Page 4: SWOT analysis
Arlington Securities' main strengths lie in the quality of its product, its brand leadership and its experience in business park development. Arlington Securities has maintained its competitive advantage by adopting a differentiation strategy. Differentiation is not simply concerned with giving a product differing attributes to that of competitors, but in providing differences that customers can see and will value. It is also concerned with providing the sort of quality that rivals find difficult to match. Maintaining a competitive advantage is likely to come from four main areas in which Arlington excels: technical superiority, quality, support services and better value for money.
All organisations must recognise their potential weaknesses or vulnerabilities. Arlington Securities’ assets are potentially vulnerable to fluctuations in the property market. An asset is what an organisation owns or is owed. Assets are usually considered in terms of their degree of liquidity. When Arlington Securities buys land for development, it will dispose of large amounts of its most liquid asset - cash. When Arlington buys land for development, it does so by incurring capital expenditure. Arlington’s assets then become illiquid, because they are more difficult to convert back into cash quickly. If it takes too long for Arlington to either sell or lease the land and buildings it has developed, too many of Arlington’s assets become tied up as illiquid assets. Therefore, if the property market is slow, it may be difficult for Arlington to meet its liabilities. Liabilities and borrowings are what an organisation owes to third parties.
When an organisation, such as Arlington, is seen as the brand leader, competitors will attempt to copy and improve on the product or service. Therefore, Arlington must continue to monitor its performance to remain ahead of its competitors. Arlington must also prepare for government imposed threats such as increased interest rates. An increase in interest rates may:
- deter customers from obtaining loans to invest in property development
- increase interest rates on loans Arlington Securities has made to finance the development.
Arlington Securities recognised that it needed to develop a financial strategy to create a more balanced company which was less vulnerable to the risks associated with the peaks and troughs of the property market. Arlington realised that it needed to establish a dependable income stream, in which current assets are well-balanced against current liabilities.
Arlington’s brand leadership, experience and reputation for quality has provided the opportunity to move away from being solely a developer / trader and further expand its service provision into investments and full support services while retaining its development role. Arlington has also identified an opportunity for expansion into Europe, where the concept of business park development is in its infancy.