Otter Tail Corporation SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Otter Tail Corporation managers to do a situational analysis of the company . It is a handy technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Otter Tail Corporation is facing in its current business environment.

The Otter Tail Corporation is one of the leading companies in its industry. Otter Tail Corporation 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 organization such as – marketing, finance, operations, management information systems and strategic planning.

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The SWOT Analysis framework helps 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 Otter Tail Corporation to develop four types of strategies:

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

Otter Tail Corporation swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Otter Tail Corporation strengths, and eradicate its weaknesses.

Step by Step Guide to Otter Tail Corporation SWOT Analysis

Strengths of Otter Tail Corporation – Internal Strategic Factors

As one of the leading companies in its industry, Otter Tail Corporation 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 Otter Tail Corporation are –

Read - Otter Tail Corporation Porter 5 Forces Analysis & Industry Analysis
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Successful track record of developing new products – product innovation.
Strong distribution network – Over the years Otter Tail Corporation has built a reliable distribution network that can reach majority of its potential market.
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.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Good Returns on Capital Expenditure – Otter Tail Corporation is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Superb Performance in New Markets – Otter Tail Corporation 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 Otter Tail Corporation has invested in building a strong brand portfolio. The SWOT analysis of Otter Tail Corporation just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Highly successful at Go To Market strategies for its products.

Weakness of Otter Tail Corporation – Internal Strategic Factors

Weakness are the areas where Otter Tail Corporation 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 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.
The profitability ratio and Net Contribution % of Otter Tail Corporation are below the industry average.
Limited success outside core business – Even though Otter Tail Corporation 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 Otter Tail Corporation is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
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 Otter Tail Corporation 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 Otter Tail Corporation has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
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 Otter Tail Corporation – External Strategic Factors

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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 Otter Tail Corporation. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
New trends in the consumer behavior can open up new market for the Otter Tail Corporation . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
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.
The market development will lead to dilution of competitor’s advantage and enable Otter Tail Corporation 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 Otter Tail Corporation’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.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Otter Tail Corporation to increase its profitability.
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 Otter Tail Corporation to drive home its advantage in new technology and gain market share in the new product category.
The new technology provides an opportunity to Otter Tail Corporation 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.

Threats Otter Tail Corporation Facing - External Strategic Factors

Rising raw material can pose a threat to the Otter Tail Corporation profitability.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Liability laws in different countries are different and Otter Tail Corporation may be exposed to various liability claims given change in policies in those markets.
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.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Otter Tail Corporation
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.

Limitations of SWOT Analysis for Otter Tail Corporation

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 Otter Tail Corporation
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 Otter Tail Corporation

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 Otter Tail Corporation 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 Otter Tail Corporation

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

You can email us to get an example document of Weighted SWOT analysis.

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)