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CHAPTER V

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

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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 them.ess repeated.

Environmental Scan

/ \

Internal Analysis External Analysis

/\ /\

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

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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

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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
S-O W-O
strategies strategies

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Opportunities

S-T W-T
Threats strategies 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

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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.

Fig 5.3 SWOT Matrix of KSE Ltd.

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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%

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 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 society.KSE
has contributed liberally towards the social courses; few of them are:
1) Construction and maintenance of a modern children’s information center KSPAR
K 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 St.James Hospital Rs.3 lakhs

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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 5.1 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 0.05 0.40 0.40 0.80 6.4 7.85 8.10 9.00

RETURN (MT)

FEED 0.001% 0.005% .005% 0.006% 0.03% 0.048% 0.046% 0.043%

RETURN %
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.

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 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

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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

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Fig 5.4 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.

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