Lloyds Banking Group plc SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

SWOT analysis is a vital strategic planning tool that can be used by Lloyds Banking Group plc 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) Lloyds Banking Group plc is facing in its current business environment.

The Lloyds Banking Group plc is one of the leading companies in its industry. Lloyds Banking Group plc maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis a highly 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 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 known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Lloyds Banking Group 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 central purpose of SWOT matrix is to identify the strategies that a company can utilize to exploit external opportunities, counter threats, and build on & protect Lloyds Banking Group plc strengths, and eradicate its weaknesses.

Step by Step Guide to Lloyds Banking Group plc SWOT Analysis

Strengths of Lloyds Banking Group plc – Internal Strategic Factors

As one of the leading organizations in its industry, Lloyds Banking Group 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 Lloyds Banking Group plc are –

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• Good Returns on Capital Expenditure – Lloyds Banking Group plc 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.
• 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 distribution network – Over the years Lloyds Banking Group plc has built a reliable distribution network that can reach majority of its potential market.
• Highly successful at Go To Market strategies for its products.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Superb Performance in New Markets – Lloyds Banking Group plc 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 Lloyds Banking Group plc products and has enabled the company to scale up and scale down based on the demand conditions in the market.

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Weakness of Lloyds Banking Group plc – Internal Strategic Factors

Weakness are the areas where Lloyds Banking Group plc can improve upon. Strategy is about making choices and weakness are the areas where a firm can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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• 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.
• 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. Lloyds Banking Group plc has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• Limited success outside core business – Even though Lloyds Banking Group plc is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• 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.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Lloyds Banking Group plc 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 Lloyds Banking Group plc are below the industry average.

Opportunities for Lloyds Banking Group plc – External Strategic Factors

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• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Lloyds Banking Group plc’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.
• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Lloyds Banking Group plc to capture new customers and increase its market share.
• The market development will lead to dilution of competitor’s advantage and enable Lloyds Banking Group plc to increase its competitiveness compare to the other competitors.
• 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 Lloyds Banking Group plc. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Lloyds Banking Group plc an opportunity to enter a new emerging market.
• 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 Lloyds Banking Group plc in other product categories.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Lloyds Banking Group plc to increase its profitability.
• The new technology provides an opportunity to Lloyds Banking Group 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.

Threats Lloyds Banking Group plc Facing - External Strategic Factors

• Growing strengths of local distributors also presents a threat in some markets as the competition is paying higher margins to the local distributors.
• Liability laws in different countries are different and Lloyds Banking Group plc may be exposed to various liability claims given change in policies in those markets.
• 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.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Lloyds Banking Group plc   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.
• Rising raw material can pose a threat to the Lloyds Banking Group plc profitability.
• 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.
• 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 Lloyds Banking Group 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 Lloyds Banking Group 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 Lloyds Banking Group 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 Lloyds Banking Group 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 Lloyds Banking Group 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)