Valspar SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Valspar managers to do a situational analysis of the firm . It is an important technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Valspar is facing in its current business environment.

The Valspar is one of the leading firms in its industry. Valspar maintains its prominent position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the firm such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework facilitates an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Valspar to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Valspar strengths, and eradicate its weaknesses.

Step by Step Guide to Valspar SWOT Analysis

Strengths of Valspar – Internal Strategic Factors

As one of the leading organizations in its industry, Valspar has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Valspar are –

Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Strong Brand Portfolio – Over the years Valspar has invested in building a strong brand portfolio. The SWOT analysis of Valspar just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Successful track record of developing new products – product innovation.
High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
Good Returns on Capital Expenditure – Valspar is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
Strong distribution network – Over the years Valspar has built a reliable distribution network that can reach majority of its potential market.
Superb Performance in New Markets – Valspar has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.

Weakness of Valspar – Internal Strategic Factors

Weakness are the areas where Valspar can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Valspar is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Valspar
The profitability ratio and Net Contribution % of Valspar are below the industry average.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.

Opportunities for Valspar – External Strategic Factors

Government green drive also opens an opportunity for procurement of Valspar products by the state as well as federal government contractors.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Valspar an opportunity to enter a new emerging market.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Valspar’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Valspar to capture new customers and increase its market share.
The market development will lead to dilution of competitor’s advantage and enable Valspar to increase its competitiveness compare to the other competitors.
New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Valspar to drive home its advantage in new technology and gain market share in the new product category.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Valspar.
New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Valspar. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.

Threats Valspar Facing - External Strategic Factors

Liability laws in different countries are different and Valspar may be exposed to various liability claims given change in policies in those markets.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Imitation of the counterfeit and low quality product is also a threat to Valspar’s product especially in the emerging markets and low income markets.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Valspar in those markets.
As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.

Limitations of SWOT Analysis for Valspar

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Valspar
SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

Weighted SWOT Analysis of Valspar

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Valspar managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Valspar

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)