Financial Performance and Structure Essay

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Internal Environment Analysis

Strategic Plan Part 2: Internal Environmental Analysis

Strategic planning is informed by both the organization's external and internal environments. Internal factors are particularly important drivers of an organization's strategic direction. Among other internal factors, management and employee competencies, organizational culture and structure, product portfolio, and financial performance significantly influence the strategic decisions an organization makes (Hill & Jones, 2012). This text provides an internal environment analysis of WEX Inc., a payment processing and information management services firm with operations in the U.S. and beyond. The text particularly focuses on the most important strengths and weaknesses for the organization and its competitive position in the payment processing industry.

Important Strengths, Weaknesses, and Internal Environment Factors

WEX was established in 1983. More than three decades in operation means that the organization boasts fairly extensive operational experience in the payment processing industry, a major strength for the company. Over the years, the company has built its presence in the U.S. and other countries such as Canada, Brazil, UK, as well Australia and New Zealand. With attention to service quality and customer satisfaction, the company has attracted and retained an expansive customer base mainly in fleet, travel, and health industries as well as fuel retailing, media, and insurance industries. The company has excelled in corporate payment solutions, with simplicity, security, and affordability being the core strengths of its services. Other important strengths include competent leadership and personnel, valuable strategic partnerships, and strong financial performance. As of 2015, the company boasted revenues, net income, and assets in excess of $854 million, $110 million, and $3.8 billion, respectively (WEX Inc., 2015). With its impressive financial performance, WEX is one of the top firms in the Russell 2000 index. This adds to the strengths of the company.

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Strategic management theory asserts that competitive advantage is created from valuable, rare, inimitable, and non-substitutable resources, capabilities, and competencies (Hill & Jones, 2012). For WEX, a relatively lengthy operational experience, fairly strong customer loyalty, simple and secure corporate payment processing services, multinational presence, and robust financial performance can be described as the organization's bundle of valuable and rare resources. These competencies are particularly important in the industry in which the organization operates. The payment processing industry essentially involves handling payment and purchasing transactions on behalf of clients. Therefore, the ability of a provider to offer convenient, secure, trustworthy, and customer-centered solutions is a vital source of competitive advantage in the marketplace, especially in terms of customer acquisition, customer retention, and financial performance at large.

In spite of its strengths, WEX has a number of weaknesses worthy of consideration. First, the organization primarily focuses on corporate clients mainly in the fleet, travel, and health industries. This is a significant disadvantage compared to most of its major competitors as they focus on not only corporate clients, but also individuals and institutions. They also facilitate payments for a broader range of clientele beyond fleet, travel, and health industries. Additionally, the organization is heavily dependent on the U.S. market. In 2015, for instance, only 19% of its revenues came from outside the U.S. (WEX Inc., 2015). This weakness is crucial as overreliance on the domestic market can be disastrous for an organization, particularly due to market saturation and maturation challenges (Hill & Jones, 2012).

Another important weakness for WEX relates to financial performance. Though revenues have grown consistently in the last three years, a closer look reveals weaknesses in the company's financial performance. For instance, net earnings declined substantially from $202 million.....

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