Westmoreland Coal Company SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Westmoreland Coal Company is one of the leading firms in its industry. Westmoreland Coal Company maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis. SWOT analysis a highly 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 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 helps the managers of the Westmoreland Coal Company to develop four types of strategies:

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

Westmoreland Coal Company swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect Westmoreland Coal Company strengths, and eradicate its weaknesses.

Step by Step Guide to Westmoreland Coal Company SWOT Analysis

Strengths of Westmoreland Coal Company – Internal Strategic Factors

As one of the leading organizations in its industry, Westmoreland Coal 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 Westmoreland Coal Company are –

Read - Westmoreland Coal Company Porter 5 Forces Analysis & Industry Analysis
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Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
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.
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 – Westmoreland Coal Company has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Good Returns on Capital Expenditure – Westmoreland Coal Company 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 – Westmoreland Coal 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 distribution network – Over the years Westmoreland Coal Company has built a reliable distribution network that can reach majority of its potential market.
Strong Brand Portfolio – Over the years Westmoreland Coal Company has invested in building a strong brand portfolio. The SWOT analysis of Westmoreland Coal Company just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

Weakness of Westmoreland Coal Company – Internal Strategic Factors

Weakness are the areas where Westmoreland Coal Company 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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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.
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 Westmoreland Coal Company
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Westmoreland Coal 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.
Investment in Research and Development is below the fastest growing players in the industry. Even though Westmoreland Coal Company 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.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Westmoreland Coal Company is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
The profitability ratio and Net Contribution % of Westmoreland Coal Company are below the industry average.
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.

Opportunities for Westmoreland Coal Company – External Strategic Factors

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Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Westmoreland Coal Company 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 Westmoreland Coal Company to capture new customers and increase its market share.
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 Westmoreland Coal Company. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
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.
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 Westmoreland Coal Company in other product categories.
The new technology provides an opportunity to Westmoreland Coal 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 Westmoreland Coal Company.
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 Westmoreland Coal Company to drive home its advantage in new technology and gain market share in the new product category.

Threats Westmoreland Coal Company Facing - External Strategic Factors

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.
Imitation of the counterfeit and low quality product is also a threat to Westmoreland Coal Company’s product especially in the emerging markets and low income markets.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Liability laws in different countries are different and Westmoreland Coal Company may be exposed to various liability claims given change in policies in those markets.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Westmoreland Coal Company in those markets.
Rising raw material can pose a threat to the Westmoreland Coal Company profitability.

Limitations of SWOT Analysis for Westmoreland Coal 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 Westmoreland Coal 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.

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Weighted SWOT Analysis of Westmoreland Coal 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 Westmoreland Coal 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 Westmoreland Coal 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.

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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)