Velocys Plc SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Velocys Plc is one of the leading companies in its industry. Velocys Plc 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 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 helps the managers of the Velocys Plc 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 main purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Velocys Plc strengths, and eradicate its weaknesses.

Step by Step Guide to Velocys Plc SWOT Analysis

Strengths of Velocys Plc – Internal Strategic Factors

As one of the leading firms in its industry, Velocys Plc 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 Velocys Plc are –

Read - Velocys Plc Porter 5 Forces Analysis & Industry Analysis
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Automation of activities brought consistency of quality to Velocys Plc products and has enabled the company to scale up and scale down based on the demand conditions in the market.
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.
Strong Brand Portfolio – Over the years Velocys Plc has invested in building a strong brand portfolio. The SWOT analysis of Velocys Plc just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
Highly successful at Go To Market strategies for its products.
Good Returns on Capital Expenditure – Velocys Plc 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. Velocys Plc 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.
Successful track record of developing new products – product innovation.

Weakness of Velocys Plc – Internal Strategic Factors

Weakness are the areas where Velocys Plc 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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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 Velocys Plc is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
Limited success outside core business – Even though Velocys Plc is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present 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.
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. Velocys Plc has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Velocys Plc 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.
High attrition rate in work force – compare to other organizations in the industry Velocys Plc 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.

Opportunities for Velocys Plc – External Strategic Factors

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The new technology provides an opportunity to Velocys Plc 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.
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 Velocys Plc to drive home its advantage in new technology and gain market share in the new product category.
Government green drive also opens an opportunity for procurement of Velocys Plc products by the state as well as federal government contractors.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Velocys Plc to capture new customers and increase its market share.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Velocys Plc an opportunity to enter a new emerging market.
The market development will lead to dilution of competitor’s advantage and enable Velocys Plc to increase its competitiveness compare to the other competitors.
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 Velocys Plc in other product categories.
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.

Threats Velocys Plc Facing - External Strategic Factors

Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
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.
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.
New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
Rising raw material can pose a threat to the Velocys Plc profitability.
Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
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 Velocys Plc

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 Velocys Plc
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 Velocys Plc

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 Velocys Plc 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 Velocys Plc

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)