Freeport-McMoRan Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Freeport-McMoRan Inc. is one of the leading organizatations in its industry. Freeport-McMoRan Inc. maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.

Order Now - Freeport-McMoRan Inc. SWOT Analysis
Check out- Freeport-McMoRan Inc. 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Freeport-McMoRan Inc. to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

Freeport-McMoRan Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Freeport-McMoRan Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Freeport-McMoRan Inc. SWOT Analysis

Strengths of Freeport-McMoRan Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Freeport-McMoRan 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 Freeport-McMoRan Inc. are –

Read - Freeport-McMoRan Inc. Porter 5 Forces Analysis & Industry Analysis
Article continues after advertisement

Good Returns on Capital Expenditure – Freeport-McMoRan Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Strong Free Cash Flow – Freeport-McMoRan 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. Freeport-McMoRan 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.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Strong distribution network – Over the years Freeport-McMoRan Inc. has built a reliable distribution network that can reach majority of its potential market.
Successful track record of developing new products – product innovation.
Highly successful at Go To Market strategies for its 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.

Weakness of Freeport-McMoRan Inc. – Internal Strategic Factors

Weakness are the areas where Freeport-McMoRan 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.

Article continues after advertisement

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 Freeport-McMoRan Inc.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Freeport-McMoRan 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.
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 Freeport-McMoRan Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
Investment in Research and Development is below the fastest growing players in the industry. Even though Freeport-McMoRan 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.
Limited success outside core business – Even though Freeport-McMoRan Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Freeport-McMoRan Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Opportunities for Freeport-McMoRan Inc. – External Strategic Factors

Article continues after advertisement

Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Freeport-McMoRan 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.
Government green drive also opens an opportunity for procurement of Freeport-McMoRan 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 Freeport-McMoRan 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 Freeport-McMoRan Inc. to increase its competitiveness compare to the other competitors.
Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Freeport-McMoRan Inc. in other product categories.
New trends in the consumer behavior can open up new market for the Freeport-McMoRan Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Freeport-McMoRan Inc..
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Freeport-McMoRan Inc. an opportunity to enter a new emerging market.

Threats Freeport-McMoRan Inc. Facing - External Strategic Factors

New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
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.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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 pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Freeport-McMoRan Inc.
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 Freeport-McMoRan 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 Freeport-McMoRan 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.

Article continues after advertisement

Weighted SWOT Analysis of Freeport-McMoRan 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 Freeport-McMoRan 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 Freeport-McMoRan 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.

Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of Freeport-McMoRan Inc.

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)