Gulf Island Fabrication, Inc. SWOT Analysis / Matrix

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SWOT analysis is a vital strategic planning tool that can be used by Gulf Island Fabrication, Inc. managers to do a situational analysis of the company . It is an important technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Gulf Island Fabrication, Inc. is facing in its current business environment.

The Gulf Island Fabrication, Inc. is one of the leading companies in its industry. Gulf Island Fabrication, Inc. 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 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 Gulf Island Fabrication, Inc. to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Gulf Island Fabrication, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Gulf Island Fabrication, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Gulf Island Fabrication, Inc. SWOT Analysis

Strengths of Gulf Island Fabrication, Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Gulf Island Fabrication, Inc. has numerous strengths that enable 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 Gulf Island Fabrication, Inc. are –

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  • Successful track record of developing new products – product innovation.
  • Good Returns on Capital Expenditure – Gulf Island Fabrication, 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 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 Free Cash Flow – Gulf Island Fabrication, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Automation of activities brought consistency of quality to Gulf Island Fabrication, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Strong distribution network – Over the years Gulf Island Fabrication, Inc. has built a reliable distribution network that can reach majority of its potential market.
  • 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.
  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.

Weakness of Gulf Island Fabrication, Inc. – Internal Strategic Factors

Weakness are the areas where Gulf Island Fabrication, 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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  • Limited success outside core business – Even though Gulf Island Fabrication, 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 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 Gulf Island Fabrication, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • The profitability ratio and Net Contribution % of Gulf Island Fabrication, Inc. are below the industry average.
  • High attrition rate in work force – compare to other organizations in the industry Gulf Island Fabrication, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Gulf Island Fabrication, 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.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though Gulf Island Fabrication, 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.
  • 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. Gulf Island Fabrication, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Gulf Island Fabrication, Inc. – External Strategic Factors

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  • The market development will lead to dilution of competitor’s advantage and enable Gulf Island Fabrication, Inc. to increase its competitiveness compare to the other competitors.
  • Government green drive also opens an opportunity for procurement of Gulf Island Fabrication, Inc. products by the state as well as federal government contractors.
  • 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 Gulf Island Fabrication, Inc. in other product categories.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Gulf Island Fabrication, Inc. to capture new customers and increase its market share.
  • 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 Gulf Island Fabrication, Inc. to drive home its advantage in new technology and gain market share in the new product category.
  • 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 Gulf Island Fabrication, 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 Gulf Island Fabrication, 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.
  • 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.

Threats Gulf Island Fabrication, Inc. Facing - External Strategic Factors

  • Rising raw material can pose a threat to the Gulf Island Fabrication, Inc. profitability.
  • 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.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • 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.
  • 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.
  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • Imitation of the counterfeit and low quality product is also a threat to Gulf Island Fabrication, Inc.’s product especially in the emerging markets and low income markets.
  • New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Limitations of SWOT Analysis for Gulf Island Fabrication, 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 Gulf Island Fabrication, 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 Gulf Island Fabrication, 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 Gulf Island Fabrication, 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 Gulf Island Fabrication, 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)