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AutoEdge SWOT

Desmond Sangbong

Gerald Weisenseel

Applied Managerial Economics

May 28, 2015

The SWOT analysis is a useful tool that helps AutoEdge to understand the future current prospects for business success. The tool evaluates the internal factor to the company such as the management personnel as either strength or weakness. On the other hand, the tool describes the external factors such as economic, social/cultural and political environment as threat or opportunity to the business. In other words, the SWOT analysis provides AutoEdge with a snapshot of business’s situation.

Strengths	Weaknesses
1. Recognized as market leader 2. Adequate financial resources 3. Strong management team 4. Proprietary technology 5. Strong financial performance 6. Innovative culture 7. Growing brand reputation 8. Trusted brand name 9. Loyal consumers 10. The company is the leading provider of auto parts 11. Knowledgeable employees with abundance of skills 12. High quality standard of services 13. Positive consumer perception towards the organization	1. Costs disadvantage with competitors 2. Weak market image 3. No clear strategic direction 4. Lack managerial depth 5. Outdated facilities 6. Overdependence on limited services to customers 7. Price inelasticity 8. Inefficiency in terms of diseconomies of scale 9. Oligopoly market 10. Low Barrier to Entry 11. Raise unemployment 12. Overleveraged with risk and cash outflow 13. Lower interest rates 14. GDP higher per capita
Opportunities	Threats
1. Expand product line 2. Add related service 3. Form strategic alliance 4. Target new market 5. Increase in service demand 6. Increase inelasticity by differentiation & capture higher marginal revenue 7. Growth, efficiency, managed fixed costs with economies of scale 8. High EVA unique to demographic	1. Entry of strong competitor 2. Increased regulation 3. Change in customer buying preferences 4. Potential substitutes from the competitors 5. Inflation causing price reduction 6. Market volatility causing fluctuations in the rate of exchange

Strength

Strength refers to an inherent capacity that AutoEdge can use to gain a strategic advantage. The business can use its strength to obtain competitive advantages (David, 2007). The business must nurture on its strengths. The employee capabilities combined with finances becomes an essential strength especially for neutralizing the competitors’ moves.

Weaknesses

This refers to an inherent limitation or constraint that creates a strategic disadvantage to AutoEdge. The business must devote attention in correcting its weaknesses in order to achieve its objectives (Leigh, & Pershing, 2006). Concentrating on weakness is essential since failure can lead to business failure.

Opportunities

An opportunity refers to a favorable condition in the business environment that enables it to consolidate and strengthen its position (David, 2007). Opportunities can enable AutoEdge to improve its market position besides growing its operations. The business must strive to take up the opportunities in the environment in order to remain competitive.

Threats

This is an unfavorable condition in the business environment that can create a risk or causes damage to the organization. This is usually a potential challenge that the business must consider and address (Leigh et al, 2006). The business must strive to identify its threats in order to identify areas that requires enhancement.

Conclusion

The business can use SWOT analysis in determining its core competencies that enhances the performance of the business. The core competencies includes the capabilities that can enable the business realize its competitive advantage. These capabilities include strong branding and efficient processes as well as expert sales team or assets that are critical to the success of the business (Leigh et al, 2006). Through the SWOT analysis, the business can match strengths and weakness existing in the business environment and match opportunities with threats operating in the environment so that it can formulate an effective strategy. An effective strategy is the one that capitalizes on the opportunities using strengths to neutralize the threats and minimizing the impacts of weaknesses.

References

David, F. R. (2007). Strategic management: Concepts and cases. Pearson Prentice Hall.

Leigh, D., & Pershing, A. J. (2006). SWOT analysis. The Handbook of Human Performance Technology, 1089-1108.