International Flavors & Fragrances Inc. SWOT Analysis / Matrix

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

The International Flavors & Fragrances Inc. is one of the leading companies in its industry. International Flavors & Fragrances Inc. 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 firm such as – marketing, finance, operations, management information systems and strategic planning.

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The SWOT Analysis framework facilitates 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 International Flavors & Fragrances Inc. to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
International Flavors & Fragrances Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect International Flavors & Fragrances Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to International Flavors & Fragrances Inc. SWOT Analysis

Strengths of International Flavors & Fragrances Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, International Flavors & Fragrances 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 International Flavors & Fragrances Inc. are –

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  • Successful track record of developing new products – product innovation.
  • Strong Free Cash Flow – International Flavors & Fragrances Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
  • 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.
  • Superb Performance in New Markets – International Flavors & Fragrances 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.
  • Automation of activities brought consistency of quality to International Flavors & Fragrances Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Strong distribution network – Over the years International Flavors & Fragrances Inc. has built a reliable distribution network that can reach majority of its potential market.

Weakness of International Flavors & Fragrances Inc. – Internal Strategic Factors

Weakness are the areas where International Flavors & Fragrances Inc. 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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  • Limited success outside core business – Even though International Flavors & Fragrances Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
  • Not highly successful at integrating firms with different work culture. As mentioned earlier even though International Flavors & Fragrances Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
  • High attrition rate in work force – compare to other organizations in the industry International Flavors & Fragrances Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • The profitability ratio and Net Contribution % of International Flavors & Fragrances Inc. are below the industry average.
  • 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 International Flavors & Fragrances 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.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, International Flavors & Fragrances 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.

Opportunities for International Flavors & Fragrances Inc. – External Strategic Factors

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  • 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 International Flavors & Fragrances Inc. in other product categories.
  • 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.
  • Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided International Flavors & Fragrances Inc. an opportunity to enter a new emerging market.
  • Government green drive also opens an opportunity for procurement of International Flavors & Fragrances Inc. products by the state as well as federal government contractors.
  • New trends in the consumer behavior can open up new market for the International Flavors & Fragrances Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
  • 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 International Flavors & Fragrances 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 International Flavors & Fragrances 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.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of International Flavors & Fragrances 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.

Threats International Flavors & Fragrances Inc. 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.
  • Imitation of the counterfeit and low quality product is also a threat to International Flavors & Fragrances Inc.’s product especially in the emerging markets and low income markets.
  • Liability laws in different countries are different and International Flavors & Fragrances Inc. may be exposed to various liability claims given change in policies in those markets.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • 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.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • 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 International Flavors & Fragrances 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 International Flavors & Fragrances 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 International Flavors & Fragrances 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 International Flavors & Fragrances 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 International Flavors & Fragrances 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)