SWOT analysis is a strategic planning technique that is used to analyze a business’s opportunities in the face of its strengths, weaknesses and the threats that it faces.What is SWOT Analysis of Au

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A SWOT Analysis of Auto Edge Inc

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A SWOT Analysis of Auto Edge

SWOT analysis is a strategic planning technique that is used to analyze a business’s opportunities in the face of its strengths, weaknesses and the threats that it faces. The technique provides a framework for organizing information gained from a situation analysis to enable a business move from its challenges by adopting a fresh perspective (Cadle, Eva, & Hindle, 2014).

This SWOT analysis of Auto Edge is conducted with the aim of determining whether the firm should relocate its operations back to the United States. The analysis is aimed at exploring the opportunities available to the company as well as the threats it faces. Additionally its strengths and weaknesses will be reviewed.

Strengths

This refers to a company’s internal assets that can give it a competitive edge over its competitors (Jacob, 2012). An analysis of Auto Edge reveals that the company has an enormous loyal buyer base. This is because the company’s products are considered over those of competitors due to their high quality. Additionally the brand has a past reputation of manufacturing quality products that it can ride on if it relocates operations to the United States.

Opportunities

Opportunities are attractive factors that present an organization with a chance to make above average returns. Organizations should be able to sense this opportunities and take advantage of them whenever they arise (Grant, 2013). Auto Edge can take advantage of the favorable microeconomic factors such as low inflation and low interest rates to obtain cheap financing. Additionally, high employment rates mean that it can source labor cheaply in the United States.

Weaknesses

Weaknesses are those characteristics that place a company at a disadvantage compared to its peers. Weaknesses must be jettisoned if a company is to meet its business outcomes (Grant, 2013). Like all companies, Auto Edge also has some weaknesses. The company’s biggest weakness lies in poor management decision making. It’s the top management’s decision to outsource operations that has ruined the company’s brand name

Threats

Threats are external elements in the environment that put a business into great risk of not achieving its goals and objectives. They pose a threat on the stability and survival of a firm as it has no control over them (Jannesson, 2013). One of the threat that Auto Edge faces is increased competition from rivals. This has led to decreased fortunes in the automotive industry.

The rigid American regulations in the Auto industry are also a threat to Auto Edge. This is because stringent laws have led to low production which had pushed the company into the loss making territory.

Summary of the decision to be made

Auto Edge’s restrained business performance led its board of directors’ decision to shut down its manufacturing operations and outsource its products from a reputable factory South Korea. While the strategy worked for the company for five years, the issue of poor quality products led to the company’s brand coming under scrutiny. The recall of automobiles made from the parts the company supplied also further affected its brand.

Nevertheless, the company’s traditional reputation in the automotive industry for quality, reliability, and dependable products can still work to its advantage especially if it moved its operations back into the United States. Consequently, the company should move its operations back to the United States to enable it win back its loyal customers. This will result in increased sales as a result of the anticipated return to quality from basing the manufacturing operation in the U.S.

Additionally, the macroeconomic factors that the U.S is experiencing are bound to work to the company’s advantage. High unemployment in the country is bound to lower the high cost of labor that had led the company to close down its U.S operations. Low interest rates and low-slung inflation are also likely to result into reduced financing costs which is another factor that contributed to the company’s decision to outsource operations. Hence, it’s totally sensible and plausible for the company to make the change and shift its operations back into the United States.

Cadle, J., Eva, M., & Hindle, K. (2014). Business Analysis. Swindon: BCS Learning & Development Limited.

Grant, R. M. (2013). Contemporary Strategy analysis. New Jersey: Wiley.

Jacob, V. (2012). Strategy (1st ed.). Bloomington: AuthorHouseTM.

Jannesson, E. (2013). Strategy. Berlin: Springer.