Inovalon Holdings, Inc. SWOT Analysis / Matrix

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

The Inovalon Holdings, Inc. is one of the leading companies in its industry. Inovalon Holdings, Inc. maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis a highly 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 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 enables the managers of the Inovalon Holdings, Inc. to develop four types of strategies:

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

Inovalon Holdings, Inc. 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 Inovalon Holdings, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Inovalon Holdings, Inc. SWOT Analysis

Strengths of Inovalon Holdings, Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Inovalon Holdings, 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 Inovalon Holdings, Inc. are –

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Automation of activities brought consistency of quality to Inovalon Holdings, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong Free Cash Flow – Inovalon Holdings, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Superb Performance in New Markets – Inovalon Holdings, Inc. 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.
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.
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.
Highly successful at Go To Market strategies for its products.
Strong distribution network – Over the years Inovalon Holdings, Inc. has built a reliable distribution network that can reach majority of its potential market.
Good Returns on Capital Expenditure – Inovalon Holdings, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Weakness of Inovalon Holdings, Inc. – Internal Strategic Factors

Weakness are the areas where Inovalon Holdings, 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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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.
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 Inovalon Holdings, Inc.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Inovalon Holdings, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
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. Inovalon Holdings, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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 Inovalon Holdings, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
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.
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.

Opportunities for Inovalon Holdings, 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 Inovalon Holdings, Inc..
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Inovalon Holdings, Inc. an opportunity to enter a new emerging market.
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 Inovalon Holdings, Inc. to drive home its advantage in new technology and gain market share in the new product category.
The market development will lead to dilution of competitor’s advantage and enable Inovalon Holdings, Inc. to increase its competitiveness compare to the other competitors.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Inovalon Holdings, 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.
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 Inovalon Holdings, Inc. in other product categories.
The new technology provides an opportunity to Inovalon Holdings, 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.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Inovalon Holdings, Inc. to increase its profitability.

Threats Inovalon Holdings, Inc. Facing - External Strategic Factors

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.
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.
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.
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.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
Rising raw material can pose a threat to the Inovalon Holdings, Inc. profitability.
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 Inovalon Holdings, 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 Inovalon Holdings, 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 Inovalon Holdings, 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 Inovalon Holdings, 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 Inovalon Holdings, 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)