International Flavors & Fragrances SWOT Analysis / Matrix

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

The International Flavors & Fragrances is one of the leading companies in its industry. International Flavors & Fragrances 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 organization 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the International Flavors & Fragrances to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
International Flavors & Fragrances swot analysis / matrix

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect International Flavors & Fragrances strengths, and eradicate its weaknesses.

Step by Step Guide to International Flavors & Fragrances SWOT Analysis

Strengths of International Flavors & Fragrances – Internal Strategic Factors

As one of the leading firms in its industry, International Flavors & Fragrances 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 International Flavors & Fragrances are –

  • 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.
  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
  • Successful track record of developing new products – product innovation.
  • Automation of activities brought consistency of quality to International Flavors & Fragrances products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Strong Brand Portfolio – Over the years International Flavors & Fragrances has invested in building a strong brand portfolio. The SWOT analysis of International Flavors & Fragrances just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • Highly successful at Go To Market strategies for its products.
  • 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 skilled workforce through successful training and learning programs. International Flavors & Fragrances 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 International Flavors & Fragrances – Internal Strategic Factors

Weakness are the areas where International Flavors & Fragrances 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.

  • 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. International Flavors & Fragrances has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
  • 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.
  • High attrition rate in work force – compare to other organizations in the industry International Flavors & Fragrances has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though International Flavors & Fragrances 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 International Flavors & Fragrances are below the industry average.
  • Not highly successful at integrating firms with different work culture. As mentioned earlier even though International Flavors & Fragrances is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.

Opportunities for International Flavors & Fragrances – External Strategic Factors

  • The market development will lead to dilution of competitor’s advantage and enable International Flavors & Fragrances to increase its competitiveness compare to the other competitors.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of International Flavors & Fragrances’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 International Flavors & Fragrances to capture new customers and increase its market share.
  • Government green drive also opens an opportunity for procurement of International Flavors & Fragrances 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 International Flavors & Fragrances an opportunity to enter a new emerging market.
  • 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 International Flavors & Fragrances to drive home its advantage in new technology and gain market share in the new product category.
  • 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 International Flavors & Fragrances. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
  • The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as International Flavors & Fragrances to increase its profitability.

Threats International Flavors & Fragrances Facing - External Strategic Factors

  • Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of International Flavors & Fragrances
  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • 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.
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for International Flavors & Fragrances   in those markets.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • 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.
  • Liability laws in different countries are different and International Flavors & Fragrances may be exposed to various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for International Flavors & Fragrances

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 International Flavors & Fragrances
  • 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 International Flavors & Fragrances

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 International Flavors & Fragrances 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 International Flavors & Fragrances

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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SWOT Worksheet & Template

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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)