The L.S. Starrett Company SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by The L.S. Starrett Company managers to do a situational analysis of the organization . It is a useful technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) The L.S. Starrett Company is facing in its current business environment.

The The L.S. Starrett Company is one of the leading firms in its industry. The L.S. Starrett Company 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 helps the managers of the The L.S. Starrett Company to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

The L.S. Starrett Company swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect The L.S. Starrett Company strengths, and eradicate its weaknesses.

Step by Step Guide to The L.S. Starrett Company SWOT Analysis

Strengths of The L.S. Starrett Company – Internal Strategic Factors

As one of the leading organizations in its industry, The L.S. Starrett Company 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 The L.S. Starrett Company are –

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Successful track record of developing new products – product innovation.
Good Returns on Capital Expenditure – The L.S. Starrett Company is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Automation of activities brought consistency of quality to The L.S. Starrett Company products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong Brand Portfolio – Over the years The L.S. Starrett Company has invested in building a strong brand portfolio. The SWOT analysis of The L.S. Starrett Company just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Superb Performance in New Markets – The L.S. Starrett Company 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.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Highly successful at Go To Market strategies for its products.
Highly skilled workforce through successful training and learning programs. The L.S. Starrett Company 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.

Weakness of The L.S. Starrett Company – Internal Strategic Factors

Weakness are the areas where The L.S. Starrett Company 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 profitability ratio and Net Contribution % of The L.S. Starrett Company are below the industry average.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, The L.S. Starrett Company 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.
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.
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 The L.S. Starrett Company
High attrition rate in work force – compare to other organizations in the industry The L.S. Starrett Company has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.

Opportunities for The L.S. Starrett Company – External Strategic Factors

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Government green drive also opens an opportunity for procurement of The L.S. Starrett Company products by the state as well as federal government contractors.
The new technology provides an opportunity to The L.S. Starrett Company 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.
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 The L.S. Starrett Company to drive home its advantage in new technology and gain market share in the new product category.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of The L.S. Starrett Company’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.
New trends in the consumer behavior can open up new market for the The L.S. Starrett Company . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided The L.S. Starrett Company an opportunity to enter a new emerging market.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for The L.S. Starrett Company to capture new customers and increase its market share.
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 The L.S. Starrett Company in other product categories.

Threats The L.S. Starrett Company Facing - External Strategic Factors

Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for The L.S. Starrett Company in those markets.
Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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 pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of The L.S. Starrett Company
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .

Limitations of SWOT Analysis for The L.S. Starrett Company

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 The L.S. Starrett Company
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 The L.S. Starrett Company

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 The L.S. Starrett Company 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 The L.S. Starrett Company

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)