Andersons SWOT Analysis / Matrix

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

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

The SWOT Analysis framework helps 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 Andersons 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 main purpose of SWOT matrix is to identify the strategies that a firm can use to exploit external opportunities, counter threats, and build on & protect Andersons strengths, and eradicate its weaknesses.

Step by Step Guide to Andersons SWOT Analysis

Strengths of Andersons – Internal Strategic Factors

As one of the leading organizations in its industry, Andersons has numerous strengths that enable 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 Andersons are –

Strong Brand Portfolio – Over the years Andersons has invested in building a strong brand portfolio. The SWOT analysis of Andersons just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Strong Free Cash Flow – Andersons has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Automation of activities brought consistency of quality to Andersons products and has enabled the company to scale up and scale down based on the demand conditions in the market.
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.
Strong distribution network – Over the years Andersons has built a reliable distribution network that can reach majority of its potential market.
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.
Superb Performance in New Markets – Andersons 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.
Highly skilled workforce through successful training and learning programs. Andersons is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.

Weakness of Andersons – Internal Strategic Factors

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

Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Andersons has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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.
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.
Investment in Research and Development is below the fastest growing players in the industry. Even though Andersons is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
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.
Limited success outside core business – Even though Andersons is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.

Opportunities for Andersons – External Strategic Factors

The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Andersons to increase its profitability.
New trends in the consumer behavior can open up new market for the Andersons . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Andersons to capture new customers and increase its market share.
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 Andersons to drive home its advantage in new technology and gain market share in the new product category.
The new technology provides an opportunity to Andersons to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
Government green drive also opens an opportunity for procurement of Andersons products by the state as well as federal government contractors.
Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Andersons’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.

Threats Andersons Facing - External Strategic Factors

New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Liability laws in different countries are different and Andersons may be exposed to various liability claims given change in policies in those markets.
Imitation of the counterfeit and low quality product is also a threat to Andersons’s product especially in the emerging markets and low income markets.
No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
Rising raw material can pose a threat to the Andersons profitability.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.

Limitations of SWOT Analysis for Andersons

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 Andersons
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 Andersons

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 Andersons 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 Andersons

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)