Swot Analysis of "Arctic Timber AB: Engineered Woods Division (C)" 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 (C) 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 (C) casestudy better are - – cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%,
talent flight as more people leaving formal jobs, wage bills are increasing, etc
Introduction to SWOT Analysis of Arctic Timber AB: Engineered Woods Division (C)
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 (C) 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 (C) can be done for the following purposes –
1. Strategic planning using facts provided in Arctic Timber AB: Engineered Woods Division (C) 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 (C) | 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 (C) Harvard Business Review case study are -
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.
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.
Successful track record of launching new products
– Arctic Timber has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arctic Timber has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Arctic Timber digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Arctic Timber has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
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 (C) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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 (C) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Arctic Timber AB: Engineered Woods Division (C) 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.
Learning organization
- Arctic Timber is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Arctic Timber is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Arctic Timber AB: Engineered Woods Division (C) Harvard Business Review case study emphasize – knowledge, initiative, 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.
Sustainable margins compare to other players in Organizational Development industry
– Arctic Timber AB: Engineered Woods Division (C) 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.
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.
Weaknesses Arctic Timber AB: Engineered Woods Division (C) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Arctic Timber AB: Engineered Woods Division (C) are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Arctic Timber AB: Engineered Woods Division (C), it seems that the employees of Arctic Timber don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Arctic Timber supply chain. Even after few cautionary changes mentioned in the HBR case study - Arctic Timber AB: Engineered Woods Division (C), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Arctic Timber vulnerable to further global disruptions in South East Asia.
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.
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.
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 (C) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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 (C) 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.
Skills based hiring
– The stress on hiring functional specialists at Arctic Timber has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Arctic Timber AB: Engineered Woods Division (C), 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.
Capital Spending Reduction
– Even during the low interest decade, Arctic Timber has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Arctic Timber AB: Engineered Woods Division (C) | 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 (C) are -
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 (C), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 (C) 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.
Using analytics as competitive advantage
– Arctic Timber has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Arctic Timber AB: Engineered Woods Division (C) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arctic Timber to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Arctic Timber in the consumer business. Now Arctic Timber can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Buying journey improvements
– Arctic Timber can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Arctic Timber AB: Engineered Woods Division (C) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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.
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.
Manufacturing automation
– Arctic Timber can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Arctic Timber AB: Engineered Woods Division (C) 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 (C) are -
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.
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.
Consumer confidence and its impact on Arctic Timber demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Arctic Timber needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Arctic Timber high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Arctic Timber can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Arctic Timber AB: Engineered Woods Division (C) .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Arctic Timber AB: Engineered Woods Division (C) 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 (C) 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 (C) 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 (C) 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 (C) 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.
