Rice Energy Inc. SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by Rice Energy Inc. 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) Rice Energy Inc. is facing in its current business environment.

The Rice Energy Inc. is one of the leading firms in its industry. Rice Energy Inc. maintains its prominent 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 helps the managers of the Rice Energy Inc. to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
Rice Energy Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to Rice Energy Inc. SWOT Analysis

Strengths of Rice Energy Inc. – Internal Strategic Factors

As one of the leading firms in its industry, Rice Energy 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 Rice Energy Inc. are –

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  • Strong Free Cash Flow – Rice Energy Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • Highly successful at Go To Market strategies for its products.
  • 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 Rice Energy Inc. has invested in building a strong brand portfolio. The SWOT analysis of Rice Energy Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • Successful track record of developing new products – product innovation.
  • 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.
  • Strong distribution network – Over the years Rice Energy Inc. has built a reliable distribution network that can reach majority of its potential market.
  • 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 Rice Energy Inc. – Internal Strategic Factors

Weakness are the areas where Rice Energy 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.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Rice Energy 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.
  • 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 Rice Energy Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • High attrition rate in work force – compare to other organizations in the industry Rice Energy Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Limited success outside core business – Even though Rice Energy Inc. 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 Rice Energy Inc. are below the industry average.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.

Opportunities for Rice Energy Inc. – External Strategic Factors

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  • 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 Rice Energy Inc. to drive home its advantage in new technology and gain market share in the new product category.
  • The new technology provides an opportunity to Rice Energy 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 Rice Energy 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.
  • 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.
  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Rice Energy Inc. to capture new customers and increase its market share.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Rice Energy Inc..
  • The market development will lead to dilution of competitor’s advantage and enable Rice Energy Inc. to increase its competitiveness compare to the other competitors.
  • The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Rice Energy Inc. to increase its profitability.

Threats Rice Energy Inc. Facing - External Strategic Factors

  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • 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.
  • 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 Rice Energy Inc. profitability.
  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • 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.

Limitations of SWOT Analysis for Rice Energy 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 Rice Energy 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 Rice Energy 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 Rice Energy 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 Rice Energy 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)