Internal Analysis, SWOT Analysis Example

Background/Overview

CPI is a company with a successful growth trend in terms of economic performance, acquisition of skills and organic development. The company’s current models are recording good performance although the company depends highly on Ireland’s economy. Among these services include temporary staffing, permanent recruitment, managed services, outsourcing, career transition as well as training. The company obtains most of its net income from Ireland although the office located in Europe also contributes a small portion of the total net income. The challenge is on the mounting pressure on the gross and operating margins which keeps fluctuation because of the company’s temporary and contract staffing of employees. The company deals with provision of recruitment and workforce solutions in various markets (currently in Ireland and Europe and aspires to expand to UK and Poland).

Current Model

This internal analysis can be described as an analysis of the company’s strengths, weakness, opportunities and the threats in place. For instance, the changing economic conditions in Ireland can be considered as one of the threats to the operations, performance and success of the company. In this aspect, the rate of unemployment is proving to be quite high and consumer confidence is still on the downward trend. If this condition continues to worsen, then it will be difficult to forecast the demand for staffing services following the sensitivity of staffing and recruitment to economic conditions. It will also be difficult for the company’s candidates to provide much notice for their need in staffing changes. All these may call for a redefinition of the strategy of the whole business or company as an entity.

Strengths

As a service provider, one of the main strengths of CPL Company is that it has a diverse product/service line. The company offers diverse range of services or a variety of different services to many clients including temporary staffing, permanent recruitment, managed services, outsourcing, career transition as well as training of individuals. What this means is that the company has diversified its risks in a way that, failure in one service line does not affect the running of the company since the company will invest or depend on other service lines. This strength can not be enjoyed by a company with only one or few product/service lines. Therefore, failure in one service line offered by CPL Company does not affect its economic performance in any way. With this strength in place, the company is set to expand and enter the UK and Poland markets. In these new markets, the company will easily apply the diverse range of service lines and later concentrate on the service lines that record good performance in the new markets.

The second strength of the company concerns its strong brand name in Ireland. Here, the company has grown locally and has stayed close to its candidates to establish a strong candidates base, create good reputation and enhance healthy relationship with the candidates. This strength has been a great advantage to the company in terms of enhancing its competitive advantage because, being close to candidates enables the company to determine what exactly its clients want. The company has also adopted local supply conditions and managed to capture a high percentage of the industry in the country (Ireland) and has maintained its growth trend, just as the Irish economy continues to grow. The company has been rated in the country as the leading service provider in the market in terms of employment, outsourcing and training services. Having developed a strong brand, the company is likely to take this as an advantage and use the same strategy to win over candidates in the new markets currently underway (UK and Poland).

The company has established a strong financial strength capable of surviving harsh economic conditions or fluctuations. For instance, despite the unfavorable conditions that were witnessed between the year 2008 and 2010, the company was able to maintain its operations and remain profitable. Looking at the company’s balance sheet as per the end of year 2010, its end year financial balance was standing at €42.5 million meaning that the company has a strong cash position. It is this strength that will enable the company to plan and fund the anticipated expansion strategies in UK and Poland with little or no accumulation of significant debt. A strong financial base will enable the company to study the market while in operation before anticipating for profits. This allowance will give the company an upper hand of implementing strategies in the initial periods of operations to suit market demands with little pressure or hurry to make profits. This strategy can not work for companies with a weak financial background since they normally enter the market with a strategy to make quick profits and this may not work well for them in most markets. This is because some may be required to lower prices and give value to attract clients or candidates. Without strong financial base, such strategies are doomed to fail.

The company is also able to leverage its strong balance sheet in order to make opportunistic acquisitions. By doing so, the company can be able to make expansion links though utilization of available financial opportunities and improve performance.

Besides possessing a diverse range of services, the company has got a diverse portfolio of candidates and clients. Having started as a boutique IT recruitment firm, the company has diversified into other segments of service provision thus winning the loyalty of a diverse portfolio of clients including those from information technology, engineering departments, science, healthcare, contact centre, secretarial, finance, industrial, insurance, accounting and sales just to name a few. It is this wide range of clients that gives the strength to the company to explore other new markets like UK and Poland.

The company has got a strong ability to respond to the needs and demands of its clients. This is a great strategy and strength which can help the company to thrive in other new markets like UK and Poland if maintained or sustained. For instance, the company’s speed of response to the clients’ needs is quite high since its managers and the recruiters strongly believe in short turnaround times as well as processes involved in responding to the sentiments of the clients.

Efficiency in cost management is also one of the strengths possessed by the company. The company has got well established cost management team with elaborate strategies that enhance a well controlled cost base. Due to low cots incurred, the company is able to offer its services to customers at a low price. The company is thus able to get many customers and earn benefits from increased volumes of sales or services.

The fact that the current revenues of the company comes from few BIG accounts, with strategies underway to focus on BIG accounts, is a great strength on its own. This strategy is likely to enable the company to earn enough revenues to fund the new underway plans of the company to extend its links to new markets. In addition the company has established a strong relationship with other companies across the globe (operating on a global network). The company is likely to benefit from these relationships through exchange of management ideas, expansion strategies and competitive success factors in order to enhance its performance. It is these ideas that will contribute to success in the anticipated new market links in Poland and UK.

Acquisition Success is another success factor of CPI Company. In this aspect, the company has been able to make various acquisitions and at the same time managed to keep the cost low and maintain balanced scorecard.

Supporting visual: The strengths mentioned include diverse product/service line, strong brand name, strong financial base/balance, diverse portfolio of candidates and clients, strong ability to respond to needs and demands of clients, cost management efficiency, BIG accounts, leverage balance sheet and acquisition success. 

Weaknesses

The first weakness of the company is that it overly dependent on Irish economy as one can see from the company obtaining more that 80% of current venue from Ireland. During the time when the Irish economy recorded tremendous growth; this is when the company also grew and established a strong financial base. Now that the economy has recorded negative GDP for the last four consecutive quarters, the company’s dependency on this economy is likely to get affected if this trend continues. This whole scenario can highly affect the company’s expansion plans in place. Therefore, it is a general weakness for the company to almost entirely depend this single economy.

Operating many brands with little brand strategy is among the company’s weaknesses. Despite multiple brands, the company has very few strategies to cater for the brands. This has led to some brands to set up their own brand strategies and put in place measures to launch new websites for their brands. With this notion, the company is likely to be affected in the new anticipated markets of UK and Poland. In addition, the strategy by the company to establish its brands online has been weak from the beginning. Although recent developments have recorded some progress, company’s online strategy remains a weakness that is likely to affect the company in its expansion plans especially in UK and Poland where most the companies are in e-commerce.

Lack of long term focus and strategy is a weakness to the company. Despite the company’s efforts of chasing opportunities to enhance its growth of revenues in the Irish economy up to €250 million, the company lacks a long term strategy and focus thus doomed to fail in the long term if the Irish economy crumbles or shrinks. Unless this is changed, the expansion plans are likely to be affected.

The company’s organization structure is not quite strategic. Despite having an organizational hierarchy in place, it is counterproductive for all managers to report directly to the CEO since executive management is supposed to focus on the strategy and not on small internal issues. Unless this is changed, the company’s expansion strategies into new markets will be affected as well.

The company also lacks proper structured, repeatable and scalable processes. With no such processes in place, the unitization of resources is likely to be low. This will affect expansion strategies in new markets.

Despite having and focusing on BIG accounts as revenue source, lack of small and medium sized candidates may prove to be a weakness in consideration with expansion strategies in place. In the new markets, the small and medium sized candidates will be required in the initial period of operation before establishing BIG accounts.

Supporting visual: The weaknesses mentioned include overdependence on Irish economy, diverse brands with little brand strategy, poor long term focus/strategy, less strategic organization structure, over-focusing on BIG accounts and poor structured, repeatable and scalable processes.

Opportunities

One of the greatest opportunities of the company is to expand outside Ireland. Since 80% of the company’s revenue comes from Ireland, the company can diversify the risks involved, (incase the Irish economy continues to crumble for a prolonged period), by investing in other economies. This is an opportunity because, currently, the company has the strength to expand outside Ireland.

Another opportunity for the company is to leverage cross sell. Since the company has invested its resources in a diverse range of service provision, the management should look for opportunities to cross sell the recruitment services across managed services and industries including the anticipated new market. The company can cross sell by merging or collaborating with companies or managed services in the new markets and lobby them to market and sell some of the available services.

Technology is also one of the opportunities that are available for the company following current growth in inventions and innovations. The company needs to look for opportunities and invest in technology and take advantage of tools available in the market to enhance its competitiveness. Online presence strategy is also another technological opportunity for the company. Al these will help the company to maintain competiveness and thrive in the new markets.

Another opportunity is for Cpl to develop strong and dedicated customer management teams that could leverage cross-selling and ensure customer relationships.  This will be critical if they want to have strategic conversations with these existing customers around how they can help them out specifically in the UK and Polish markets.

 Supporting visual: The opportunities are to expand outside Ireland, leverage cross sell, use of technology for new inventions/innovations and develop strong and dedicated customer management teams.

Threats

One of the main threats of the company is the fact that Agency workers Directive also exists. This is a directive that uses a similar business model to that of Cpl Company. This means that Agency workers Directive is a great competitor and immediate strategies should be put in place by the company to survive the competition. Some of the strategies include changing existing business model in other new models of operation. Therefore, unless the company changes its model, Agency workers Directive will still remain the biggest threat in the market in terms of competing for customers or clients. Through leverage technology, social and professional networking websites also posses a great threat to the company. Technology as a threat overall, allows companies to operate in certain areas without making a capital investment in that location.

For instance, the latest recruitment strategy is to use social and professional sites other than job sites and agencies used by the company. Therefore, social sites like facebook, twitter and linked-in are posing a great threat to the company.

Global competitors are also a threat to the company due to increased competition. Such competitors like Adecco, Hays and Manpower are stiffening competition since they are able to do more volume pricing taking advantage of economies of scale which could potentially be a threat to the company.

Since most countries are imposing various barriers and regulations to entry into their markets, this move is a threat to the anticipation of the company in terms of global expansion into new markets where skilled labor is scarce.

 Supporting visual: The threats mentioned include market competition from Agency Works Directive and other global competitors as well as barriers and regulations to market entry.

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