Ormat Technologies, Inc. SWOT Analysis / Matrix

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

The Ormat Technologies, Inc. is one of the leading organizatations in its industry. Ormat Technologies, Inc. maintains its prominent position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the firm 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 Ormat Technologies, Inc. to develop four types of strategies:

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

Ormat Technologies, 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 Ormat Technologies, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Ormat Technologies, Inc. SWOT Analysis

Strengths of Ormat Technologies, Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, Ormat Technologies, 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 Ormat Technologies, Inc. are –

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Highly successful at Go To Market strategies for its products.
Strong Free Cash Flow – Ormat Technologies, 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 – Ormat Technologies, 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.
Highly skilled workforce through successful training and learning programs. Ormat Technologies, Inc. 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 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.
Good Returns on Capital Expenditure – Ormat Technologies, 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.
Automation of activities brought consistency of quality to Ormat Technologies, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Weakness of Ormat Technologies, Inc. – Internal Strategic Factors

Weakness are the areas where Ormat Technologies, 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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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 Ormat Technologies, Inc.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
Limited success outside core business – Even though Ormat Technologies, Inc. is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Ormat Technologies, 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.
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.
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. Ormat Technologies, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Ormat Technologies, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.

Opportunities for Ormat Technologies, 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 Ormat Technologies, Inc..
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Ormat Technologies, Inc. an opportunity to enter a new emerging market.
New trends in the consumer behavior can open up new market for the Ormat Technologies, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
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 Ormat Technologies, 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.
The market development will lead to dilution of competitor’s advantage and enable Ormat Technologies, Inc. to increase its competitiveness compare to the other competitors.
Government green drive also opens an opportunity for procurement of Ormat Technologies, Inc. products by the state as well as federal government contractors.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Ormat Technologies, 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.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Ormat Technologies, Inc. to capture new customers and increase its market share.

Threats Ormat Technologies, Inc. Facing - External Strategic Factors

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.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
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.
Rising raw material can pose a threat to the Ormat Technologies, Inc. profitability.
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.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.

Limitations of SWOT Analysis for Ormat Technologies, 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 Ormat Technologies, 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 Ormat Technologies, 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 Ormat Technologies, 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 Ormat Technologies, 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)