EXTRACTION OIL & GAS, LLC SWOT Analysis / Matrix

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

The EXTRACTION OIL & GAS, LLC is one of the leading firms in its industry. EXTRACTION OIL & GAS, LLC 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.

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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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the EXTRACTION OIL & GAS, LLC to develop four types of strategies:

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

EXTRACTION OIL & GAS, LLC swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect EXTRACTION OIL & GAS, LLC strengths, and eradicate its weaknesses.

Step by Step Guide to EXTRACTION OIL & GAS, LLC SWOT Analysis

Strengths of EXTRACTION OIL & GAS, LLC – Internal Strategic Factors

As one of the leading firms in its industry, EXTRACTION OIL & GAS, LLC 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 EXTRACTION OIL & GAS, LLC are –

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Strong Free Cash Flow – EXTRACTION OIL & GAS, LLC has strong free cash flows that provide resources in the hand of the company to expand into new projects.
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.
Highly successful at Go To Market strategies for its products.
Superb Performance in New Markets – EXTRACTION OIL & GAS, LLC 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.
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.
Successful track record of developing new products – product innovation.
Good Returns on Capital Expenditure – EXTRACTION OIL & GAS, LLC is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.

Weakness of EXTRACTION OIL & GAS, LLC – Internal Strategic Factors

Weakness are the areas where EXTRACTION OIL & GAS, LLC 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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The profitability ratio and Net Contribution % of EXTRACTION OIL & GAS, LLC are below the industry average.
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, EXTRACTION OIL & GAS, LLC 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 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.
High attrition rate in work force – compare to other organizations in the industry EXTRACTION OIL & GAS, LLC has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
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. EXTRACTION OIL & GAS, LLC has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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 EXTRACTION OIL & GAS, LLC

Opportunities for EXTRACTION OIL & GAS, LLC – 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 EXTRACTION OIL & GAS, LLC to drive home its advantage in new technology and gain market share in the new product category.
The new technology provides an opportunity to EXTRACTION OIL & GAS, LLC 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.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for EXTRACTION OIL & GAS, LLC to capture new customers and increase its market share.
Decreasing cost of transportation because of lower shipping prices can also bring down the cost of EXTRACTION OIL & GAS, LLC’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.
Government green drive also opens an opportunity for procurement of EXTRACTION OIL & GAS, LLC products by the state as well as federal government contractors.
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 EXTRACTION OIL & GAS, LLC in other product categories.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of EXTRACTION OIL & GAS, LLC.
The market development will lead to dilution of competitor’s advantage and enable EXTRACTION OIL & GAS, LLC to increase its competitiveness compare to the other competitors.

Threats EXTRACTION OIL & GAS, LLC Facing - External Strategic Factors

Imitation of the counterfeit and low quality product is also a threat to EXTRACTION OIL & GAS, LLC’s product especially in the emerging markets and low income markets.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of EXTRACTION OIL & GAS, LLC
Liability laws in different countries are different and EXTRACTION OIL & GAS, LLC may be exposed to various liability claims given change in policies in those markets.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards 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.
Rising raw material can pose a threat to the EXTRACTION OIL & GAS, LLC profitability.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
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.

Limitations of SWOT Analysis for EXTRACTION OIL & GAS, LLC

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 EXTRACTION OIL & GAS, LLC
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 EXTRACTION OIL & GAS, LLC

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 EXTRACTION OIL & GAS, LLC 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 EXTRACTION OIL & GAS, LLC

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)