RH SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The RH is one of the leading organizatations in its industry. RH 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 helps 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 helps the managers of the RH 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 a company can use to exploit external opportunities, counter threats, and build on & protect RH strengths, and eradicate its weaknesses.

Step by Step Guide to RH SWOT Analysis

Strengths of RH – Internal Strategic Factors

As one of the leading organizations in its industry, RH 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 RH are –

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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 developing new products – product innovation.
• Highly skilled workforce through successful training and learning programs. RH 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.
• 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 distribution network – Over the years RH has built a reliable distribution network that can reach majority of its potential market.
• Automation of activities brought consistency of quality to RH products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Superb Performance in New Markets – RH 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.

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Weakness of RH – Internal Strategic Factors

Weakness are the areas where RH 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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• 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.
• 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. RH has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• Limited success outside core business – Even though RH is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• High attrition rate in work force – compare to other organizations in the industry RH has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• 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.
• 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 highly successful at integrating firms with different work culture. As mentioned earlier even though RH is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Opportunities for RH – 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 RH.
• 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 RH. 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 RH 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 RH’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.
• The market development will lead to dilution of competitor’s advantage and enable RH to increase its competitiveness compare to the other competitors.
• New trends in the consumer behavior can open up new market for the RH . 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 RH an opportunity to enter a new emerging market.
• 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 RH in other product categories.

Threats RH Facing - External Strategic Factors

• New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
• Liability laws in different countries are different and RH may be exposed to various liability claims given change in policies in those markets.
• 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.
• 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.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of RH
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for RH   in those markets.
• Rising raw material can pose a threat to the RH profitability.
• Imitation of the counterfeit and low quality product is also a threat to RH’s product especially in the emerging markets and low income markets.

Limitations of SWOT Analysis for RH

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 RH
• 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 RH

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 RH 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 RH

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)