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Limited Brands is a transnational corporation established in 1963 with its headquarters in Columbus, Ohio. A SWOT analysis is an important tool for comprehending company’s strengths and weaknesses, as well as identifying available opportunities and imminent threats. This essay looks at the L Brands’ current situation both from within and outside the company with the aim of providing recommendations on the best growth strategy, which it can use to boost growth.
Limited Brands Current Situation Analysis
Limited Brands recorded a 4% increase in net sales as of April 30, 2016 as compared to May 2, 2015 (Preston). The company showed a rise from $ 2,512 to $2,613 billion. With this trend, an increase in L Brands’ projected second-quarter earnings per share (from $0.50 to $0.60) can be achieved (Vault).
Limited Brands SWOT Analysis
Limited Brands Strengths
The Limited Brands Company draws its strengths from many aspects. Firstly, it has a robust management team, which has been working to make the firm earn very positive reputation in the market. Secondly, L Brands manufactures unique products and offers high-quality services to its customers. Thirdly, company’s sales and profitability ratios are high due to perfect and robust communication systems in all retail stores. L Brands’ limited size explains a significant profit advantage. Its step to address the dispute with West Coast ports has reduced shortages (Schultz). Besides, company’s assortments are often priced at reasonable rates (Vault).
Limited Brands Weaknesses
The most notable L Brands’ weakness arises from less commodities sold, being challenges threatening to diminish customers’ loyalty to the company (Vault). Business losing clients cannot survive competition and can be be pushed out of the market. Secondly, L Brands takes little or no effort in improving its cost structure, limiting its projected growth. It is also worth pointing out company’s lack of investment in research.
Limited Brands Opportunities
However, Limited Brand’s weaknesses cannot overshadow its stream of opportunities. Investing and putting more efforts in inventions and innovations of new products and service lines will go a long way in increasing company’s growth rate. Furthermore, Limited Brands should work on asset acquisition, which will increase production and consequently profitability. Although L Brands has been present online, it has to review its online services to increase differentiated product sales.
Limited Brands Threats
Competitors offer services and sell products at lower prices, shifting customer loyalty away from L Brands. A slow pace in which market price wars occur and are settled further compounds this threat. It reduces corporation’s profit margins. In addition, reduced profitability can be a result of the economic crisis (Vault). L Brands has not been spared of many other external threats, such as political instability, harsh government policies and biting tax rates.
Growth Strategy Recommendation
Considering the situation above, the Limited Brands Company should place more emphasis on the customer-focused strategy. It has to identify core customers, engage them in insightful conversations on the best operational experiences and significant changes in the current way of handling business. The customer-focused strategy also entails sub-segmenting customer groups based on their needs, purchase patterns and contribution to company’s revenue. From this point, L Brands can create high-impact offers for the most attractive customer sub-segment. Nevertheless, the company must also work on incentives to lower sub-segments, while ensuring that it does not incur a loss. For example, L Brands can replace direct sales calls with on-line ordering (Rodrik).
Over the last few months, L Brands showed a significant net sales and profit increase. Its effective management, proper communication systems, high-quality products and services, and ability to retain customer loyalty have led to company’s exponential growth. However, L Brands risks losing clients and should adopt the customer-focused strategy to gain competitive advantage. Innovations of new products and investing in more research and development will aid the company in reducing threats such as external competition, harsh government policies and tax increase.