GMS Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The GMS Inc. is one of the leading firms in its industry. GMS Inc. maintains its prominent 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 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 GMS 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 core purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect GMS Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to GMS Inc. SWOT Analysis

Strengths of GMS Inc. – Internal Strategic Factors

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

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• Good Returns on Capital Expenditure – GMS Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Strong Brand Portfolio – Over the years GMS Inc. has invested in building a strong brand portfolio. The SWOT analysis of GMS 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 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.
• Automation of activities brought consistency of quality to GMS Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Strong Free Cash Flow – GMS Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Highly skilled workforce through successful training and learning programs. GMS 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 distribution network – Over the years GMS Inc. has built a reliable distribution network that can reach majority of its potential market.
• Superb Performance in New Markets – GMS 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.

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Weakness of GMS Inc. – Internal Strategic Factors

Weakness are the areas where GMS 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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• 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 GMS Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though GMS Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• 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. GMS Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• 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 GMS Inc.
• 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.
• The profitability ratio and Net Contribution % of GMS Inc. are below the industry average.

Opportunities for GMS Inc. – External Strategic Factors

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• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as GMS Inc. to increase its profitability.
• New trends in the consumer behavior can open up new market for the GMS Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• Government green drive also opens an opportunity for procurement of GMS Inc. products by the state as well as federal government contractors.
• The market development will lead to dilution of competitor’s advantage and enable GMS Inc. to increase its competitiveness compare to the other competitors.
• 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 GMS Inc. in other product categories.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of GMS 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.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided GMS Inc. 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 GMS Inc..

Threats GMS Inc. Facing - External Strategic Factors

• Rising raw material can pose a threat to the GMS Inc. profitability.
• 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.
• Liability laws in different countries are different and GMS Inc. may be exposed to various liability claims given change in policies in those markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for GMS Inc.   in those markets.
• 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 GMS Inc.

Limitations of SWOT Analysis for GMS 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 GMS 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 GMS 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 GMS 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 GMS 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)