In businesses and other organizations, SWOT analysis is considered to be a powerful evaluation tool upon which decisions can be made, especially in terms of its competitiveness in the market (Bacon, 1999). The acronym SWOT refers to Strengths, Weaknesses, Opportunities, and Threats with the first two elements as the internal factors and the last two are considered to be external ones (Pinson, 2008). Given the case of Makatume and Smith & White, two of the strongest leaders in the power tool industry, a SWOT analysis would reveal the competitive positions of each company and from which, relevant decisions can be made.
SWOT Analysis of Makatume and Smith & White From an outsider’s perspective, Smith & White invested in different professional and consumer tools and placed it under the same brand. The ability of the company to place all of its products into a line of consumer products has become the springboard for its strength, which is the unification of all its products whether it may be a power tool or a non-power tool product. More so, its reputation and brand equity is firmly rested on national media advertising, which actually reaches a far more audience.
On the other hand, the strength of Makatume is its cordless power tools wherein the company is able to get hold of 70% of the market share in the cordless segment. The company has proven itself to be capable of excelling into these kind of tools despite its early entry into the market. As for the weaknesses of the company, Smith & White’s weakness lies on its huge size that also affects the company’s ability to react in cases where rapid change occurs in the market.
The inability of the company to go with the rapid changes required is because of the large change it also requires within the company and its huge size clearly does not allow for a quick response. More so, its outdated facilities and technology also serves among its weaknesses as it continuously affects the productivity and efficiency of the company’s output. The maintenance and operations using these systems has become costly for the company together with the high cost of labor in the urban areas where its production facilities are situated.
Added to this is the absence of the company in the growing cordless segment of the market. As for Makatume, its weakness lies in its distinct isolation for the production of professional tools. It has been boxed in the idea of being required to produce only these products. There is a certain boundary which has been drawn because of this and its share in the demand of the consumers is also limited where it only grasps the needs of a fair share of the population. As for its opportunities, Smith & White can rely on the great demand it has created for its company’s product that kept retailers to continuously order for the products.
The great demand leads to an inevitable need for the retailers to always have a steady stock for the products and their reliance on the high turnover rate of the S&W products leads them to make room for the company’s goods in their shelves. Thus, the availability of the wide array of goods produced by the company is enhanced. On the other hand, the opportunity of Makatume lies on the favorable exchange rates which are being enjoyed by the company in consideration of its trade with the US. However, there is the tendency for this to be reversed in t coming years.
Moreover, the company has a good position in terms of cost because of the low rates that the new manufacturing plants in Japan has. Where technology is considered to be a great factor in the Japanese country, this is also considered to be one of the opportunities that can be seen from the production of the professional tools by Makatume. The perceived high-end and modern technological processes of production leads consumers to bank on the reliability and durability of the products together with its low usage and maintenance costs.
Lastly, a big threat for the company is the rise of a new company, Far East imports from China. The competition will be higher when the said company poses itself to be a major player in the power tools industry because of the lower costs and good value. More so, the currency of China has a role to play in the competitive advantage of the country. In individual terms, S&W’s threat is basically on the new imports and the higher wages for the company. For Makatume, it rests on the probability of greater competitors for the professional tools and the economic changes that will affect the currency rates between US and Japan.
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