CDK Global, Inc. SWOT Analysis / Matrix

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

The CDK Global, Inc. is one of the leading firms in its industry. CDK Global, Inc. maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis a highly 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 facilitates 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 CDK Global, 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 main purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect CDK Global, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to CDK Global, Inc. SWOT Analysis

Strengths of CDK Global, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, CDK Global, 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 CDK Global, Inc. are –

Read - CDK Global, Inc. Porter 5 Forces Analysis & Industry Analysis
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Successful track record of developing new products – product innovation.
Strong Brand Portfolio – Over the years CDK Global, Inc. has invested in building a strong brand portfolio. The SWOT analysis of CDK Global, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Good Returns on Capital Expenditure – CDK Global, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Strong distribution network – Over the years CDK Global, Inc. has built a reliable distribution network that can reach majority of its potential market.
Highly successful at Go To Market strategies for its products.
Strong Free Cash Flow – CDK Global, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
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.
Automation of activities brought consistency of quality to CDK Global, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Weakness of CDK Global, Inc. – Internal Strategic Factors

Weakness are the areas where CDK Global, 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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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.
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. CDK Global, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
The profitability ratio and Net Contribution % of CDK Global, Inc. 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.
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 CDK Global, Inc.
Investment in Research and Development is below the fastest growing players in the industry. Even though CDK Global, 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.
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 CDK Global, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.

Opportunities for CDK Global, Inc. – External Strategic Factors

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The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as CDK Global, Inc. to increase its profitability.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for CDK Global, Inc. to capture new customers and increase its market share.
The market development will lead to dilution of competitor’s advantage and enable CDK Global, 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 CDK Global, Inc. an opportunity to enter a new emerging market.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of CDK Global, 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.
The new technology provides an opportunity to CDK Global, 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 CDK Global, Inc. in other product categories.
New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for CDK Global, Inc. to drive home its advantage in new technology and gain market share in the new product category.

Threats CDK Global, Inc. Facing - External Strategic Factors

Imitation of the counterfeit and low quality product is also a threat to CDK Global, Inc.’s product especially in the emerging markets and low income markets.
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.
Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
Rising raw material can pose a threat to the CDK Global, Inc. profitability.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Liability laws in different countries are different and CDK Global, Inc. may be exposed to various liability claims given change in policies in those markets.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
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.

Limitations of SWOT Analysis for CDK Global, 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 CDK Global, 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 CDK Global, 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 CDK Global, 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 CDK Global, 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)