Federal Signal Corporation SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Federal Signal Corporation is one of the leading organizatations in its industry. Federal Signal Corporation 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 company 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 enables the managers of the Federal Signal Corporation 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 Federal Signal Corporation strengths, and eradicate its weaknesses.

Step by Step Guide to Federal Signal Corporation SWOT Analysis

Strengths of Federal Signal Corporation – Internal Strategic Factors

As one of the leading companies in its industry, Federal Signal Corporation 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 Federal Signal Corporation are –

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• Highly skilled workforce through successful training and learning programs. Federal Signal Corporation 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 distribution network – Over the years Federal Signal Corporation has built a reliable distribution network that can reach majority of its potential market.
• Strong Brand Portfolio – Over the years Federal Signal Corporation has invested in building a strong brand portfolio. The SWOT analysis of Federal Signal Corporation 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 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.
• Successful track record of developing new products – product innovation.
• Highly successful at Go To Market strategies for its products.
• Strong Free Cash Flow – Federal Signal Corporation has strong free cash flows that provide resources in the hand of the company to expand into new projects.

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Weakness of Federal Signal Corporation – Internal Strategic Factors

Weakness are the areas where Federal Signal Corporation 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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• Investment in Research and Development is below the fastest growing players in the industry. Even though Federal Signal Corporation 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.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• 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 Federal Signal Corporation is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• 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 Federal Signal Corporation
• Limited success outside core business – Even though Federal Signal Corporation is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• High attrition rate in work force – compare to other organizations in the industry Federal Signal Corporation has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• 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. Federal Signal Corporation has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Federal Signal Corporation – 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 Federal Signal Corporation 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 Federal Signal Corporation an opportunity to enter a new emerging market.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Federal Signal Corporation.
• 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.
• 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 Federal Signal Corporation to drive home its advantage in new technology and gain market share in the new product category.
• The new technology provides an opportunity to Federal Signal Corporation 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 new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Federal Signal Corporation 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 Federal Signal Corporation. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.

Threats Federal Signal Corporation Facing - External Strategic Factors

• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Federal Signal Corporation   in those markets.
• Imitation of the counterfeit and low quality product is also a threat to Federal Signal Corporation’s product especially in the emerging markets and low income markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
• Rising raw material can pose a threat to the Federal Signal Corporation profitability.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Federal Signal Corporation

Limitations of SWOT Analysis for Federal Signal Corporation

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 Federal Signal Corporation
• 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 Federal Signal Corporation

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 Federal Signal Corporation 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 Federal Signal Corporation

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)