Plus500 Ltd SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a strategic planning tool that can be used by Plus500 Ltd managers to do a situational analysis of the firm . It is a useful technique to evalauate the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Plus500 Ltd is facing in its current business environment.

The Plus500 Ltd is one of the leading companies in its industry. Plus500 Ltd maintains its prominent position in market by carefully 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.

Order Now - Plus500 Ltd SWOT Analysis
Check out- Plus500 Ltd PESTEL / PEST & Environment Analysis
Article continues after advertisement

The SWOT Analysis framework facilitates 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 enables the managers of the Plus500 Ltd to develop four types of strategies:

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

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Plus500 Ltd strengths, and eradicate its weaknesses.

Step by Step Guide to Plus500 Ltd SWOT Analysis

Strengths of Plus500 Ltd – Internal Strategic Factors

As one of the leading firms in its industry, Plus500 Ltd 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 Plus500 Ltd are –

Read - Plus500 Ltd Porter 5 Forces Analysis & Industry Analysis
Article continues after advertisement

Good Returns on Capital Expenditure – Plus500 Ltd 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 – Plus500 Ltd 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 Plus500 Ltd products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Strong distribution network – Over the years Plus500 Ltd has built a reliable distribution network that can reach majority of its potential market.
Highly skilled workforce through successful training and learning programs. Plus500 Ltd 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.
Highly successful at Go To Market strategies for its products.
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.
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 Plus500 Ltd – Internal Strategic Factors

Weakness are the areas where Plus500 Ltd 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.

Article continues after advertisement

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 Plus500 Ltd
Not highly successful at integrating firms with different work culture. As mentioned earlier even though Plus500 Ltd is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
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.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
High attrition rate in work force – compare to other organizations in the industry Plus500 Ltd has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
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 Plus500 Ltd is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
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 Plus500 Ltd – External Strategic Factors

Article continues after advertisement

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 Plus500 Ltd in other product categories.
The new technology provides an opportunity to Plus500 Ltd 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 Plus500 Ltd to capture new customers and increase its market share.
New trends in the consumer behavior can open up new market for the Plus500 Ltd . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Plus500 Ltd to increase its profitability.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Plus500 Ltd an opportunity to enter a new emerging market.
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 Plus500 Ltd to drive home its advantage in new technology and gain market share in the new product category.

Threats Plus500 Ltd Facing - External Strategic Factors

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.
Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
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 Plus500 Ltd in those markets.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
Liability laws in different countries are different and Plus500 Ltd may be exposed to various liability claims given change in policies in those markets.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .

Limitations of SWOT Analysis for Plus500 Ltd

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 Plus500 Ltd
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.

Article continues after advertisement

Weighted SWOT Analysis of Plus500 Ltd

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 Plus500 Ltd 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 Plus500 Ltd

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.

Buy Custom Essay and Term Paper on SWOT Analysis / Matrix , Weighted SWOT Analysis of Plus500 Ltd

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)