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Sears Holdings Corporation SWOT Analysis / Matrix
Business Essays, Term Papers & Research Papers
SWOT analysis is a strategic planning tool that can be used by Sears Holdings Corporation managers to do a situational analysis of the organization . It is an important technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Sears Holdings Corporation is facing in its current business environment.
The Sears Holdings Corporation is one of the leading organizatations in its industry. Sears Holdings Corporation 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 company such as – marketing, finance, operations, management information systems and strategic planning.
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Check out- Sears Holdings Corporation PESTEL / PEST & Environment Analysis
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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 Sears Holdings Corporation 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 use to exploit external opportunities, counter threats, and build on & protect Sears Holdings Corporation strengths, and eradicate its weaknesses.
Step by Step Guide to Sears Holdings Corporation SWOT Analysis
Strengths of Sears Holdings Corporation – Internal Strategic Factors
As one of the leading firms in its industry, Sears Holdings Corporation 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 Sears Holdings Corporation are –
Read - Sears Holdings Corporation Porter 5 Forces Analysis & Industry Analysis
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- Superb Performance in New Markets – Sears Holdings Corporation 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.
- Successful track record of developing new products – product innovation.
- Strong Free Cash Flow – Sears Holdings Corporation has strong free cash flows that provide resources in the hand of the company to expand into new projects.
- 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.
- Automation of activities brought consistency of quality to Sears Holdings Corporation products and has enabled the company to scale up and scale down based on the demand conditions in the market.
- Good Returns on Capital Expenditure – Sears Holdings Corporation 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 Sears Holdings Corporation has built a reliable distribution network that can reach majority of its potential market.
- Highly skilled workforce through successful training and learning programs. Sears Holdings Corporation 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 Sears Holdings Corporation – Internal Strategic Factors
Weakness are the areas where Sears Holdings Corporation 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 Sears Holdings Corporation is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present 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.
- 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 profitability ratio and Net Contribution % of Sears Holdings Corporation are below the industry average.
- High attrition rate in work force – compare to other organizations in the industry Sears Holdings Corporation 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.
- Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Opportunities for Sears Holdings Corporation – External Strategic Factors
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- Government green drive also opens an opportunity for procurement of Sears Holdings Corporation products by the state as well as federal government contractors.
- The new technology provides an opportunity to Sears Holdings Corporation 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.
- The market development will lead to dilution of competitor’s advantage and enable Sears Holdings Corporation to increase its competitiveness compare to the other competitors.
- Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Sears Holdings Corporation.
- New trends in the consumer behavior can open up new market for the Sears Holdings Corporation . 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 Sears Holdings Corporation an opportunity to enter a new emerging market.
- The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Sears Holdings Corporation to increase its profitability.
Threats Sears Holdings Corporation Facing - External Strategic Factors
- 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.
- Liability laws in different countries are different and Sears Holdings Corporation may be exposed to various liability claims given change in policies in those markets.
- The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
- 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.
- Rising raw material can pose a threat to the Sears Holdings Corporation profitability.
- 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 Sears Holdings Corporation’s product especially in the emerging markets and low income 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 Sears Holdings Corporation
Limitations of SWOT Analysis for Sears Holdings Corporation
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 Sears Holdings Corporation
- 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 Sears Holdings Corporation
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 Sears Holdings Corporation 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 Sears Holdings Corporation
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)
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