SM Energy Company SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by SM Energy Company managers to do a situational analysis of the company . It is an important technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) SM Energy Company is facing in its current business environment.

The SM Energy Company is one of the leading firms in its industry. SM Energy Company 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 firm such as – marketing, finance, operations, management information systems and strategic planning.

Order Now - SM Energy Company SWOT Analysis
Check out- SM Energy Company PESTEL / PEST & Environment Analysis
Article continues after advertisement

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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the SM Energy Company to develop four types of strategies:

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
SM Energy Company swot analysis / matrix

SWOT Matrix Strategies Objective

The central purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect SM Energy Company strengths, and eradicate its weaknesses.

Step by Step Guide to SM Energy Company SWOT Analysis

Strengths of SM Energy Company – Internal Strategic Factors

As one of the leading organizations in its industry, SM Energy Company 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 SM Energy Company are –

Read - SM Energy Company Porter 5 Forces Analysis & Industry Analysis
Article continues after advertisement

  • Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
  • Superb Performance in New Markets – SM Energy Company 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 Free Cash Flow – SM Energy Company has strong free cash flows that provide resources in the hand of the company to expand into new projects.
  • 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.
  • Good Returns on Capital Expenditure – SM Energy Company is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
  • Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
  • 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.
  • Automation of activities brought consistency of quality to SM Energy Company products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Weakness of SM Energy Company – Internal Strategic Factors

Weakness are the areas where SM Energy Company 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.

Article continues after advertisement

  • High attrition rate in work force – compare to other organizations in the industry SM Energy Company 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.
  • 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, SM Energy Company 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.
  • 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 SM Energy 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 SM Energy Company is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
  • The profitability ratio and Net Contribution % of SM Energy Company are below the industry average.

Opportunities for SM Energy Company – External Strategic Factors

Article continues after advertisement

  • Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for SM Energy Company to capture new customers and increase its market share.
  • 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 SM Energy Company to drive home its advantage in new technology and gain market share in the new product category.
  • The new technology provides an opportunity to SM Energy Company 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.
  • Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of SM Energy Company.
  • Government green drive also opens an opportunity for procurement of SM Energy Company 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 SM Energy Company’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 market development will lead to dilution of competitor’s advantage and enable SM Energy Company 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 SM Energy Company to increase its profitability.

Threats SM Energy Company Facing - External Strategic Factors

  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards 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.
  • Rising raw material can pose a threat to the SM Energy Company profitability.
  • 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.
  • Liability laws in different countries are different and SM Energy Company may be exposed to various liability claims given change in policies in those markets.
  • Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
  • New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
  • Imitation of the counterfeit and low quality product is also a threat to SM Energy Company’s product especially in the emerging markets and low income markets.

Limitations of SWOT Analysis for SM Energy Company

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 SM Energy Company
  • 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.

Article continues after advertisement

Weighted SWOT Analysis of SM Energy Company

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 SM Energy Company 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 SM Energy Company

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.

Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of SM Energy Company

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)