Management Essay on SWOT Analysis Weaknesses for D & J Plastics Company

SWOT Analysis Weaknesses for D & J Plastics Company

Abstract

SWOT analysis is a research tool used to evaluate the positives (Strengths and Opportunities) and negatives (Weaknesses and Threats) for the firm (Fields, 2011).  The outcome of the evaluation affects the future direction of the business.  D & J Plastics Company manufactures plastics using injection and extrusion molding technologies on Made-To-Order basis.  The company has been profitability, but without optimal use of its strengths and opportunities.  After the management decided to expand the business, there are certain dangers that the company needs to strategize on so that these future investments may not slow the growth on the privately owned company.  The SWOT analysis has identified the company’s strengths in production design and manufacturing techniques.  The study also identified weaknesses in the inefficient production technology and pulled production plan.  The opportunities identified for the firm lie in the market size and the company’s dominance while the threats are in the designing of new product lines.  The company’s plan to secure a bigger market share has led to a drastic change in operation.  The management strategies will be guided by the ultimate goal of improving profitability.

SWOT Analysis Weaknesses for D & J Plastics Company

SWOT analysis of the company will help reveal some of the weaknesses that may hinder the company from achieving its goals (Fields, 2011).  For D & J Plastics Company, there are three weaknesses:

  1. Use of Made-To-Order (MTO) production strategy
  2. Use of extrusion molding technology
  3. Adoption of in-house development

In manufacturing, the market demand significantly controls the level of production.  For most large-scale manufacturers, the level of production is not affected a lot by market demand because they use the Make-To-Stock (MTS) approach (Fields, 2011).  This system of production pushes the products to the customers.  However, D & J Plastics Company uses the MTO strategy.  In this production strategy, the manufacturer waits for the orders to be placed by the customers, before commencing production (Fields, 2011).  It is the pull type of production where the market demand pulls the production.  Per production, the company accrues maximum profit because the market is ready.  However, the production level is reduced significantly.  For D & J Company, this has been their primary weakness.  In an attempt to maximize on profits, the company has very low output level.

At the steel rolling mill where I work, the use of MTO had significantly lowered the level of production.  As a result, the management decided to review the marketing strategy and policy then change the production approach from MTO to MTS.  After this change had been initiated, there was a drastic improvement in the production level.  The company also registered improved profits due to increased revenue.  The profit margin was reduced significantly due to the intense marketing that was done.  However, the overall benefit accrued over the first six months was much high compared to the same period the previous year before the MTS strategy was implemented.

In addressing this weakness, D & J Company should find incorporated the two strategies.  Gradual introduction of MTS may help boost the production level of the company.  The company should also review its marketing strategy.  In the future, the D & J Company should consider the fusion of MTO with MTS strategies.

The use of inefficient technology by a company is very critical weakness as it may affect the profitability of the company and marketability of its products (Fields, 2011).  For D & J Plastic Company, the use of extrusion molding technology is a significant gap in its production.  While there are products that are made suitably using this technique, most of those produced by this company are not.  D & J Company has employed this technology because it allows for the production within a day (Chanda & Roy, 2009).  Despite the necessity to reduce the amount of time that a customer waits for a product to be made, it is important that quality products be produced.  One of the major weaknesses of extrusion molding technology is a variation of size.  This variation of size is because of a dying swell that occur when the hot plastic leaves the extruder (Chanda & Roy, 2009).  The unpredictability of this change is due to several factors and therefore it compounds the problem.  In manufacturing, precision is essential for the production of good quality products.  Therefore, extrusion molding is not appropriate for production of high-quality production. 

Extrusion molding technology adds to weaknesses to D & J Company’s production because it has product limitations.  Extrusion molding cannot be use to manufacture products such as bottles that have lids on the narrow end (Chanda & Roy, 2009).  Therefore, it limits that number of orders that the company can adequately service.  A company that used this technique near my place of work had to upgrade it to extrusion blow molding so that they could handle all these product types.

To address this weakness, D & J Company needs to reduce the overreliance on injection molding by either upgrading the current extrusion molding technology or replacing it.

The decision to adopt in-house design and development was guided primarily by a desire to improve competitiveness and profitability.  However, this decision is a weakness for the company because it will stray the company’s primary objective of making profit.  Use of in-house development will increase the competitive advantage of the company because they will be able to produce new products that they can patent.  However, the weakness in this plan is on the cost.  The costs are high for development, continuous maintenance, and upgrade of the equipments to the meet the different market demands, acquiring personnel for the new technology and changing to the new technologies.  Development of new product designs and construction takes time.  After the models are obsolete, the company may unable to sell due to incompatibility.  Given the low-level production in D & C Plastic Company, this new venture is bound to draw back the profitability of the company.  The new products designed may sometimes suffer poor market reception.  Consequently, this may force the company to discard the new technology.  Given the cost of in-house development, the company may experience reduced profits.  The new employees hired for in-house engineering will increase the company’s wage bill.  Therefore, this move is a setback to the company. As a solution to this gap, the company should opt for outsourcing.  

References

Chanda, M., & Roy, S. K. (2009).  Plastics fundamentals, properties, and testing.  Boca Raton: CRC Press.

Fields, E. (2011).  The essentials of finance and accounting for nonfinancial managers. New York: American Management Association.