BorgWarner Inc. SWOT Analysis / Matrix

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

The BorgWarner Inc. is one of the leading companies in its industry. BorgWarner Inc. maintains its dominant 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 known as SWOT Matrix.

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

  • SO (strengths-opportunities) Strategies
  • WO (weaknesses-opportunities) Strategies
  • ST (strengths-threats) Strategies
  •  WT (weaknesses-threats) Strategies
BorgWarner Inc. 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 BorgWarner Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to BorgWarner Inc. SWOT Analysis

Strengths of BorgWarner Inc. – Internal Strategic Factors

As one of the leading organizations in its industry, BorgWarner Inc. 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 BorgWarner Inc. are –

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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.
  • Good Returns on Capital Expenditure – BorgWarner Inc. 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 – BorgWarner Inc. 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.
  • Automation of activities brought consistency of quality to BorgWarner Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
  • Successful track record of developing new products – product innovation.
  • Strong Brand Portfolio – Over the years BorgWarner Inc. has invested in building a strong brand portfolio. The SWOT analysis of BorgWarner Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
  • 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.

Weakness of BorgWarner Inc. – Internal Strategic Factors

Weakness are the areas where BorgWarner 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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  • The profitability ratio and Net Contribution % of BorgWarner Inc. are below the industry average.
  • Investment in Research and Development is below the fastest growing players in the industry. Even though BorgWarner 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.
  • Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
  • 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. BorgWarner Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
  • High attrition rate in work force – compare to other organizations in the industry BorgWarner Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
  • Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, BorgWarner 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.
  • 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.

Opportunities for BorgWarner Inc. – External Strategic Factors

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  • 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 BorgWarner Inc. in other product categories.
  • The new technology provides an opportunity to BorgWarner Inc. 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.
  • 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.
  • 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 BorgWarner Inc. to drive home its advantage in new technology and gain market share in the new product category.
  • Decreasing cost of transportation because of lower shipping prices can also bring down the cost of BorgWarner Inc.’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 taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as BorgWarner Inc. to increase its profitability.
  • Government green drive also opens an opportunity for procurement of BorgWarner Inc. products by the state as well as federal government contractors.
  • New trends in the consumer behavior can open up new market for the BorgWarner Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.

Threats BorgWarner Inc. Facing - External Strategic Factors

  • Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
  • Liability laws in different countries are different and BorgWarner Inc. may be exposed to various liability claims given change in policies 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 BorgWarner Inc.
  • Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
  • Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for BorgWarner Inc.   in those markets.
  • The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
  • Rising raw material can pose a threat to the BorgWarner Inc. profitability.
  • 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.

Limitations of SWOT Analysis for BorgWarner 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 BorgWarner 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 BorgWarner 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 BorgWarner 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 BorgWarner 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)