Swot Analysis of "Arctic Timber AB: Engineered Woods Division (B)" written by Michael L. Tushman, David Kiron, Wendy Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Arctic Timber facing as an external strategic factors. Some of the topics covered in Arctic Timber AB: Engineered Woods Division (B) case study are - Strategic Management Strategies, Innovation, Leadership, Organizational structure and Organizational Development.
Some of the macro environment factors that can be used to understand the Arctic Timber AB: Engineered Woods Division (B) casestudy better are - – increasing commodity prices, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, wage bills are increasing, increasing government debt because of Covid-19 spendings, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
technology disruption, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Arctic Timber AB: Engineered Woods Division (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Arctic Timber AB: Engineered Woods Division (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Arctic Timber, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Arctic Timber 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 Arctic Timber AB: Engineered Woods Division (B) can be done for the following purposes –
1. Strategic planning using facts provided in Arctic Timber AB: Engineered Woods Division (B) case study
2. Improving business portfolio management of Arctic Timber
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Arctic Timber
Strengths Arctic Timber AB: Engineered Woods Division (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Arctic Timber in Arctic Timber AB: Engineered Woods Division (B) Harvard Business Review case study are -
Sustainable margins compare to other players in Organizational Development industry
– Arctic Timber AB: Engineered Woods Division (B) firm has clearly differentiated products in the market place. This has enabled Arctic Timber to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Arctic Timber to invest into research and development (R&D) and innovation.
Analytics focus
– Arctic Timber is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Michael L. Tushman, David Kiron, Wendy Smith can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Arctic Timber in the sector have low bargaining power. Arctic Timber AB: Engineered Woods Division (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arctic Timber to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Arctic Timber has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Arctic Timber to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Arctic Timber 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.
Operational resilience
– The operational resilience strategy in the Arctic Timber AB: Engineered Woods Division (B) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management
– Arctic Timber is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Arctic Timber in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Arctic Timber is present in almost all the verticals within the industry. This has provided firm in Arctic Timber AB: Engineered Woods Division (B) case study 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.
Highly skilled collaborators
– Arctic Timber has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Arctic Timber AB: Engineered Woods Division (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Arctic Timber is one of the most innovative firm in sector. Manager in Arctic Timber AB: Engineered Woods Division (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Arctic Timber is one of the leading recruiters in the industry. Managers in the Arctic Timber AB: Engineered Woods Division (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Arctic Timber AB: Engineered Woods Division (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arctic Timber AB: Engineered Woods Division (B) are -
Increasing silos among functional specialists
– The organizational structure of Arctic Timber is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Arctic Timber needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Arctic Timber to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Arctic Timber has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arctic Timber AB: Engineered Woods Division (B), in the dynamic environment Arctic Timber has struggled to respond to the nimble upstart competition. Arctic Timber has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Arctic Timber products
– To increase the profitability and margins on the products, Arctic Timber needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arctic Timber is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Arctic Timber AB: Engineered Woods Division (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Arctic Timber needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Arctic Timber has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Arctic Timber AB: Engineered Woods Division (B) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Arctic Timber 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Arctic Timber has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Arctic Timber 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 strategic competitive environment developments
– As Arctic Timber AB: Engineered Woods Division (B) HBR case study mentions - Arctic Timber takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Arctic Timber, firm in the HBR case study Arctic Timber AB: Engineered Woods Division (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Arctic Timber AB: Engineered Woods Division (B) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Arctic Timber AB: Engineered Woods Division (B) are -
Better consumer reach
– The expansion of the 5G network will help Arctic Timber to increase its market reach. Arctic Timber 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.
Loyalty marketing
– Arctic Timber has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Arctic Timber 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 Organizational Development segment.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Arctic Timber can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Arctic Timber can use these opportunities to build new business models that can help the communities that Arctic Timber operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Arctic Timber is facing challenges because of the dominance of functional experts in the organization. Arctic Timber AB: Engineered Woods Division (B) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Arctic Timber can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Creating value in data economy
– The success of analytics program of Arctic Timber has opened avenues for new revenue streams for the organization in the industry. This can help Arctic Timber to build a more holistic ecosystem as suggested in the Arctic Timber AB: Engineered Woods Division (B) case study. Arctic Timber can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Arctic Timber can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Arctic Timber 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Arctic Timber can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Arctic Timber can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Arctic Timber can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Arctic Timber 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, as suggested in case study, Arctic Timber AB: Engineered Woods Division (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Arctic Timber AB: Engineered Woods Division (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Arctic Timber AB: Engineered Woods Division (B) are -
Shortening product life cycle
– it is one of the major threat that Arctic Timber is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Arctic Timber has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Arctic Timber needs to keep up with the evolution of technology in the Organizational Development 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.
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 Arctic Timber business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Arctic Timber 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 field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Arctic Timber in the Organizational Development sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Arctic Timber AB: Engineered Woods Division (B), Arctic Timber may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Arctic Timber with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Arctic Timber
– 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 Arctic Timber.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Arctic Timber in the Organizational Development industry. The Organizational Development 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.
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 Arctic Timber.
Regulatory challenges
– Arctic Timber needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
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. Arctic Timber 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 Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Arctic Timber can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Arctic Timber AB: Engineered Woods Division (B) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Arctic Timber AB: Engineered Woods Division (B) 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 the case study Arctic Timber AB: Engineered Woods Division (B) 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 the Harvard case study Arctic Timber AB: Engineered Woods Division (B) 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 Arctic Timber AB: Engineered Woods Division (B) is 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 Arctic Timber needs to make to build a sustainable competitive advantage.