Business Essays, Term Papers & Research Papers
SWOT analysis is a vital strategic planning tool that can be used by Vera Bradley, Inc. managers to do a situational analysis of the organization . It is an important technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Vera Bradley, Inc. is facing in its current business environment.
The Vera Bradley, Inc. is one of the leading organizatations in its industry. Vera Bradley, Inc. 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 firm 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 called SWOT Matrix.
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Vera Bradley, Inc. 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 firm can use to exploit external opportunities, counter threats, and build on & protect Vera Bradley, Inc. strengths, and eradicate its weaknesses.
Step by Step Guide to Vera Bradley, Inc. SWOT Analysis
Strengths of Vera Bradley, Inc. – Internal Strategic Factors
As one of the leading companies in its industry, Vera Bradley, 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 Vera Bradley, Inc. are –
Read - Vera Bradley, Inc. Porter 5 Forces Analysis & Industry Analysis
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- 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.
- 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 – Vera Bradley, 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.
- Strong distribution network – Over the years Vera Bradley, Inc. has built a reliable distribution network that can reach majority of its potential market.
- Good Returns on Capital Expenditure – Vera Bradley, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
- Successful track record of developing new products – product innovation.
- Automation of activities brought consistency of quality to Vera Bradley, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
Weakness of Vera Bradley, Inc. – Internal Strategic Factors
Weakness are the areas where Vera Bradley, Inc. 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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- Investment in Research and Development is below the fastest growing players in the industry. Even though Vera Bradley, 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.
- Not highly successful at integrating firms with different work culture. As mentioned earlier even though Vera Bradley, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
- The profitability ratio and Net Contribution % of Vera Bradley, Inc. are below the industry average.
- 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 Vera Bradley, Inc.
- Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Vera Bradley, 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.
- 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 Vera Bradley, Inc. is not very good at demand forecasting thus end up keeping higher inventory both in-house and in channel.
- 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 Vera Bradley, Inc. – External Strategic Factors
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- The market development will lead to dilution of competitor’s advantage and enable Vera Bradley, Inc. to increase its competitiveness compare to the other competitors.
- The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Vera Bradley, Inc. 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 Vera Bradley, Inc. an opportunity to enter a new emerging market.
- 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 Vera Bradley, 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.
- New trends in the consumer behavior can open up new market for the Vera Bradley, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
- 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.
- Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Vera Bradley, Inc. to capture new customers and increase its market share.
- Government green drive also opens an opportunity for procurement of Vera Bradley, Inc. products by the state as well as federal government contractors.
Threats Vera Bradley, Inc. 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.
- New technologies developed by the competitor or market disruptor could be a serious threat to the industry in medium to long term future.
- 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.
- Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Vera Bradley, Inc.
- Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
- Rising raw material can pose a threat to the Vera Bradley, Inc. profitability.
- New environment regulations under Paris agreement (2016) could be a threat to certain existing product categories .
- Imitation of the counterfeit and low quality product is also a threat to Vera Bradley, Inc.’s product especially in the emerging markets and low income markets.
Limitations of SWOT Analysis for Vera Bradley, 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 Vera Bradley, 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 Vera Bradley, 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 Vera Bradley, 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 Vera Bradley, 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.
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)