Olympic Steel, Inc. SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Olympic Steel, Inc. is one of the leading firms in its industry. Olympic Steel, Inc. 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Olympic Steel, Inc. to develop four types of strategies:

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

Olympic Steel, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Olympic Steel, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Olympic Steel, Inc. SWOT Analysis

Strengths of Olympic Steel, Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Olympic Steel, Inc. 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 Olympic Steel, Inc. are –

Read - Olympic Steel, Inc. Porter 5 Forces Analysis & Industry Analysis
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Highly skilled workforce through successful training and learning programs. Olympic Steel, Inc. 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.
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.
Good Returns on Capital Expenditure – Olympic Steel, Inc. 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 Olympic Steel, Inc. has built a reliable distribution network that can reach majority of its potential market.
Highly successful at Go To Market strategies for its products.
Automation of activities brought consistency of quality to Olympic Steel, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.

Weakness of Olympic Steel, Inc. – Internal Strategic Factors

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

Opportunities for Olympic Steel, Inc. – 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 Olympic Steel, Inc. to drive home its advantage in new technology and gain market share in the new product category.
The market development will lead to dilution of competitor’s advantage and enable Olympic Steel, Inc. to increase its competitiveness compare to the other competitors.
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 Olympic Steel, Inc.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Olympic Steel, Inc. to increase its profitability.
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 Olympic Steel, Inc. 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 Olympic Steel, Inc..
Government green drive also opens an opportunity for procurement of Olympic Steel, Inc. products by the state as well as federal government contractors.
New trends in the consumer behavior can open up new market for the Olympic Steel, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats Olympic Steel, Inc. Facing - External Strategic Factors

Imitation of the counterfeit and low quality product is also a threat to Olympic Steel, Inc.’s product especially in the emerging markets and low income 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.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those 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 Olympic Steel, Inc.
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 Olympic Steel, Inc. in those markets.

Limitations of SWOT Analysis for Olympic Steel, Inc.

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 Olympic Steel, Inc.
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 Olympic Steel, Inc.

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 Olympic Steel, Inc. 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 Olympic Steel, Inc.

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)