Lucapa Diamond Company Limited SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by Lucapa Diamond Company Limited managers to do a situational analysis of the firm . It is a useful technique to analyze the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Lucapa Diamond Company Limited is facing in its current business environment.

The Lucapa Diamond Company Limited is one of the leading companies in its industry. Lucapa Diamond Company Limited maintains its dominant position in market by carefully analyzing and reviewing the SWOT analysis. SWOT analysis an immensenly 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 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 Lucapa Diamond Company Limited to develop four types of strategies:

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

Lucapa Diamond Company Limited swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to Lucapa Diamond Company Limited SWOT Analysis

Strengths of Lucapa Diamond Company Limited – Internal Strategic Factors

As one of the leading companies in its industry, Lucapa Diamond Company 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 Lucapa Diamond Company Limited are –

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Strong distribution network – Over the years Lucapa Diamond Company Limited has built a reliable distribution network that can reach majority of its potential market.
Strong Brand Portfolio – Over the years Lucapa Diamond Company Limited has invested in building a strong brand portfolio. The SWOT analysis of Lucapa Diamond Company Limited just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Highly skilled workforce through successful training and learning programs. Lucapa Diamond Company Limited is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
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.
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.
Highly successful at Go To Market strategies for its products.
Automation of activities brought consistency of quality to Lucapa Diamond Company Limited products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong Free Cash Flow – Lucapa Diamond Company Limited has strong free cash flows that provide resources in the hand of the company to expand into new projects.

Weakness of Lucapa Diamond Company Limited – Internal Strategic Factors

Weakness are the areas where Lucapa Diamond Company Limited 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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Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Lucapa Diamond Company 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.
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.
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. Lucapa Diamond Company Limited has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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.
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 Lucapa Diamond Company Limited
The profitability ratio and Net Contribution % of Lucapa Diamond Company Limited are below the industry average.
High attrition rate in work force – compare to other organizations in the industry Lucapa Diamond Company Limited has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.

Opportunities for Lucapa Diamond Company Limited – External Strategic Factors

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The new technology provides an opportunity to Lucapa Diamond Company 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.
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 Lucapa Diamond Company Limited. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Lucapa Diamond Company 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.
New trends in the consumer behavior can open up new market for the Lucapa Diamond Company Limited . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
Government green drive also opens an opportunity for procurement of Lucapa Diamond Company Limited products by the state as well as federal government contractors.
The market development will lead to dilution of competitor’s advantage and enable Lucapa Diamond Company Limited to increase its competitiveness compare to the other competitors.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Lucapa Diamond Company 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 Lucapa Diamond Company Limited to capture new customers and increase its market share.

Threats Lucapa Diamond Company Limited 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.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Lucapa Diamond Company Limited in those markets.
Rising raw material can pose a threat to the Lucapa Diamond Company Limited profitability.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.

Limitations of SWOT Analysis for Lucapa Diamond Company 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 Lucapa Diamond Company 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 Lucapa Diamond Company 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 Lucapa Diamond Company 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 Lucapa Diamond Company 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

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)