Order custom Harvard Business Case Study Analysis & Solution. Starting just $19
American Equity Investment Life Holding Company SWOT Analysis / Matrix
Business Essays, Term Papers & Research Papers
SWOT analysis is a strategic planning tool that can be used by American Equity Investment Life Holding Company managers to do a situational analysis of the organization . It is a handy technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) American Equity Investment Life Holding Company is facing in its current business environment.
The American Equity Investment Life Holding Company is one of the leading firms in its industry. American Equity Investment Life Holding Company maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the firm such as – marketing, finance, operations, management information systems and strategic planning.
Order Now - American Equity Investment Life Holding Company SWOT Analysis
Check out- American Equity Investment Life Holding Company PESTEL / PEST & Environment Analysis
Article continues after advertisement
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 enables the managers of the American Equity Investment Life Holding Company 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 a firm can use to exploit external opportunities, counter threats, and build on & protect American Equity Investment Life Holding Company strengths, and eradicate its weaknesses.
Step by Step Guide to American Equity Investment Life Holding Company SWOT Analysis
Strengths of American Equity Investment Life Holding Company – Internal Strategic Factors
As one of the leading organizations in its industry, American Equity Investment Life Holding Company 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 American Equity Investment Life Holding Company are –
Read - American Equity Investment Life Holding Company Porter 5 Forces Analysis & Industry Analysis
Article continues after advertisement
- 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.
- 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 distribution network – Over the years American Equity Investment Life Holding Company has built a reliable distribution network that can reach majority of its potential market.
- Strong Brand Portfolio – Over the years American Equity Investment Life Holding Company has invested in building a strong brand portfolio. The SWOT analysis of American Equity Investment Life Holding Company just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Highly skilled workforce through successful training and learning programs. American Equity Investment Life Holding Company 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 – American Equity Investment Life Holding Company is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Automation of activities brought consistency of quality to American Equity Investment Life Holding Company products and has enabled the company to scale up and scale down based on the demand conditions in the market.
- Strong Free Cash Flow – American Equity Investment Life Holding Company has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Weakness of American Equity Investment Life Holding Company – Internal Strategic Factors
Weakness are the areas where American Equity Investment Life Holding Company 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.
Article continues after advertisement
- 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.
- 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.
- 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 American Equity Investment Life Holding Company 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 American Equity Investment Life Holding Company 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 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. American Equity Investment Life Holding Company has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
- 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 American Equity Investment Life Holding Company
Opportunities for American Equity Investment Life Holding Company – External Strategic Factors
Article continues after advertisement
- Decreasing cost of transportation because of lower shipping prices can also bring down the cost of American Equity Investment Life Holding Company’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.
- The new technology provides an opportunity to American Equity Investment Life Holding Company 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.
- 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.
- Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of American Equity Investment Life Holding Company.
- The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as American Equity Investment Life Holding Company to increase its profitability.
- New trends in the consumer behavior can open up new market for the American Equity Investment Life Holding Company . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for American Equity Investment Life Holding Company 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 American Equity Investment Life Holding Company. 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 American Equity Investment Life Holding Company 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.
- 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.
- The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
- 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.
- Rising raw material can pose a threat to the American Equity Investment Life Holding Company profitability.
- Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for American Equity Investment Life Holding Company in those markets.
- Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of American Equity Investment Life Holding Company
Limitations of SWOT Analysis for American Equity Investment Life Holding Company
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 American Equity Investment Life Holding Company
- 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.
Article continues after advertisement
Weighted SWOT Analysis of American Equity Investment Life Holding Company
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 American Equity Investment Life Holding Company 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 American Equity Investment Life Holding Company
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.
Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of American Equity Investment Life Holding Company
Example of Weighted SWOT Analysis
You can email us to get an example document of Weighted SWOT analysis.
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)
Previous 5 SWOT Analysis
- AEGON N.V. SWOT Analysis
- Atlantic American Corporation SWOT Analysis
- Willis Towers Watson Public Limited Company SWOT Analysis
- Patriot National, Inc. SWOT Analysis
- Marsh & McLennan Companies, Inc. SWOT Analysis
Next 5 SWOT Analysis
- Citizens, Inc. SWOT Analysis
- FBL Financial Group, Inc. SWOT Analysis
- Fidelity & Guaranty Life SWOT Analysis
- Genworth Financial, Inc. SWOT Analysis
- GWG Holdings, Inc. SWOT Analysis
HBR Case Studies Solutions
- VOSS Artesian Water from Norway case study solution
- Collision Course in Commercial Aircraft: Boeing-Airbus-McDonnell Douglas--1991 (B) case study solution
- West Marine: Driving Growth Through Shipshape Supply Chain Management case study solution
- Cradle-to-Cradle Design at Herman Miller: Moving Toward Environmental Sustainability, Portuguese Version case study solution
- Procter & Gamble, Private-Label Brands, and the Wal-Mart Partnership (B) case study solution