HealthSouth SWOT Analysis / Matrix

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

The HealthSouth is one of the leading companies in its industry. HealthSouth maintains its dominant 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 firm 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 enables the managers of the HealthSouth 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 utilize to exploit external opportunities, counter threats, and build on & protect HealthSouth strengths, and eradicate its weaknesses.

Step by Step Guide to HealthSouth SWOT Analysis

Strengths of HealthSouth – Internal Strategic Factors

As one of the leading companies in its industry, HealthSouth 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 HealthSouth are –

• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Good Returns on Capital Expenditure – HealthSouth is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Superb Performance in New Markets – HealthSouth 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.
• Successful track record of developing new products – product innovation.
• Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
• Highly successful at Go To Market strategies for its products.
• Strong distribution network – Over the years HealthSouth has built a reliable distribution network that can reach majority of its potential market.
• Strong Brand Portfolio – Over the years HealthSouth has invested in building a strong brand portfolio. The SWOT analysis of HealthSouth just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Weakness of HealthSouth – Internal Strategic Factors

Weakness are the areas where HealthSouth 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.
• 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.
• Not very good at product demand forecasting leading to higher rate of missed opportunities compare to its competitors. One of the reason why the days inventory is high compare to its competitors is that HealthSouth is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• 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.
• 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. HealthSouth has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, HealthSouth 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.
• High attrition rate in work force – compare to other organizations in the industry HealthSouth has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.

Opportunities for HealthSouth – External Strategic Factors

• 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 HealthSouth to drive home its advantage in new technology and gain market share in the new product category.
• Government green drive also opens an opportunity for procurement of HealthSouth 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.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of HealthSouth.
• The market development will lead to dilution of competitor’s advantage and enable HealthSouth to increase its competitiveness compare to the other competitors.
• 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 HealthSouth. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• 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 HealthSouth in other product categories.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of HealthSouth’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 HealthSouth Facing - External Strategic Factors

• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of HealthSouth
• 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.
• Imitation of the counterfeit and low quality product is also a threat to HealthSouth’s product especially in the emerging markets and low income markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for HealthSouth   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.

Limitations of SWOT Analysis for HealthSouth

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 HealthSouth
• 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 HealthSouth

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 HealthSouth 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 HealthSouth

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)