Fairmount Santrol Holdings Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Fairmount Santrol Holdings 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) Fairmount Santrol Holdings Inc. is facing in its current business environment.

The Fairmount Santrol Holdings Inc. is one of the leading companies in its industry. Fairmount Santrol Holdings Inc. 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.

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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 enables the managers of the Fairmount Santrol Holdings Inc. to develop four types of strategies:

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

Fairmount Santrol Holdings Inc. swot analysis / matrix

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 Fairmount Santrol Holdings Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Fairmount Santrol Holdings Inc. SWOT Analysis

Strengths of Fairmount Santrol Holdings Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Fairmount Santrol Holdings 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 Fairmount Santrol Holdings Inc. are –

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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 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.
Highly successful at Go To Market strategies for its products.
High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
Strong Free Cash Flow – Fairmount Santrol Holdings Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Strong Brand Portfolio – Over the years Fairmount Santrol Holdings Inc. has invested in building a strong brand portfolio. The SWOT analysis of Fairmount Santrol Holdings Inc. 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. Fairmount Santrol Holdings 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.
Good Returns on Capital Expenditure – Fairmount Santrol Holdings Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Weakness of Fairmount Santrol Holdings Inc. – Internal Strategic Factors

Weakness are the areas where Fairmount Santrol Holdings 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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The profitability ratio and Net Contribution % of Fairmount Santrol Holdings Inc. are below the industry average.
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.
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 Fairmount Santrol Holdings Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
High attrition rate in work force – compare to other organizations in the industry Fairmount Santrol Holdings Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Limited success outside core business – Even though Fairmount Santrol Holdings Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
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 Fairmount Santrol Holdings Inc.

Opportunities for Fairmount Santrol Holdings Inc. – External Strategic Factors

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Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Fairmount Santrol Holdings Inc. to capture new customers and increase its 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 Fairmount Santrol Holdings Inc..
The market development will lead to dilution of competitor’s advantage and enable Fairmount Santrol Holdings Inc. to increase its competitiveness compare to the other competitors.
The new technology provides an opportunity to Fairmount Santrol Holdings 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.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Fairmount Santrol Holdings Inc. an opportunity to enter a new emerging market.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Fairmount Santrol Holdings Inc. to increase its profitability.
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 Fairmount Santrol Holdings 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.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Fairmount Santrol Holdings 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.

Threats Fairmount Santrol Holdings Inc. Facing - External Strategic Factors

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.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Fairmount Santrol Holdings Inc.
Liability laws in different countries are different and Fairmount Santrol Holdings Inc. may be exposed to various liability claims given change in policies in those markets.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Fairmount Santrol Holdings Inc. in those markets.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
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 Fairmount Santrol Holdings Inc. profitability.

Limitations of SWOT Analysis for Fairmount Santrol Holdings 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 Fairmount Santrol Holdings 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 Fairmount Santrol Holdings 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 Fairmount Santrol Holdings 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 Fairmount Santrol Holdings 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)