Legg Mason SWOT Analysis / Matrix

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

The Legg Mason is one of the leading firms in its industry. Legg Mason maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis a highly 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 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 known as SWOT Matrix.

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

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Legg Mason swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to Legg Mason SWOT Analysis

Strengths of Legg Mason – Internal Strategic Factors

As one of the leading organizations in its industry, Legg Mason 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 Legg Mason are –

  • Successful track record of developing new products – product innovation.
  • Highly skilled workforce through successful training and learning programs. Legg Mason 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.
  • Strong Brand Portfolio – Over the years Legg Mason has invested in building a strong brand portfolio. The SWOT analysis of Legg Mason just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • Superb Performance in New Markets – Legg Mason 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.
  • Strong Free Cash Flow – Legg Mason has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Good Returns on Capital Expenditure – Legg Mason is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
  • 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.

Weakness of Legg Mason – Internal Strategic Factors

Weakness are the areas where Legg Mason 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.

  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Legg Mason 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.
  • 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. Legg Mason 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.
  • Limited success outside core business – Even though Legg Mason is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
  • 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 Legg Mason is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though Legg Mason 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.

Opportunities for Legg Mason – External Strategic Factors

  • Government green drive also opens an opportunity for procurement of Legg Mason products by the state as well as federal government contractors.
  • New trends in the consumer behavior can open up new market for the Legg Mason . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
  • The new technology provides an opportunity to Legg Mason 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.
  • The market development will lead to dilution of competitor’s advantage and enable Legg Mason to increase its competitiveness compare to the other competitors.
  • 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.
  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Legg Mason an opportunity to enter a new emerging market.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Legg Mason to capture new customers and increase its market share.
  • 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 Legg Mason. 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 Legg Mason Facing - External Strategic Factors

  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • Imitation of the counterfeit and low quality product is also a threat to Legg Mason’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 .
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Legg Mason   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.
  • 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.
  • 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.

Limitations of SWOT Analysis for Legg Mason

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 Legg Mason
  • 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 Legg Mason

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 Legg Mason 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 Legg Mason

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)