Darling Ingredients SWOT Analysis / Matrix

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SWOT analysis is a vital strategic planning tool that can be used by Darling Ingredients managers to do a situational analysis of the organization . It is a handy technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Darling Ingredients is facing in its current business environment.

The Darling Ingredients is one of the leading organizatations in its industry. Darling Ingredients 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 organization such as – marketing, finance, operations, management information systems and strategic planning.

The SWOT Analysis framework enables 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Darling Ingredients 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 utilize to exploit external opportunities, counter threats, and build on & protect Darling Ingredients strengths, and eradicate its weaknesses.

Step by Step Guide to Darling Ingredients SWOT Analysis

Strengths of Darling Ingredients – Internal Strategic Factors

As one of the leading organizations in its industry, Darling Ingredients 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 Darling Ingredients are –

• 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.
• Superb Performance in New Markets – Darling Ingredients 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 successful at Go To Market strategies for its products.
• Successful track record of developing new products – product innovation.
• Strong Free Cash Flow – Darling Ingredients has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Strong Brand Portfolio – Over the years Darling Ingredients has invested in building a strong brand portfolio. The SWOT analysis of Darling Ingredients just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
• Highly skilled workforce through successful training and learning programs. Darling Ingredients 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.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.

Weakness of Darling Ingredients – Internal Strategic Factors

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

• 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. Darling Ingredients 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.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• Investment in Research and Development is below the fastest growing players in the industry. Even though Darling Ingredients 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 profitability ratio and Net Contribution % of Darling Ingredients are below the industry average.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Darling Ingredients needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.
• 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 Darling Ingredients

Opportunities for Darling Ingredients – External Strategic Factors

• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Darling Ingredients to capture new customers and increase its market share.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Darling Ingredients in other product categories.
• 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 Darling Ingredients to drive home its advantage in new technology and gain market share in the new product category.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Darling Ingredients to increase its profitability.
• 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.
• New trends in the consumer behavior can open up new market for the Darling Ingredients . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Government green drive also opens an opportunity for procurement of Darling Ingredients products by the state as well as federal government contractors.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Darling Ingredients’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 Darling Ingredients Facing - External Strategic Factors

• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Liability laws in different countries are different and Darling Ingredients may be exposed to various liability claims given change in policies in those markets.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Darling Ingredients   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 Darling Ingredients

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 Darling Ingredients
• 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 Darling Ingredients

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 Darling Ingredients 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 Darling Ingredients

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)