Based on various researches at Oak Spring University , Summit Midstream Partners LP is operating in a macro-environment that has been destablized by – wage bills are increasing, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
increasing energy prices, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Summit Midstream Partners LP
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Summit Midstream Partners LP can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Summit Midstream Partners LP, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Summit Midstream Partners LP operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Summit Midstream Partners LP can be done for the following purposes –
1. Strategic planning of Summit Midstream Partners LP
2. Improving business portfolio management of Summit Midstream Partners LP
3. Assessing feasibility of the new initiative in United States
4. Making a Natural Gas Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Summit Midstream Partners LP
Strengths of Summit Midstream Partners LP | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Summit Midstream Partners LP are -
Diverse revenue streams
– Summit Midstream Partners LP is present in almost all the verticals within the Natural Gas Utilities industry. This has provided Summit Midstream Partners LP a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Cross disciplinary teams
– Horizontal connected teams at the Summit Midstream Partners LP are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Summit Midstream Partners LP
– The covid-19 pandemic has put organizational resilience at the centre of everthing Summit Midstream Partners LP does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Summit Midstream Partners LP is one of the most innovative firm in Natural Gas Utilities sector.
Low bargaining power of suppliers
– Suppliers of Summit Midstream Partners LP in the Utilities sector have low bargaining power. Summit Midstream Partners LP has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Summit Midstream Partners LP to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Summit Midstream Partners LP is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Summit Midstream Partners LP is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Summit Midstream Partners LP emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Summit Midstream Partners LP has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Natural Gas Utilities industry. Secondly the value chain collaborators of Summit Midstream Partners LP have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Summit Midstream Partners LP has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Summit Midstream Partners LP has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Summit Midstream Partners LP has one of the best training and development program in Utilities industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Summit Midstream Partners LP has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Summit Midstream Partners LP is one of the leading players in the Natural Gas Utilities industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Natural Gas Utilities industry
- digital transformation varies from industry to industry. For Summit Midstream Partners LP digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Summit Midstream Partners LP has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses of Summit Midstream Partners LP | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Summit Midstream Partners LP are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Summit Midstream Partners LP supply chain. Even after few cautionary changes, Summit Midstream Partners LP is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Summit Midstream Partners LP vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Summit Midstream Partners LP needs to have more collaboration between its sales team and marketing team. Sales professionals in the Natural Gas Utilities industry have deep experience in developing customer relationships. Marketing department at Summit Midstream Partners LP can leverage the sales team experience to cultivate customer relationships as Summit Midstream Partners LP is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative at Summit Midstream Partners LP, in the dynamic environment of Natural Gas Utilities industry it has struggled to respond to the nimble upstart competition. Summit Midstream Partners LP has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Summit Midstream Partners LP ‘s star products
– The top 2 products and services of Summit Midstream Partners LP still accounts for major business revenue. This dependence on star products in Natural Gas Utilities industry has resulted into insufficient focus on developing new products, even though Summit Midstream Partners LP has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of United States, Summit Midstream Partners LP needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Summit Midstream Partners LP has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Summit Midstream Partners LP has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Natural Gas Utilities industry over the last five years. Summit Midstream Partners LP even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Summit Midstream Partners LP is slow explore the new channels of communication. These new channels of communication can help Summit Midstream Partners LP to provide better information regarding Natural Gas Utilities products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Summit Midstream Partners LP has some of the most successful models in the Natural Gas Utilities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Summit Midstream Partners LP should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Summit Midstream Partners LP products
– To increase the profitability and margins on the products, Summit Midstream Partners LP needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Summit Midstream Partners LP is dominated by functional specialists. It is not different from other players in the Natural Gas Utilities industry, but Summit Midstream Partners LP needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Summit Midstream Partners LP to focus more on services in the Natural Gas Utilities industry rather than just following the product oriented approach.
Summit Midstream Partners LP Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Summit Midstream Partners LP are -
Use of Bitcoin and other crypto currencies for transactions in Natural Gas Utilities industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Summit Midstream Partners LP in the Natural Gas Utilities industry. Now Summit Midstream Partners LP can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Summit Midstream Partners LP can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Natural Gas Utilities industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Summit Midstream Partners LP can use these opportunities to build new business models that can help the communities that Summit Midstream Partners LP operates in. Secondly it can use opportunities from government spending in Natural Gas Utilities sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Natural Gas Utilities industry, but it has also influenced the consumer preferences. Summit Midstream Partners LP can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Summit Midstream Partners LP to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Summit Midstream Partners LP can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Summit Midstream Partners LP can improve the customer journey of consumers in the Natural Gas Utilities industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Summit Midstream Partners LP has opened avenues for new revenue streams for the organization in Natural Gas Utilities industry. This can help Summit Midstream Partners LP to build a more holistic ecosystem for Summit Midstream Partners LP products in the Natural Gas Utilities industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Summit Midstream Partners LP is facing challenges because of the dominance of functional experts in the organization. Summit Midstream Partners LP can utilize new technology in the field of Natural Gas Utilities industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Summit Midstream Partners LP can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Summit Midstream Partners LP to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Summit Midstream Partners LP to increase its market reach. Summit Midstream Partners LP will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Low interest rates
– Even though inflation is raising its head in most developed economies, Summit Midstream Partners LP can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Summit Midstream Partners LP has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Natural Gas Utilities sector. This continuous investment in analytics has enabled Summit Midstream Partners LP to build a competitive advantage using analytics. The analytics driven competitive advantage can help Summit Midstream Partners LP to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Summit Midstream Partners LP External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Summit Midstream Partners LP are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Summit Midstream Partners LP needs to understand the core reasons impacting the Natural Gas Utilities industry. This will help it in building a better workplace.
Increasing wage structure of Summit Midstream Partners LP
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Summit Midstream Partners LP.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Summit Midstream Partners LP in Natural Gas Utilities industry. The Natural Gas Utilities industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Summit Midstream Partners LP can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Natural Gas Utilities industry.
Consumer confidence and its impact on Summit Midstream Partners LP demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Natural Gas Utilities industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Summit Midstream Partners LP may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Natural Gas Utilities sector.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Summit Midstream Partners LP will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Natural Gas Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Summit Midstream Partners LP can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Summit Midstream Partners LP.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Summit Midstream Partners LP business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Summit Midstream Partners LP has witnessed rapid integration of technology during Covid-19 in the Natural Gas Utilities industry. As one of the leading players in the industry, Summit Midstream Partners LP needs to keep up with the evolution of technology in the Natural Gas Utilities sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Summit Midstream Partners LP Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Summit Midstream Partners LP needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Summit Midstream Partners LP is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Summit Midstream Partners LP is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Summit Midstream Partners LP to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Summit Midstream Partners LP needs to make to build a sustainable competitive advantage.