Legacy Iron Ore Limited SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Legacy Iron Ore Limited is one of the leading firms in its industry. Legacy Iron Ore Limited 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 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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Legacy Iron Ore Limited to develop four types of strategies:

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

Legacy Iron Ore Limited swot analysis / matrix

SWOT Matrix Strategies Objective

The main purpose of SWOT matrix is to identify the strategies that a firm can use to exploit external opportunities, counter threats, and build on & protect Legacy Iron Ore Limited strengths, and eradicate its weaknesses.

Step by Step Guide to Legacy Iron Ore Limited SWOT Analysis

Strengths of Legacy Iron Ore Limited – Internal Strategic Factors

As one of the leading companies in its industry, Legacy Iron Ore Limited 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 Legacy Iron Ore Limited are –

Read - Legacy Iron Ore Limited Porter 5 Forces Analysis & Industry Analysis
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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.
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.
Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
Strong distribution network – Over the years Legacy Iron Ore Limited has built a reliable distribution network that can reach majority of its potential market.
Strong Free Cash Flow – Legacy Iron Ore Limited has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Strong Brand Portfolio – Over the years Legacy Iron Ore Limited has invested in building a strong brand portfolio. The SWOT analysis of Legacy Iron Ore Limited just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Automation of activities brought consistency of quality to Legacy Iron Ore Limited products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Good Returns on Capital Expenditure – Legacy Iron Ore Limited is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Weakness of Legacy Iron Ore Limited – Internal Strategic Factors

Weakness are the areas where Legacy Iron Ore Limited 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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Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Legacy Iron Ore Limited 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.
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 Legacy Iron Ore Limited 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 Legacy Iron Ore Limited has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Limited success outside core business – Even though Legacy Iron Ore Limited is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
The profitability ratio and Net Contribution % of Legacy Iron Ore Limited are below the industry average.
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.
Investment in Research and Development is below the fastest growing players in the industry. Even though Legacy Iron Ore Limited 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.

Opportunities for Legacy Iron Ore Limited – External Strategic Factors

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The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Legacy Iron Ore Limited to increase its profitability.
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.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Legacy Iron Ore Limited’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 technology provides an opportunity to Legacy Iron Ore Limited 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.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Legacy Iron Ore Limited 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 Legacy Iron Ore Limited to capture new customers and increase its market share.
New trends in the consumer behavior can open up new market for the Legacy Iron Ore Limited . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
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 Legacy Iron Ore Limited to drive home its advantage in new technology and gain market share in the new product category.

Threats Legacy Iron Ore Limited Facing - External Strategic Factors

Rising raw material can pose a threat to the Legacy Iron Ore Limited 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.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Legacy Iron Ore Limited 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 pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Legacy Iron Ore Limited

Limitations of SWOT Analysis for Legacy Iron Ore Limited

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 Legacy Iron Ore Limited
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 Legacy Iron Ore Limited

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 Legacy Iron Ore Limited 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 Legacy Iron Ore Limited

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)