Sonoco Products Company SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

The Sonoco Products Company is one of the leading organizatations in its industry. Sonoco Products Company maintains its dominant 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.

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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 called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Sonoco Products Company to develop four types of strategies:

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

Sonoco Products Company swot analysis / matrix

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that an organization can utilize to exploit external opportunities, counter threats, and build on & protect Sonoco Products Company strengths, and eradicate its weaknesses.

Step by Step Guide to Sonoco Products Company SWOT Analysis

Strengths of Sonoco Products Company – Internal Strategic Factors

As one of the leading companies in its industry, Sonoco Products Company 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 Sonoco Products Company are –

Read - Sonoco Products Company Porter 5 Forces Analysis & Industry Analysis
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Good Returns on Capital Expenditure – Sonoco Products Company 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 – Sonoco Products Company 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 Sonoco Products Company 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 Sonoco Products Company has built a reliable distribution network that can reach majority of its potential market.
Highly skilled workforce through successful training and learning programs. Sonoco Products Company 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.
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 Sonoco Products Company – Internal Strategic Factors

Weakness are the areas where Sonoco Products Company 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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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 Sonoco Products Company 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.
Limited success outside core business – Even though Sonoco Products Company is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
High attrition rate in work force – compare to other organizations in the industry Sonoco Products Company has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
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 Sonoco Products Company
Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Sonoco Products Company 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.

Opportunities for Sonoco Products Company – External Strategic Factors

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Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Sonoco Products Company.
Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Sonoco Products Company an opportunity to enter a new emerging market.
Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Sonoco Products Company to capture new customers and increase its market share.
New trends in the consumer behavior can open up new market for the Sonoco Products Company . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
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 Sonoco Products Company to drive home its advantage in new technology and gain market share in the new product category.
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.
Government green drive also opens an opportunity for procurement of Sonoco Products Company products by the state as well as federal government contractors.
The new technology provides an opportunity to Sonoco Products Company 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.

Threats Sonoco Products Company 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 Sonoco Products Company may be exposed to various liability claims given change in policies in those markets.
Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Sonoco Products Company in those markets.
No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
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.
Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Sonoco Products Company
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.

Limitations of SWOT Analysis for Sonoco Products Company

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 Sonoco Products Company
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 Sonoco Products Company

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 Sonoco Products Company 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 Sonoco Products Company

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

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)