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Zeta Petroleum Plc SWOT Analysis / Matrix
Business Essays, Term Papers & Research Papers
SWOT analysis is a strategic planning tool that can be used by Zeta Petroleum Plc managers to do a situational analysis of the firm . It is an important technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Zeta Petroleum Plc is facing in its current business environment.
The Zeta Petroleum Plc is one of the leading firms in its industry. Zeta Petroleum Plc 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 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 known as SWOT Matrix.
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Zeta Petroleum Plc 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 a firm can use to exploit external opportunities, counter threats, and build on & protect Zeta Petroleum Plc strengths, and eradicate its weaknesses.
Step by Step Guide to Zeta Petroleum Plc SWOT Analysis
Strengths of Zeta Petroleum Plc – Internal Strategic Factors
As one of the leading firms in its industry, Zeta Petroleum Plc 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 Zeta Petroleum Plc are –
Read - Zeta Petroleum Plc Porter 5 Forces Analysis & Industry Analysis
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- Automation of activities brought consistency of quality to Zeta Petroleum Plc products and has enabled the company to scale up and scale down based on the demand conditions in the market.
- Highly successful at Go To Market strategies for its products.
- Strong Free Cash Flow – Zeta Petroleum Plc has strong free cash flows that provide resources in the hand of the company to expand into new projects.
- Good Returns on Capital Expenditure – Zeta Petroleum Plc is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Strong distribution network – Over the years Zeta Petroleum Plc has built a reliable distribution network that can reach majority of its potential market.
- Superb Performance in New Markets – Zeta Petroleum Plc 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.
- 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.
Weakness of Zeta Petroleum Plc – Internal Strategic Factors
Weakness are the areas where Zeta Petroleum Plc 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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- 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 Zeta Petroleum Plc 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 Zeta Petroleum Plc are below the industry average.
- 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 Zeta Petroleum Plc
- 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.
- Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Zeta Petroleum Plc 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.
- 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. Zeta Petroleum Plc has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
- Limited success outside core business – Even though Zeta Petroleum Plc is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
Opportunities for Zeta Petroleum Plc – 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 Zeta Petroleum Plc to drive home its advantage in new technology and gain market share in the new product category.
- Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Zeta Petroleum Plc an opportunity to enter a new emerging market.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Zeta Petroleum Plc to capture new customers and increase its market share.
- Government green drive also opens an opportunity for procurement of Zeta Petroleum Plc products by the state as well as federal government contractors.
- The new technology provides an opportunity to Zeta Petroleum Plc 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 trends in the consumer behavior can open up new market for the Zeta Petroleum Plc . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
- 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 Zeta Petroleum Plc in other product categories.
- Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Zeta Petroleum Plc’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.
Threats Zeta Petroleum Plc Facing - External Strategic Factors
- 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.
- Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
- Rising raw material can pose a threat to the Zeta Petroleum Plc 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.
- Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Zeta Petroleum Plc
- 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.
- Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
- Liability laws in different countries are different and Zeta Petroleum Plc may be exposed to various liability claims given change in policies in those markets.
Limitations of SWOT Analysis for Zeta Petroleum Plc
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 Zeta Petroleum Plc
- 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 Zeta Petroleum Plc
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 Zeta Petroleum Plc 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 Zeta Petroleum Plc
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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SWOT Worksheet & Template
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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)
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