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Appliance Recycling Centers of America, Inc. SWOT Analysis / Matrix
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SWOT analysis is a strategic planning tool that can be used by Appliance Recycling Centers of America, Inc. managers to do a situational analysis of the company . It is an important technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Appliance Recycling Centers of America, Inc. is facing in its current business environment.
The Appliance Recycling Centers of America, Inc. is one of the leading firms in its industry. Appliance Recycling Centers of America, Inc. maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly 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 Appliance Recycling Centers of America, 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 central purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect Appliance Recycling Centers of America, Inc. strengths, and eradicate its weaknesses.
Step by Step Guide to Appliance Recycling Centers of America, Inc. SWOT Analysis
Strengths of Appliance Recycling Centers of America, Inc. – Internal Strategic Factors
As one of the leading organizations in its industry, Appliance Recycling Centers of America, Inc. has numerous strengths that help 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 Appliance Recycling Centers of America, Inc. are –
Read - Appliance Recycling Centers of America, Inc. Porter 5 Forces Analysis & Industry Analysis
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- Superb Performance in New Markets – Appliance Recycling Centers of America, 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.
- Highly successful at Go To Market strategies for its products.
- Successful track record of developing new products – product innovation.
- Strong Brand Portfolio – Over the years Appliance Recycling Centers of America, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Appliance Recycling Centers of America, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Strong Free Cash Flow – Appliance Recycling Centers of America, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
- 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.
- Good Returns on Capital Expenditure – Appliance Recycling Centers of America, Inc. 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 Appliance Recycling Centers of America, Inc. has built a reliable distribution network that can reach majority of its potential market.
Weakness of Appliance Recycling Centers of America, Inc. – Internal Strategic Factors
Weakness are the areas where Appliance Recycling Centers of America, 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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- High attrition rate in work force – compare to other organizations in the industry Appliance Recycling Centers of America, 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 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.
- 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 Appliance Recycling Centers of America, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
- 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.
- Investment in Research and Development is below the fastest growing players in the industry. Even though Appliance Recycling Centers of America, Inc. 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.
- 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. Appliance Recycling Centers of America, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
- Limited success outside core business – Even though Appliance Recycling Centers of America, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Opportunities for Appliance Recycling Centers of America, Inc. – External Strategic Factors
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- Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Appliance Recycling Centers of America, Inc..
- Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Appliance Recycling Centers of America, Inc. an opportunity to enter a new emerging market.
- The market development will lead to dilution of competitor’s advantage and enable Appliance Recycling Centers of America, Inc. to increase its competitiveness compare to the other competitors.
- New trends in the consumer behavior can open up new market for the Appliance Recycling Centers of America, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Appliance Recycling Centers of America, Inc. to capture new customers and increase its market share.
- The new technology provides an opportunity to Appliance Recycling Centers of America, 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.
- 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.
- Government green drive also opens an opportunity for procurement of Appliance Recycling Centers of America, Inc. products by the state as well as federal government contractors.
Threats Appliance Recycling Centers of America, Inc. Facing - External Strategic Factors
- Rising raw material can pose a threat to the Appliance Recycling Centers of America, Inc. profitability.
- New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
- Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
- 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.
- 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.
- The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
- Liability laws in different countries are different and Appliance Recycling Centers of America, Inc. may be exposed to various liability claims given change in policies in those markets.
- Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Appliance Recycling Centers of America, Inc.
Limitations of SWOT Analysis for Appliance Recycling Centers of America, 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 Appliance Recycling Centers of America, 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 Appliance Recycling Centers of America, 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 Appliance Recycling Centers of America, 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 Appliance Recycling Centers of America, 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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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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