CHAPTER 5
SWOT ANALYSIS
5.1 SWOT Analysis
SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate
the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business
venture. A SWOT analysis can be carried out for a product, place or person. It involves
specifying the objective of the business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving that objective. The technique is
credited to Albert Humphrey, who led a convention at the Stanford Research Institute (now SRI
International) in the 1960s and 1970s using data from Fortune 500 companies.
Setting the objective should be done after the SWOT analysis has been performed. This would
allow achievable goals or objectives to be set for the organization.
Strengths: characteristics of the business or project that give it an advantage over others
Weaknesses: are characteristics that place the team at a disadvantage relative to others
Opportunities: elements that the project could exploit to its advantage
Threats: elements in the environment that could cause trouble for the business or project
Identification of SWOTs is important because they can inform later steps in planning to achieve
the objective.
First, the decision makers should consider whether the objective is attainable, given the SWOTs.
If the objective is not attainable a different objective must be selected and the procOne way of
utilizing SWOT is matching and converting. Matching is used to find competitive advantages by
matching the strengths to opportunities. Converting is to apply conversion strategies to convert
weaknesses or threats into strengths or opportunities. An example of conversion strategy is to
find new markets. If the threats or weaknesses cannot be converted a company should try to
minimize or avoid [Link] repeated.
Environmental Scan
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Internal Analysis External Analysis
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Strengths Weaknesses Opportunities Threats
SWOT Matrix
Figure 5.1: Framework of SWOT analysis
5.1.1Internal and External Factors
The aim of any SWOT analysis is to identify the key internal and external factors that are
important to achieving the objective. These come from within the company's unique value chain.
SWOT analysis groups key pieces of information into two main categories:
Internal factors – The strengths and weaknesses internal to the organization.
External factors – The opportunities and threats presented by the external environment to
the organization.
The internal factors may be viewed as strengths or weaknesses depending upon their effect on
the organization's objectives. What may represent strengths with respect to one objective may be
weaknesses for another objective. The factors may include all of the 4Ps; as well as personnel,
finance, manufacturing capabilities, and so on. The external factors may include macroeconomic
matters, technological change, legislation, and socio-cultural changes, as well as changes in the
marketplace or competitive position. The results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses. For example, it
may tend to persuade its users to compile lists rather than to think about what is actually
important in achieving objectives. It also presents the resulting lists uncritically and without clear
prioritization so that, for example, weak opportunities may appear to balance strong threats.
It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of
individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that
produces valuable strategies is important. A SWOT item that generates no strategies is not
important.
5.1.2 Strengths
A firm's strengths are its resources and capabilities that can be used as a basis for developing a
competitive advantage. Examples of such strengths include patents, strong brand names, and
good reputation among customers, cost advantages from proprietary know-how, exclusive access
to high grade natural resources, and favorable access to distribution networks.
5.1.3 Weaknesses
The absence of certain strengths may be viewed as a weakness. For example, each of the
following may be considered weaknesses- lack of patent protection, a weak brand name, poor
reputation among customers, high cost structure, lack of access to the best natural resources, lack
of access to key distribution channels etc. In some cases, a weakness may be the flip side of a
strength. Take the case in which a firm has a large amount of manufacturing capacity. While this
capacity may be considered a strength that competitors do not share, it also may be considered as
a weakness if the large investment in manufacturing capacity prevents the firm from reacting
quickly to changes in the strategic environment.
5.1.4 Opportunities
The external environmental analysis may reveal certain new opportunities for profit and growth.
Some examples of such opportunities include an unfulfilled customer need, arrival of new
technologies, loosening of regulations, removal of international trade barriers etc.
5.1.5 Threats
Changes in the external environmental also may present threats to the firm. Some examples of
such threats include shifts in consumer tastes away from the firm's products, emergence of
substitute products, new regulations, increased trade barriers etc.
5.1.6 The SWOT Matrix
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a
better chance at developing a competitive advantage by identifying a fit between the firm's
strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order
to prepare itself to pursue a compelling opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these factors can be
constructed. The SWOT matrix (also known as a TOWS Matrix) is shown in figure 5.2.
Strengths Weaknesses
Opportunities S-O strategies W-O strategies
Threats S-T strategies W-T strategies
Figure 5.2: The SWOT matrix
Various strategies are adopted to improve the performance of the firm based on SWOT
analysis. They can be:
S-O strategies pursue opportunities that are a good fit to the company's strengths.
W-O strategies overcome weaknesses to pursue opportunities.
S-T strategies identify ways that the firm can use its strengths to reduce its
vulnerability to external threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from
making it highly susceptible to external threats.
5.1.7 Use of SWOT analysis
The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis
may be used in any decision-making situation when a desired end-state (objective) has been
defined. Examples include: non-profit organizations, governmental units, and individuals.
SWOT analysis may also be used in pre-crisis planning and preventive crisis management.
SWOT analysis may also be used in creating a recommendation during a viability study/survey
5.2 SWOT analysis at KSE LTD-VEDAGIRI UNIT
5.2.1 Methodology adopted
The SWOT analysis was done by analyzing the data collected from the firm, by direct
observation, interviews, secondary sources etc. The valuable experience and guidelines of
employees and managers came as an aid, in giving final shape to the analysis part. Firstly my
focus was to classify collected data based on the following questions in mind:
What this organization can do? (Strength)
What this organization cannot do? (Weakness)
What are the potential favorable conditions for this organization? (Opportunities)
What are the potential unfavorable conditions for this organization? (Threats)
After this, with the rough analysis in mind, the managers and employees were approached and
further details were collected by using an unstructured questionnaire and by using this
information, the final analysiswas done.
5.2.2 Analysis
Upon analyzing the data, some important points requiring attention could be found out, which
can be put across in the following section.
Table 5.3 SWOT analysis
5.2.3 Strengths
Vast experience in those industries for about 40 years
It was in 1963 that Kerala Solvent Extractions Ltd. now known as KSE Ltd. entered the Solvent
Extraction Industry, setting up the very first solvent extraction plant in Kerala. The solvent
extraction plant went on stream in 1972 and in 1976, a new plant was set up to manufacture
ready mixed cattle.
Market leader in the cattle feed segment.
KSE LTD is the largest manufacturer of compound cattle feed in private sector in the country.
PERCENTAGE OF MARKET SHARE
6% KSE
7% Kerala Feeds
Milma
13% Godrej
47% Others
27%
Won numerous awards and recognitions which prove KSE’s product quality and
leadership position.
1. “Best productivity performance for Cattle feed in India” Award from National Productivity
Council continuously for Eleven Years 1996-97 to 2005-06.
2. The Solvent Extractors’ Association of India”-SEA Award for highest processor of coconut
cake in India, since institution of the award.
3. Kerala state productivity Council award.
4. “Top Cattle feed Award” for aflatoxin free feed from “The Indian Association of Veterinary
Pathologists” (IAVP) and Kerala Agricultural University.
5. Tamilnadu productivity Council Safety Award.
6. Animal Nutrition Society of India Award for Company’s contributions for propagation of
balanced compound livestock feed in India.
7. Industry Excellence Award from the Indian Society for the study of Animal Reproduction for
the year 2001.
Social Commitment
SOCIAL RESPONSIBILITY
KSE Ltd is in the fore front for meeting its responsibility towards the [Link] has
contributed liberally towards the social courses; few of them are:
1) Construction and maintenance of a modern children’s information center KSPARK at
Irinjalakkuda of a cost of Rs.80 lakhs.
2) Construction of cum handrail for public at a cost of Rs.10 lakhs.
3) Contribution to Kargil fund of Rs. 5 lakhs
4) Contribution to Gujarat earthquake relief fund Rs.10 lakhs.
5) Contribution to Bharathiya Vidya Bhavan Irinjalakkuda Rs.1 lakhs.
6) Contribution to [Link] Hospital Rs.3 lakhs
7) Contribution to Amala cancer hospital and research centre Rs.3 lakhs.
8) Contribution to Chief Minister’s relief fund Rs.3 lakhs.
Contribution to Mahatma Gandhi Library and Reading room Rs.26000
Very low Feed return
Table 5.4 Feed return details of 2012-13
2012-13 APR MAY JUN JULY AUG SEP OCT NOV
PRODUCTION 4528.25 5171.55 4976.9 4964.1 4788.6 5286.6 4859.8 5055.75
(MT)
SALES (MT) 4980.9 5223.25 5211 5020 4787.9 5215.8 5218.8 5613.75
FEED RETURN 0.05 0.40 0.40 0.80 6.4 7.85 8.10 9.00
(MT)
FEED RETURN % 0.001% 0.005% .005% 0.006% 0.03% 0.048% 0.046% 0.043%
OF
PRODUCTION
Company uses an advanced technology for manufacturing.
The most sophisticated feature of the unit is computerized system for the production. The
microprocessor controls the overall production procedure. Company uses MMCP technology
for the production of cattle feed.
Wide geographical coverage.
KSE Ltd. have seven branches in Kerala ,two in Tamilnadu and a unit in Karnataka.
Huge network of product dealers.
Financial strength of the company helping to withstand the unhealthy market competition.
The company enjoys a strong brand loyalty in the market.
5.2.4 Weaknesses
Low utilization of Plant Capacity
High Product price
Labour issues
Indirect control of government over price
Lack of availability of raw materials.
5.2.5 Opportunities
The increase in the price of milk by the Government of Kerala, will help to boost the cattle
rearing, and we expect a steady demand in year 2012-13
Good quality copra cake is available now as per requirement from Kerala and Tamil Nadu at
reasonable price and the dependency on import has reduced to that extent.
Untapped export markets
Good demand for high quality Animal feed
Scope for improvement in production capacity
5.2.6 Threats
6 Probable Entry of new players in the market
7 Upward revision of fuel price increasing the price of ingredients manifold
8 Grant switching of crop by farmers from oil seeds and grains, required by them as
ingredients, to other crops
9 These two segments being highly labour oriented, there is severe shortage in availability
of manual labour locally
5.3 Problem Identification: Cause and Effect diagram
When we analyze minutely, we can arrive at the culmination of the SWOT analysis.
As mentioned in the performance analysis Company’s incapability to meet the demand for its
products. Demand is more than present rate of production Company transferring products from
other units to fulfill demand. Low out put of feeding section increases the idle time of other
sections. Further study is there for required to uncover the reasons for under utilization of the
present capacity.
5.3.1 Low capacity utilization
FISH BONE DIAGRAM-LOW CAPACITY UTILIZATION
From fish bone diagram,we can understand major factors
that affect low capacity utilization are insufficient workforce, Union agreement, Bin empty due
low rate of feeding, Production changes, Machine break downs etc.