Hub Group, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Hub Group, Inc. is one of the leading companies in its industry. Hub Group, Inc. maintains its dominant 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 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Hub Group, 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 primary purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Hub Group, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Hub Group, Inc. SWOT Analysis

Strengths of Hub Group, Inc. – Internal Strategic Factors

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

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

Weakness of Hub Group, Inc. – Internal Strategic Factors

Weakness are the areas where Hub Group, Inc. can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Limited success outside core business – Even though Hub Group, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
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 Hub Group, Inc.
The profitability ratio and Net Contribution % of Hub Group, Inc. are below the industry average.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Hub Group, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
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.
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 Hub Group, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Opportunities for Hub Group, 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 Hub Group, Inc..
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Hub Group, Inc. an opportunity to enter a new emerging market.
Government green drive also opens an opportunity for procurement of Hub Group, Inc. products by the state as well as federal government contractors.
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 Hub Group, Inc. to increase its competitiveness compare to the other competitors.
New trends in the consumer behavior can open up new market for the Hub Group, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Hub Group, Inc. to increase its profitability.
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 Hub Group, 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.

Threats Hub Group, 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.
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.
Imitation of the counterfeit and low quality product is also a threat to Hub Group, Inc.’s product especially in the emerging markets and low income markets.
Rising raw material can pose a threat to the Hub Group, Inc. profitability.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Hub Group, Inc.
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.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Hub Group, Inc. in those markets.

Limitations of SWOT Analysis for Hub Group, 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 Hub Group, 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 Hub Group, 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 Hub Group, 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 Hub Group, 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)