Stein Mart, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Stein Mart, Inc. is one of the leading firms in its industry. Stein Mart, Inc. maintains its dominant position in market by carefully 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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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 enables the managers of the Stein Mart, 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 core purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect Stein Mart, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Stein Mart, Inc. SWOT Analysis

Strengths of Stein Mart, Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Stein Mart, Inc. 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 Stein Mart, Inc. are –

Read - Stein Mart, Inc. Porter 5 Forces Analysis & Industry Analysis
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Strong distribution network – Over the years Stein Mart, Inc. has built a reliable distribution network that can reach majority of its potential market.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
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.
Strong Brand Portfolio – Over the years Stein Mart, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Stein Mart, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Successful track record of developing new products – product innovation.
Good Returns on Capital Expenditure – Stein Mart, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Strong Free Cash Flow – Stein Mart, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Superb Performance in New Markets – Stein Mart, 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.

Weakness of Stein Mart, Inc. – Internal Strategic Factors

Weakness are the areas where Stein Mart, Inc. can improve upon. Strategy is about making choices and weakness are the areas where a firm 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 Stein Mart, Inc. are below the industry average.
Investment in Research and Development is below the fastest growing players in the industry. Even though Stein Mart, 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.
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 Stein Mart, Inc.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Stein Mart, Inc. 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.
Limited success outside core business – Even though Stein Mart, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Stein Mart, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Opportunities for Stein Mart, Inc. – External Strategic Factors

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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 Stein Mart, 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.
The new technology provides an opportunity to Stein Mart, 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.
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 Stein Mart, Inc. in other product categories.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Stein Mart, Inc. to capture new customers and increase its market share.
The market development will lead to dilution of competitor’s advantage and enable Stein Mart, Inc. to increase its competitiveness compare to the other competitors.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Stein Mart, Inc.’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.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Stein Mart, Inc..
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Stein Mart, Inc. to increase its profitability.

Threats Stein Mart, Inc. Facing - External Strategic Factors

Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Stein Mart, Inc.
Imitation of the counterfeit and low quality product is also a threat to Stein Mart, Inc.’s product especially in the emerging markets and low income markets.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Liability laws in different countries are different and Stein Mart, Inc. may be exposed to various liability claims given change in policies in those markets.
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.
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.

Limitations of SWOT Analysis for Stein Mart, 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 Stein Mart, 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 Stein Mart, 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 Stein Mart, 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 Stein Mart, 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)