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Ingersoll-Rand Plc SWOT Analysis / Matrix
Business Essays, Term Papers & Research Papers
SWOT analysis is a strategic planning tool that can be used by Ingersoll-Rand Plc managers to do a situational analysis of the company . It is a useful technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Ingersoll-Rand Plc is facing in its current business environment.
The Ingersoll-Rand Plc is one of the leading companies in its industry. Ingersoll-Rand Plc maintains its prominent 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 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 Ingersoll-Rand Plc 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 main purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect Ingersoll-Rand Plc strengths, and eradicate its weaknesses.
Step by Step Guide to Ingersoll-Rand Plc SWOT Analysis
Strengths of Ingersoll-Rand Plc – Internal Strategic Factors
As one of the leading organizations in its industry, Ingersoll-Rand Plc 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 Ingersoll-Rand Plc are –
Read - Ingersoll-Rand Plc Porter 5 Forces Analysis & Industry Analysis
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- 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 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.
- Highly successful at Go To Market strategies for its products.
- Strong Free Cash Flow – Ingersoll-Rand Plc 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 Ingersoll-Rand Plc has invested in building a strong brand portfolio. The SWOT analysis of Ingersoll-Rand Plc just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Good Returns on Capital Expenditure – Ingersoll-Rand Plc is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Strong distribution network – Over the years Ingersoll-Rand Plc has built a reliable distribution network that can reach majority of its potential market.
- Automation of activities brought consistency of quality to Ingersoll-Rand Plc products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Weakness of Ingersoll-Rand Plc – Internal Strategic Factors
Weakness are the areas where Ingersoll-Rand Plc can improve upon. Strategy is about making choices and weakness are the areas where an organization 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 Ingersoll-Rand Plc is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
- Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
- High attrition rate in work force – compare to other organizations in the industry Ingersoll-Rand Plc has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
- 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 Ingersoll-Rand Plc
- Not highly successful at integrating firms with different work culture. As mentioned earlier even though Ingersoll-Rand Plc is successful at integrating small companies it has its share of failure to merge firms that have different work 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 Ingersoll-Rand Plc is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Opportunities for Ingersoll-Rand Plc – 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 Ingersoll-Rand Plc to capture new customers and increase its market share.
- Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Ingersoll-Rand Plc.
- 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 Ingersoll-Rand Plc to drive home its advantage in new technology and gain market share in the new product category.
- Government green drive also opens an opportunity for procurement of Ingersoll-Rand Plc 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 Ingersoll-Rand Plc in other product categories.
- The new technology provides an opportunity to Ingersoll-Rand Plc 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.
- 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.
- The market development will lead to dilution of competitor’s advantage and enable Ingersoll-Rand Plc to increase its competitiveness compare to the other competitors.
Threats Ingersoll-Rand Plc Facing - External Strategic Factors
- Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
- Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
- Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Ingersoll-Rand Plc in those markets.
- 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.
- Imitation of the counterfeit and low quality product is also a threat to Ingersoll-Rand Plc’s product especially in the emerging markets and low income markets.
- Rising raw material can pose a threat to the Ingersoll-Rand Plc profitability.
- Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
- The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
Limitations of SWOT Analysis for Ingersoll-Rand Plc
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 Ingersoll-Rand Plc
- 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 Ingersoll-Rand Plc
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 Ingersoll-Rand Plc 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 Ingersoll-Rand Plc
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
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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)
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