Alliance Resource Partners, L.P. SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by Alliance Resource Partners, L.P. managers to do a situational analysis of the organization . It is a useful technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Alliance Resource Partners, L.P. is facing in its current business environment.

The Alliance Resource Partners, L.P. is one of the leading companies in its industry. Alliance Resource Partners, L.P. 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Alliance Resource Partners, L.P. to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Alliance Resource Partners, L.P. swot analysis / matrix

SWOT Matrix Strategies Objective

The main purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Alliance Resource Partners, L.P. strengths, and eradicate its weaknesses.

Step by Step Guide to Alliance Resource Partners, L.P. SWOT Analysis

Strengths of Alliance Resource Partners, L.P. – Internal Strategic Factors

As one of the leading firms in its industry, Alliance Resource Partners, L.P. 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 Alliance Resource Partners, L.P. are –

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  • 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.
  • 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.
  • Good Returns on Capital Expenditure – Alliance Resource Partners, L.P. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
  • Highly skilled workforce through successful training and learning programs. Alliance Resource Partners, L.P. 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.
  • Successful track record of developing new products – product innovation.
  • 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.
  • Strong distribution network – Over the years Alliance Resource Partners, L.P. has built a reliable distribution network that can reach majority of its potential market.

Weakness of Alliance Resource Partners, L.P. – Internal Strategic Factors

Weakness are the areas where Alliance Resource Partners, L.P. 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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  • Investment in Research and Development is below the fastest growing players in the industry. Even though Alliance Resource Partners, L.P. 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.
  • 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 Alliance Resource Partners, L.P. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Alliance Resource Partners, L.P. 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.
  • Not highly successful at integrating firms with different work culture. As mentioned earlier even though Alliance Resource Partners, L.P. is successful at integrating small companies it has its share of failure to merge firms that have different work 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 Alliance Resource Partners, L.P.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
  • The profitability ratio and Net Contribution % of Alliance Resource Partners, L.P. are below the industry average.

Opportunities for Alliance Resource Partners, L.P. – External Strategic Factors

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  • 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 Alliance Resource Partners, L.P. in other product categories.
  • The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Alliance Resource Partners, L.P. to increase its profitability.
  • The new technology provides an opportunity to Alliance Resource Partners, L.P. 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.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Alliance Resource Partners, L.P.’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.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Alliance Resource Partners, L.P. to capture new customers and increase its market share.
  • The market development will lead to dilution of competitor’s advantage and enable Alliance Resource Partners, L.P. 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 Alliance Resource Partners, L.P..

Threats Alliance Resource Partners, L.P. Facing - External Strategic Factors

  • Liability laws in different countries are different and Alliance Resource Partners, L.P. may be exposed to various liability claims given change in policies in those markets.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international 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 Alliance Resource Partners, L.P.
  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • 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.

Limitations of SWOT Analysis for Alliance Resource Partners, L.P.

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 Alliance Resource Partners, L.P.
  • 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 Alliance Resource Partners, L.P.

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 Alliance Resource Partners, L.P. 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 Alliance Resource Partners, L.P.

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)