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NXP Semiconductors N.V. SWOT Analysis / Matrix
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SWOT analysis is a strategic planning tool that can be used by NXP Semiconductors N.V. managers to do a situational analysis of the company . It is a useful technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) NXP Semiconductors N.V. is facing in its current business environment.
The NXP Semiconductors N.V. is one of the leading organizatations in its industry. NXP Semiconductors N.V. 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 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 enables the managers of the NXP Semiconductors N.V. 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 central purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect NXP Semiconductors N.V. strengths, and eradicate its weaknesses.
Step by Step Guide to NXP Semiconductors N.V. SWOT Analysis
Strengths of NXP Semiconductors N.V. – Internal Strategic Factors
As one of the leading organizations in its industry, NXP Semiconductors N.V. 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 NXP Semiconductors N.V. are –
Read - NXP Semiconductors N.V. Porter 5 Forces Analysis & Industry Analysis
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- Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
- Automation of activities brought consistency of quality to NXP Semiconductors N.V. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
- Strong Brand Portfolio – Over the years NXP Semiconductors N.V. has invested in building a strong brand portfolio. The SWOT analysis of NXP Semiconductors N.V. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
- Highly skilled workforce through successful training and learning programs. NXP Semiconductors N.V. 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 distribution network – Over the years NXP Semiconductors N.V. has built a reliable distribution network that can reach majority of its potential market.
- Highly successful at Go To Market strategies for its products.
- Good Returns on Capital Expenditure – NXP Semiconductors N.V. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Strong Free Cash Flow – NXP Semiconductors N.V. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Weakness of NXP Semiconductors N.V. – Internal Strategic Factors
Weakness are the areas where NXP Semiconductors N.V. can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.
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- 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. NXP Semiconductors N.V. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
- 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.
- 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 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 NXP Semiconductors N.V. 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 NXP Semiconductors N.V.
- Limited success outside core business – Even though NXP Semiconductors N.V. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
- The profitability ratio and Net Contribution % of NXP Semiconductors N.V. are below the industry average.
Opportunities for NXP Semiconductors N.V. – 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 NXP Semiconductors N.V. in other product categories.
- 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 NXP Semiconductors N.V.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
- The new technology provides an opportunity to NXP Semiconductors N.V. 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 trends in the consumer behavior can open up new market for the NXP Semiconductors N.V. . 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 NXP Semiconductors N.V. 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 NXP Semiconductors N.V. to capture new customers and increase its market share.
- 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.
- Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided NXP Semiconductors N.V. an opportunity to enter a new emerging market.
Threats NXP Semiconductors N.V. 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.
- Imitation of the counterfeit and low quality product is also a threat to NXP Semiconductors N.V.’s product especially in the emerging markets and low income markets.
- Rising raw material can pose a threat to the NXP Semiconductors N.V. profitability.
- Liability laws in different countries are different and NXP Semiconductors N.V. may be exposed to various liability claims given change in policies in those markets.
- Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for NXP Semiconductors N.V. in those markets.
- New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
- Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
- 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 NXP Semiconductors N.V.
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 NXP Semiconductors N.V.
- 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 NXP Semiconductors N.V.
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 NXP Semiconductors N.V. 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 NXP Semiconductors N.V.
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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SWOT Worksheet & Template
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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)
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