Nu Skin Enterprises SWOT Analysis / Matrix

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

The Nu Skin Enterprises is one of the leading companies in its industry. Nu Skin Enterprises 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Nu Skin Enterprises 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 main purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Nu Skin Enterprises strengths, and eradicate its weaknesses.

Step by Step Guide to Nu Skin Enterprises SWOT Analysis

Strengths of Nu Skin Enterprises – Internal Strategic Factors

As one of the leading organizations in its industry, Nu Skin Enterprises 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 Nu Skin Enterprises are –

• Good Returns on Capital Expenditure – Nu Skin Enterprises is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Strong distribution network – Over the years Nu Skin Enterprises has built a reliable distribution network that can reach majority of its potential market.
• Highly skilled workforce through successful training and learning programs. Nu Skin Enterprises 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.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Strong Brand Portfolio – Over the years Nu Skin Enterprises has invested in building a strong brand portfolio. The SWOT analysis of Nu Skin Enterprises 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.
• Automation of activities brought consistency of quality to Nu Skin Enterprises 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.

Weakness of Nu Skin Enterprises – Internal Strategic Factors

Weakness are the areas where Nu Skin Enterprises 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.

• The profitability ratio and Net Contribution % of Nu Skin Enterprises are below the industry average.
• High attrition rate in work force – compare to other organizations in the industry Nu Skin Enterprises has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• 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 Nu Skin Enterprises is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• 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 Nu Skin Enterprises is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• 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.

Opportunities for Nu Skin Enterprises – External Strategic Factors

• Government green drive also opens an opportunity for procurement of Nu Skin Enterprises products by the state as well as federal government contractors.
• 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 Nu Skin Enterprises. 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 market development will lead to dilution of competitor’s advantage and enable Nu Skin Enterprises to increase its competitiveness compare to the other competitors.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Nu Skin Enterprises.
• 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.
• 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 Nu Skin Enterprises to drive home its advantage in new technology and gain market share in the new product category.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Nu Skin Enterprises an opportunity to enter a new emerging market.
• New trends in the consumer behavior can open up new market for the Nu Skin Enterprises . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats Nu Skin Enterprises Facing - External Strategic Factors

• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Nu Skin Enterprises   in those markets.
• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• Imitation of the counterfeit and low quality product is also a threat to Nu Skin Enterprises’s product especially in the emerging markets and low income markets.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• 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.
• 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.

Limitations of SWOT Analysis for Nu Skin Enterprises

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 Nu Skin Enterprises
• 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 Nu Skin Enterprises

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 Nu Skin Enterprises 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 Nu Skin Enterprises

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)