Vermillion, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Vermillion, Inc. is one of the leading companies in its industry. Vermillion, 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 company 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 Vermillion, Inc. 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 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 Vermillion, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Vermillion, Inc. SWOT Analysis

Strengths of Vermillion, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, Vermillion, 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 Vermillion, Inc. are –

Read - Vermillion, Inc. Porter 5 Forces Analysis & Industry Analysis
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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.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
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 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.
Automation of activities brought consistency of quality to Vermillion, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Highly skilled workforce through successful training and learning programs. Vermillion, 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.
Strong Brand Portfolio – Over the years Vermillion, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Vermillion, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Successful track record of developing new products – product innovation.

Weakness of Vermillion, Inc. – Internal Strategic Factors

Weakness are the areas where Vermillion, 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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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 Vermillion, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
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. Vermillion, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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.
Investment in Research and Development is below the fastest growing players in the industry. Even though Vermillion, 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.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Vermillion, 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.
The profitability ratio and Net Contribution % of Vermillion, Inc. are below the industry average.

Opportunities for Vermillion, Inc. – External Strategic Factors

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

Threats Vermillion, Inc. Facing - External Strategic Factors

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.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
Imitation of the counterfeit and low quality product is also a threat to Vermillion, Inc.’s product especially in the emerging markets and low income markets.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Vermillion, Inc. 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 Vermillion, Inc.
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.

Limitations of SWOT Analysis for Vermillion, 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 Vermillion, 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 Vermillion, 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 Vermillion, 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 Vermillion, 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)