Reata Pharmaceuticals, Inc. SWOT Analysis / Matrix

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

The Reata Pharmaceuticals, Inc. is one of the leading organizatations in its industry. Reata Pharmaceuticals, 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 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 called SWOT Matrix.

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

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

Reata Pharmaceuticals, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect Reata Pharmaceuticals, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Reata Pharmaceuticals, Inc. SWOT Analysis

Strengths of Reata Pharmaceuticals, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, Reata Pharmaceuticals, 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 Reata Pharmaceuticals, 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.
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 – Reata Pharmaceuticals, 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 Reata Pharmaceuticals, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Reata Pharmaceuticals, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Automation of activities brought consistency of quality to Reata Pharmaceuticals, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Superb Performance in New Markets – Reata Pharmaceuticals, Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
Highly successful at Go To Market strategies for its products.
Successful track record of developing new products – product innovation.

Weakness of Reata Pharmaceuticals, Inc. – Internal Strategic Factors

Weakness are the areas where Reata Pharmaceuticals, Inc. can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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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.
Limited success outside core business – Even though Reata Pharmaceuticals, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
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 Reata Pharmaceuticals, Inc.
Investment in Research and Development is below the fastest growing players in the industry. Even though Reata Pharmaceuticals, 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.
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.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Reata Pharmaceuticals, 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 Reata Pharmaceuticals, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Opportunities for Reata Pharmaceuticals, Inc. – External Strategic Factors

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Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Reata Pharmaceuticals, Inc..
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 Reata Pharmaceuticals, 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.
The market development will lead to dilution of competitor’s advantage and enable Reata Pharmaceuticals, Inc. to increase its competitiveness compare to the other competitors.
Government green drive also opens an opportunity for procurement of Reata Pharmaceuticals, Inc. products by the state as well as federal government contractors.
New trends in the consumer behavior can open up new market for the Reata Pharmaceuticals, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
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 Reata Pharmaceuticals, 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 Reata Pharmaceuticals, Inc. to capture new customers and increase its market share.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Reata Pharmaceuticals, Inc. an opportunity to enter a new emerging market.

Threats Reata Pharmaceuticals, 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 raw material can pose a threat to the Reata Pharmaceuticals, Inc. profitability.
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 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.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Reata Pharmaceuticals, Inc.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
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.
Liability laws in different countries are different and Reata Pharmaceuticals, Inc. may be exposed to various liability claims given change in policies in those markets.

Limitations of SWOT Analysis for Reata Pharmaceuticals, 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 Reata Pharmaceuticals, 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 Reata Pharmaceuticals, 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 Reata Pharmaceuticals, 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 Reata Pharmaceuticals, 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)