Northwest Pipe Company SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by Northwest Pipe Company managers to do a situational analysis of the firm . It is a handy technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Northwest Pipe Company is facing in its current business environment.

The Northwest Pipe Company is one of the leading companies in its industry. Northwest Pipe Company maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis.  SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the organization 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 helps the managers of the Northwest Pipe Company to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Northwest Pipe Company swot analysis / matrix

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that a firm can utilize to exploit external opportunities, counter threats, and build on & protect Northwest Pipe Company strengths, and eradicate its weaknesses.

Step by Step Guide to Northwest Pipe Company SWOT Analysis

Strengths of Northwest Pipe Company – Internal Strategic Factors

As one of the leading companies in its industry, Northwest Pipe Company 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 Northwest Pipe Company are –

Read - Northwest Pipe Company Porter 5 Forces Analysis & Industry Analysis
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  • Automation of activities brought consistency of quality to Northwest Pipe Company 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.
  • Superb Performance in New Markets – Northwest Pipe Company 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.
  • Strong Brand Portfolio – Over the years Northwest Pipe Company has invested in building a strong brand portfolio. The SWOT analysis of Northwest Pipe Company just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.
  • Strong distribution network – Over the years Northwest Pipe Company has built a reliable distribution network that can reach majority of its potential market.
  • 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.
  • 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 Northwest Pipe Company – Internal Strategic Factors

Weakness are the areas where Northwest Pipe Company 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 Northwest Pipe Company has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
  • 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 Northwest Pipe Company is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though Northwest Pipe Company 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 profitability ratio and Net Contribution % of Northwest Pipe Company are below the industry average.
  • 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 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. Northwest Pipe Company has to build internal feedback mechanism directly from sales team on ground to counter these challenges.

Opportunities for Northwest Pipe Company – External Strategic Factors

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  • Government green drive also opens an opportunity for procurement of Northwest Pipe Company products by the state as well as federal government contractors.
  • New trends in the consumer behavior can open up new market for the Northwest Pipe Company . 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 Northwest Pipe Company to increase its profitability.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Northwest Pipe Company.
  • The market development will lead to dilution of competitor’s advantage and enable Northwest Pipe Company to increase its competitiveness compare to the other competitors.
  • 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 Northwest Pipe Company 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 Northwest Pipe Company to capture new customers and increase its market share.
  • 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 Northwest Pipe Company. 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 Northwest Pipe Company Facing - External Strategic Factors

  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • 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.
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Northwest Pipe Company   in those markets.
  • 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 Northwest Pipe Company’s product especially in the emerging markets and low income markets.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • 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 Northwest Pipe Company

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 Northwest Pipe Company
  • 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 Northwest Pipe Company

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 Northwest Pipe Company 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 Northwest Pipe Company

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

You can email us to get an example document of Weighted SWOT analysis.

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)