Last time we did a SWOT analysis of Adobe, an American multinational computer software company. Today, we will do an extensive SWOT Analysis of Nvidia to identify the company’s performance.
The leader of graphics processing unit manufacturers – Nvidia is an American multinational company that manufactures graphic processors, mobile technologies and desktop computers. The company diversified into the gaming industry with its handheld games console Shield portable, Shield tablet and Shield Android TV and now with its cloud gaming service GeForce.
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In today’s blog, we are going to do an extensive SWOT Analysis of Nvidia and find out the company’s overall performance. Before we begin our analysis let’s have a look at its founding, products, financial status and competitors.
(Nvidia Headquarters in Santa Clara, California, US, Source: Nvidia Newsroom)
Nvidia Corporation is an American multinational technology company. It was founded in 1993 by three American scientists – Jensen Huang, Chris Malachowsky and Curtis Priem. It is a California based company.
It manufactures graphic processors, mobile technologies and desktop computers. It is known for developing integrating circuits, which are used in everything from electronic games consoles to personal computers.
In 1995, it launched its first product, the NV1, which was a performance-segment graphics card.
After several years, with the launch of the RIVA series of graphic processors in 1998, it became a major force in the computer gaming industry. For the company’s excellent performance, it was honoured as Company of the Year by Forbes magazine for its rapid growth and success in 2007.
|Founder||Jensen Huang, Chris Malachowsky and Curtis Priem|
|Origin||Santa Clara, California, US|
|No. of Employees||18,100|
|Market Cap||$ 771.14 Billion (2021)|
|Annual Revenue||$ 10.92 Billion (2020)|
|Net Income/ Profit||$ 2.8 Billion (2020)|
Products of Nvidia
Nvidia is a Software Company and deals in:
- Graphics processing units
- Central processing units
- Tablet computers
- TV accessories
- Data processing units
Competitors of Nvidia
Nvidia is competing on a global level with many other well-known companies in the Information Technology sector. The top 5 competitors of Nvidia are:
- Arista Networks
As we discussed the company’s core business, let’s begin with the SWOT Analysis of Nvidia.
SWOT Analysis of Nvidia
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. SWOT Analysis is a tool that helps to analyse where the company is performing well, where it lacks, how it can grow in future and what are things it has to beware of. It helps the internal as well as external users to compare the company with its competitors and industry as a whole.
To better understand the SWOT analysis of Nvidia, refer to the infographics below:
So let us go ahead and first have a glance at the strengths of Nvidia from the SWOT analysis of Nvidia.
Strengths of Nvidia
Strengths are the factors that contribute to the success of the company. Strengths are those features and key areas where the company is performing better than its competitors. Following are the strengths of Nvidia:
- Skilled Labour Force: Nvidia has invested huge resources in training and learning programs of the labour force which in turn results in a skilled workforce as well as they are highly motivated too.
- Entering New Markets: Nvidia has focused on expansion and entering new markets. It has been proved successful and helped the company in generating income from the new market stream.
- Product Portfolio: The company has a wide product portfolio that offers large varieties of products, holding more than 2,300 patents worldwide allows the company to increase their customer base. Also, it has some unique products which are not supplied by its competitor.
- Strong Financial Position: Nvidia has a strong financial position and large accumulated profits that can be used to make further capital investments.
- Intellectual Property Rights: The company owns several intellectual property rights that include patents and trademarks. This allows the company exclusive rights over its products and competitors can’t copy or reverse engineer them.
- Product Quality: Its products have good quality which smoothens the experience of users, which is why it is still valued by the customers and increases brand loyalty. This helps to fulfil customer satisfaction as they find it as a good value for the money they pay and improves their performance in the competitive market.
Weaknesses of Nvidia
Weaknesses are the characteristics of the company that places it at a disadvantage relative to others. The weaknesses stop the company from performing at an optimum level and become barriers to achieving goals.
- Research and Development: Even though the company is spending a certain amount on research and development, it is still less than what its competitors spend on it and therefore they have a significant advantage of innovative products and more market share.
- Low Current Ratio: Current ratio shows the company’s ability to meet its short term obligations, which is lower than the company average ratio. This shows that the company is facing problems in meeting its commitments and can face liquidity problems in future.
- High Employee Turnover Ratio: The company has a higher employee turnover ratio as compared to its competitors which means more employees are leaving and it has to spend more on the training of the new employees. Hence the company faces increased recruitment costs and reduced organisational productivity.
- Centralisation: The decision making is highly centralised which means that decisions are to be approved by top-level management.
Opportunities of Nvidia
Opportunities are the favourable external factors that give the company a competitive advantage to improve its performance and increase profit.
- Population: Population is growing at a great pace and that means there is a chance of an increase in potential customers so it can target the population and increase its sales.
- Rise in Gaming Sector: There is a significant increase in the use of gaming consoles such as the all-new PS5 and Xbox which requires high-end gaming chipsets, graphics and drivers, this becomes an opportunity for Nvidia to produce the required quality and take the contract for installations.
- High Disposable Income: As there is a rise in customer disposable income and increased purchasing of gadgets which becomes an opportunity for Nvidia to introduce high-end products and increase its customer base.
- Improve its Digital Presence: Being one of the top gaming processing brands in the world, Nvidia should take the opportunity of the booming digital era and build a stronger relationship with its customers online using digital marketing strategies. Having a strong digital presence creates a lasting impression and attracts new customers.
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- Interest Rates: Reduction in the interest rates make it easier to fund loans at cheaper rates. The company can take it as an opportunity and undergo expansion projects at lower interest.
- Technology Improvement: Recently, according to the increasing demand for mobile-based technologies, Nvidia has moved their focus towards the mobile computing market where it produces vehicle navigation and entertainment software for smartphones. This shows that Nvidia is improving on efficiency and the introduction of innovative products. It also provides better information on customer needs.
Threats of Nvidia
Threats are the unfavourable factors that could harm the functioning of the company.
- Intense Competition: Due to stable profitability, there are numerous entrants in the industry. This leads to higher competition in the industry. It becomes difficult for the company to sustain and grow.
- Customer Preferences: As customers preferences keep on changing, it puts pressure on the company to constantly introduce innovations and develop new products as fast as possible so that customers might not switch to competitors products.
- Shortage of Skilled Labour: Due to the shortage of skilled labour in the technological sector in the market, the company may not be able to recruit the right person with the appropriate skill set.
- User Experience: As Nvidia works on improving the performance and user gaming experience with its drivers and chipsets. If somehow the user faces any lagging and hanging issues it directly questions the accountability of Nvidia.
- Several Controversies: Controversies such as Maxwell advertising dispute, GeForce partner program and hardware unboxed controversy negatively affected the Nvidia reputation in the market.
This ends our SWOT analysis of Nvidia. Let us conclude our learning below.
Nvidia is a world-leading company in computer technology. It has been working for almost 3 decades and gained a good amount of market share. In the SWOT analysis of Nvidia, we observed that the company has a good financial position and maintains the quality of its products. But the company has to focus on research and development to improve its technologies. The company can use the latest technology to become efficient.
With the increasing market competition, it has become a necessity to focus more on marketing. In the changing landscape, where digital marketing has become more important than traditional marketing, the company has to adopt digital marketing as a new form of marketing. If you are someone who would like to learn interesting digital marketing skills, check out IIDE’s 3 Month Advanced Online Digital Marketing Course and register today!
We hope this blog on the SWOT analysis of Nvidia has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.
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