NACCO Industries, Inc. SWOT Analysis / Matrix

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

The NACCO Industries, Inc. is one of the leading companies in its industry. NACCO Industries, Inc. 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 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 enables the managers of the NACCO Industries, Inc. to develop four types of strategies:

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

NACCO Industries, Inc. swot analysis / matrix

SWOT Matrix Strategies Objective

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

Step by Step Guide to NACCO Industries, Inc. SWOT Analysis

Strengths of NACCO Industries, Inc. – Internal Strategic Factors

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

Read - NACCO Industries, Inc. Porter 5 Forces Analysis & Industry Analysis
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Strong distribution network – Over the years NACCO Industries, Inc. has built a reliable distribution network that can reach majority of its potential market.
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.
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.
Superb Performance in New Markets – NACCO Industries, 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.
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.
Strong Free Cash Flow – NACCO Industries, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
Good Returns on Capital Expenditure – NACCO Industries, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
Highly skilled workforce through successful training and learning programs. NACCO Industries, 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.

Weakness of NACCO Industries, Inc. – Internal Strategic Factors

Weakness are the areas where NACCO Industries, 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 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. NACCO Industries, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
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.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, NACCO Industries, 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.
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 NACCO Industries, Inc.
High attrition rate in work force – compare to other organizations in the industry NACCO Industries, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Not highly successful at integrating firms with different work culture. As mentioned earlier even though NACCO Industries, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
Investment in Research and Development is below the fastest growing players in the industry. Even though NACCO Industries, 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.

Opportunities for NACCO Industries, Inc. – External Strategic Factors

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Decreasing cost of transportation because of lower shipping prices can also bring down the cost of NACCO Industries, 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 technology provides an opportunity to NACCO Industries, 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.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for NACCO Industries, Inc. to capture new customers and increase its market share.
Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of NACCO Industries, Inc..
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 NACCO Industries, 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 NACCO Industries, 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 NACCO Industries, Inc. in other product categories.
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 NACCO Industries, Inc. to drive home its advantage in new technology and gain market share in the new product category.

Threats NACCO Industries, Inc. Facing - External Strategic Factors

Rising raw material can pose a threat to the NACCO Industries, Inc. profitability.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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.
Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
Imitation of the counterfeit and low quality product is also a threat to NACCO Industries, Inc.’s product especially in the emerging markets and low income 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.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for NACCO Industries, Inc. in those markets.

Limitations of SWOT Analysis for NACCO Industries, 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 NACCO Industries, 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 NACCO Industries, 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 NACCO Industries, 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 NACCO Industries, 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)