2U, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by 2U, 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) 2U, Inc. is facing in its current business environment.

The 2U, Inc. is one of the leading companies in its industry. 2U, 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 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 2U, 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 primary purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect 2U, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to 2U, Inc. SWOT Analysis

Strengths of 2U, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, 2U, 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 2U, Inc. are –

Read - 2U, Inc. Porter 5 Forces Analysis & Industry Analysis
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• Strong distribution network – Over the years 2U, Inc. has built a reliable distribution network that can reach majority of its potential market.
• 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 Free Cash Flow – 2U, 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 – 2U, 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.
• Strong Brand Portfolio – Over the years 2U, Inc. has invested in building a strong brand portfolio. The SWOT analysis of 2U, 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 – 2U, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• 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.

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Weakness of 2U, Inc. – Internal Strategic Factors

Weakness are the areas where 2U, Inc. 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 profitability ratio and Net Contribution % of 2U, Inc. are below the industry average.
• 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. 2U, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• 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.
• 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.
• Limited success outside core business – Even though 2U, 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 highly successful at integrating firms with different work culture. As mentioned earlier even though 2U, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• Investment in Research and Development is below the fastest growing players in the industry. Even though 2U, 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.

Opportunities for 2U, Inc. – External Strategic Factors

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• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for 2U, 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 2U, Inc..
• New trends in the consumer behavior can open up new market for the 2U, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• The new technology provides an opportunity to 2U, 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 2U, Inc. in other product categories.
• 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.
• Government green drive also opens an opportunity for procurement of 2U, Inc. products by the state as well as federal government contractors.
• The market development will lead to dilution of competitor’s advantage and enable 2U, Inc. to increase its competitiveness compare to the other competitors.

Threats 2U, Inc. Facing - External Strategic Factors

• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Rising raw material can pose a threat to the 2U, Inc. profitability.
• 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.
• 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.
• New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for 2U, Inc.   in those markets.

Limitations of SWOT Analysis for 2U, 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 2U, 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 2U, 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 2U, 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 2U, 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)