Nationstar Mortgage Holdings SWOT Analysis / Matrix

Essays, Term Papers & Research Papers

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

The Nationstar Mortgage Holdings is one of the leading companies in its industry. Nationstar Mortgage Holdings maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis.  SWOT analysis a highly 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 helps 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 Nationstar Mortgage Holdings to develop four types of strategies:

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

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Nationstar Mortgage Holdings strengths, and eradicate its weaknesses.

Step by Step Guide to Nationstar Mortgage Holdings SWOT Analysis

Strengths of Nationstar Mortgage Holdings – Internal Strategic Factors

As one of the leading companies in its industry, Nationstar Mortgage Holdings 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 Nationstar Mortgage Holdings are –

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

Weakness of Nationstar Mortgage Holdings – Internal Strategic Factors

Weakness are the areas where Nationstar Mortgage Holdings 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.

  • Limited success outside core business – Even though Nationstar Mortgage Holdings is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • 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 Nationstar Mortgage Holdings
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Nationstar Mortgage Holdings 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.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though Nationstar Mortgage Holdings 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 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. Nationstar Mortgage Holdings has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
  • High attrition rate in work force – compare to other organizations in the industry Nationstar Mortgage Holdings 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 Nationstar Mortgage Holdings – External Strategic Factors

  • Government green drive also opens an opportunity for procurement of Nationstar Mortgage Holdings products by the state as well as federal government contractors.
  • 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 Nationstar Mortgage Holdings to drive home its advantage in new technology and gain market share in the new product category.
  • The new technology provides an opportunity to Nationstar Mortgage Holdings 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.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Nationstar Mortgage Holdings.
  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Nationstar Mortgage Holdings an opportunity to enter a new emerging market.
  • 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.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Nationstar Mortgage Holdings to capture new customers and increase its market share.
  • New trends in the consumer behavior can open up new market for the Nationstar Mortgage Holdings . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats Nationstar Mortgage Holdings 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 Nationstar Mortgage Holdings’s product especially in the emerging markets and low income markets.
  • 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.
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
  • 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.
  • 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 Nationstar Mortgage Holdings

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 Nationstar Mortgage Holdings
  • 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 Nationstar Mortgage Holdings

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 Nationstar Mortgage Holdings 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 Nationstar Mortgage Holdings

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)