Automatic Data Processing, Inc. SWOT Analysis / Matrix

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

The Automatic Data Processing, Inc. is one of the leading organizatations in its industry. Automatic Data Processing, Inc. maintains its dominant 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Automatic Data Processing, Inc. to develop four types of strategies:

SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies

Automatic Data Processing, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The main purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Automatic Data Processing, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Automatic Data Processing, Inc. SWOT Analysis

Strengths of Automatic Data Processing, Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Automatic Data Processing, 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 Automatic Data Processing, Inc. are –

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Automation of activities brought consistency of quality to Automatic Data Processing, Inc. 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.
Successful track record of developing new products – product innovation.
Strong Free Cash Flow – Automatic Data Processing, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Good Returns on Capital Expenditure – Automatic Data Processing, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
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 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 Automatic Data Processing, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Automatic Data Processing, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Weakness of Automatic Data Processing, Inc. – Internal Strategic Factors

Weakness are the areas where Automatic Data Processing, Inc. 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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Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
High attrition rate in work force – compare to other organizations in the industry Automatic Data Processing, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Automatic Data Processing, 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.
Investment in Research and Development is below the fastest growing players in the industry. Even though Automatic Data Processing, 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.
Limited success outside core business – Even though Automatic Data Processing, 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 Automatic Data Processing, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
The profitability ratio and Net Contribution % of Automatic Data Processing, Inc. are below the industry average.

Opportunities for Automatic Data Processing, Inc. – 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 Automatic Data Processing, Inc..
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Automatic Data Processing, Inc. 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 Automatic Data Processing, Inc. in other product categories.
New trends in the consumer behavior can open up new market for the Automatic Data Processing, Inc. . 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 Automatic Data Processing, Inc. to increase its profitability.
Government green drive also opens an opportunity for procurement of Automatic Data Processing, Inc. products by the state as well as federal government contractors.
The market development will lead to dilution of competitor’s advantage and enable Automatic Data Processing, Inc. to increase its competitiveness compare to the other competitors.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Automatic Data Processing, Inc. to capture new customers and increase its market share.

Threats Automatic Data Processing, Inc. Facing - External Strategic Factors

The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards 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.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Automatic Data Processing, Inc. in those markets.
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 Automatic Data Processing, Inc.
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 Automatic Data Processing, Inc. profitability.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.

Limitations of SWOT Analysis for Automatic Data Processing, 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 Automatic Data Processing, 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 Automatic Data Processing, 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 Automatic Data Processing, 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 Automatic Data Processing, 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)