Vectren SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

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

The Vectren is one of the leading firms in its industry. Vectren maintains its prominent 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 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 Vectren to develop four types of strategies:

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

SWOT Matrix Strategies Objective

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

Step by Step Guide to Vectren SWOT Analysis

Strengths of Vectren – Internal Strategic Factors

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

  • Strong Free Cash Flow – Vectren has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • 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.
  • Highly skilled workforce through successful training and learning programs. Vectren 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.
  • Automation of activities brought consistency of quality to Vectren products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Highly successful at Go To Market strategies for its products.
  • Superb Performance in New Markets – Vectren 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.
  • Strong Brand Portfolio – Over the years Vectren has invested in building a strong brand portfolio. The SWOT analysis of Vectren just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • 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 Vectren – Internal Strategic Factors

Weakness are the areas where Vectren 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.

  • 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 Vectren is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • The profitability ratio and Net Contribution % of Vectren are below the industry average.
  • 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 Vectren
  • High attrition rate in work force – compare to other organizations in the industry Vectren has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Limited success outside core business – Even though Vectren 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.
  • 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.

Opportunities for Vectren – External Strategic Factors

  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Vectren an opportunity to enter a new emerging market.
  • The new technology provides an opportunity to Vectren 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.
  • 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 Vectren 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 Vectren. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
  • Government green drive also opens an opportunity for procurement of Vectren products by the state as well as federal government contractors.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Vectren.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Vectren to capture new customers and increase its market share.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Vectren’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 Vectren Facing - External Strategic Factors

  • 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 demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
  • Imitation of the counterfeit and low quality product is also a threat to Vectren’s product especially in the emerging markets and low income markets.
  • Rising raw material can pose a threat to the Vectren profitability.
  • Liability laws in different countries are different and Vectren may be exposed to various liability claims given change in policies in those 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 Vectren   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 Vectren

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 Vectren
  • 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 Vectren

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 Vectren 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 Vectren

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)