Aspen Technology, Inc. SWOT Analysis / Matrix

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

The Aspen Technology, Inc. is one of the leading firms in its industry. Aspen Technology, Inc. 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 firm 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 Aspen Technology, Inc. to develop four types of strategies:

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

Aspen Technology, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Aspen Technology, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Aspen Technology, Inc. SWOT Analysis

Strengths of Aspen Technology, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, Aspen Technology, Inc. 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 Aspen Technology, Inc. are –

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Strong Brand Portfolio – Over the years Aspen Technology, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Aspen Technology, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
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.
Highly skilled workforce through successful training and learning programs. Aspen Technology, Inc. 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.
Strong Free Cash Flow – Aspen Technology, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Automation of activities brought consistency of quality to Aspen Technology, Inc. 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 – Aspen Technology, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Highly successful at Go To Market strategies for its products.
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 Aspen Technology, Inc. – Internal Strategic Factors

Weakness are the areas where Aspen Technology, Inc. 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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Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Limited success outside core business – Even though Aspen Technology, 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 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 Aspen Technology, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
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 Aspen Technology, Inc.
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.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Aspen Technology, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
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.

Opportunities for Aspen Technology, Inc. – External Strategic Factors

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New trends in the consumer behavior can open up new market for the Aspen Technology, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
The market development will lead to dilution of competitor’s advantage and enable Aspen Technology, Inc. to increase its competitiveness compare to the other competitors.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Aspen Technology, Inc. an opportunity to enter a new emerging market.
Government green drive also opens an opportunity for procurement of Aspen Technology, Inc. products by the state as well as federal government contractors.
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 new technology provides an opportunity to Aspen Technology, 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.
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 Aspen Technology, 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.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Aspen Technology, 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.

Threats Aspen Technology, Inc. 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.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Aspen Technology, Inc. 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.
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.
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.
Imitation of the counterfeit and low quality product is also a threat to Aspen Technology, Inc.’s product especially in the emerging markets and low income markets.

Limitations of SWOT Analysis for Aspen Technology, 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 Aspen Technology, 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 Aspen Technology, 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 Aspen Technology, 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 Aspen Technology, 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)