SWOT Analysis: Launching a Direct Distribution Company

SWOT Analysis Example: Direct Distribution

This example is based on an imaginary business-to-business manufacturing company that historically relied on distributors. The company is considering creating its own distribution company to directly reach end customers in sectors not currently covered by its distributors. This SWOT analysis examines that opportunity.

Subject of Analysis

Creation of a direct distribution company to access underserved end-customer segments.

Strengths

• Control and direction over final customer sales
• High product quality and reliability
• Superior product performance compared to competitors
• Excellent product lifetime and durability
• Idle manufacturing capacity
• Some employees have experience with end customers
• Existing customer list available
• Direct delivery capability
• Continuous product improvements
• Can be supported by existing facilities
• Products have necessary accreditation
• Adaptable IT processes
• Committed and confident management

Weaknesses

• Untested client list
• Gaps in product range for certain sectors
• Potential as a weak competitor initially
• Limited experience in direct marketing
• Inability to serve foreign clients
• Need for a larger sales force
• Budget limitations
• Lack of concrete evidence
• Absence of a detailed plan
• Need for delivery staff training
• Inadequate processes and systems
• Insufficient management team

Opportunities

• Potential to develop new products
• Local competitors offer poor-quality products
• Good potential profit margins
• End customers receptive to new ideas
• Opportunity to expand to other countries
• Potential for new special applications
• Opportunity to surprise the competition
• Potential for better deals with suppliers

Threats

• Impact of legislation
• Environmental effects favoring larger players
• Risk to current distribution relationships
• Seasonal market demand
• Retention of key personnel
• Potential distraction from core business
• Potential negative publicity
• Vulnerability to major competitors