Marsh & McLennan Companies, Inc. SWOT Analysis / Matrix

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

The Marsh & McLennan Companies, Inc. is one of the leading organizatations in its industry. Marsh & McLennan Companies, Inc. 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 organization such as – marketing, finance, operations, management information systems and strategic planning.


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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 Marsh & McLennan Companies, Inc. 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 primary purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect Marsh & McLennan Companies, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Marsh & McLennan Companies, Inc. SWOT Analysis

Strengths of Marsh & McLennan Companies, Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Marsh & McLennan Companies, Inc. 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 Marsh & McLennan Companies, Inc. are –

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• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Highly successful at Go To Market strategies for its products.
• Strong distribution network – Over the years Marsh & McLennan Companies, Inc. has built a reliable distribution network that can reach majority of its potential market.
• Good Returns on Capital Expenditure – Marsh & McLennan Companies, Inc. 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.
• Strong Brand Portfolio – Over the years Marsh & McLennan Companies, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Marsh & McLennan Companies, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
• Strong Free Cash Flow – Marsh & McLennan Companies, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Highly skilled workforce through successful training and learning programs. Marsh & McLennan Companies, Inc. 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.

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Weakness of Marsh & McLennan Companies, Inc. – Internal Strategic Factors

Weakness are the areas where Marsh & McLennan Companies, Inc. 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.

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• Investment in Research and Development is below the fastest growing players in the industry. Even though Marsh & McLennan Companies, Inc. 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.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Marsh & McLennan Companies, Inc. 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 profitability ratio and Net Contribution % of Marsh & McLennan Companies, Inc. are below the industry average.
• 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 Marsh & McLennan Companies, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• 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. Marsh & McLennan Companies, Inc. 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 Marsh & McLennan Companies, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• 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 Marsh & McLennan Companies, Inc. – External Strategic Factors

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• Government green drive also opens an opportunity for procurement of Marsh & McLennan Companies, Inc. 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 Marsh & McLennan Companies, Inc. to drive home its advantage in new technology and gain market share in the new product category.
• The market development will lead to dilution of competitor’s advantage and enable Marsh & McLennan Companies, Inc. 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 Marsh & McLennan Companies, Inc.’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.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Marsh & McLennan Companies, Inc..
• The new technology provides an opportunity to Marsh & McLennan Companies, Inc. 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 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 Marsh & McLennan Companies, Inc.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Marsh & McLennan Companies, Inc. an opportunity to enter a new emerging market.

Threats Marsh & McLennan Companies, Inc. Facing - External Strategic Factors

• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Marsh & McLennan Companies, Inc.
• 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.
• 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.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• 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.

Limitations of SWOT Analysis for Marsh & McLennan Companies, Inc.

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 Marsh & McLennan Companies, Inc.
• 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.

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Weighted SWOT Analysis of Marsh & McLennan Companies, Inc.

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 Marsh & McLennan Companies, Inc. 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 Marsh & McLennan Companies, Inc.

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)