HDFC Bank Limited SWOT Analysis / Matrix

Business Essays, Term Papers & Research Papers

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

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

Step by Step Guide to HDFC Bank Limited SWOT Analysis

Strengths of HDFC Bank Limited – Internal Strategic Factors

As one of the leading companies in its industry, HDFC Bank Limited 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 HDFC Bank Limited are –

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• Superb Performance in New Markets – HDFC Bank Limited 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 HDFC Bank Limited has built a reliable distribution network that can reach majority of its potential market.
• Strong Free Cash Flow – HDFC Bank Limited has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• 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.
• Automation of activities brought consistency of quality to HDFC Bank Limited products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Highly skilled workforce through successful training and learning programs. HDFC Bank Limited 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.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.

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Weakness of HDFC Bank Limited – Internal Strategic Factors

Weakness are the areas where HDFC Bank Limited 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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• 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.
• Limited success outside core business – Even though HDFC Bank Limited is one of the leading organizations in its industry it has faced challenges in moving to other product segments with its present culture.
• Investment in Research and Development is below the fastest growing players in the industry. Even though HDFC Bank Limited 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.
• 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 HDFC Bank Limited
• The profitability ratio and Net Contribution % of HDFC Bank Limited are below the industry average.
• 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 HDFC Bank Limited 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.

Opportunities for HDFC Bank Limited – External Strategic Factors

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• 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.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as HDFC Bank Limited to increase its profitability.
• New trends in the consumer behavior can open up new market for the HDFC Bank Limited . 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 HDFC Bank Limited to drive home its advantage in new technology and gain market share in the new product category.
• 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 HDFC Bank Limited. 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 technology provides an opportunity to HDFC Bank Limited 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 HDFC Bank Limited 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 HDFC Bank Limited an opportunity to enter a new emerging market.

Threats HDFC Bank Limited Facing - External Strategic Factors

• 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.
• 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 raw material can pose a threat to the HDFC Bank Limited profitability.
• Imitation of the counterfeit and low quality product is also a threat to HDFC Bank Limited’s product especially in the emerging markets and low income markets.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• 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.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for HDFC Bank Limited   in those markets.

Limitations of SWOT Analysis for HDFC Bank Limited

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 HDFC Bank Limited
• 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 HDFC Bank Limited

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 HDFC Bank Limited 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 HDFC Bank Limited

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)