Alcoa: The Race to Light-Weighting SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Alcoa: The Race to Light-Weighting
The race to lightweighting is well underway with the introduction of the aluminum body Ford F150. Raj Reddy, vice president of strategy for global rolled products at Alcoa, one of the biggest aluminum manufacturers in the world, knows, however, that the competition in the aluminum market will get stiffer with the introduction of more stringent CAFE standards. The company could look to newer bonding technologies and customization of services for its prized clients like Ford to diversify or invest in R&D to increase the ductility and strength of its core products. Students are asked to find strategies to define and boost Alcoa's value proposition.
Authors :: Andrew Hoffman, Jordan Siegel
Topics :: Strategy & Execution
Tags :: International business, Research & development, Sales, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis
Swot Analysis of "Alcoa: The Race to Light-Weighting" written by Andrew Hoffman, Jordan Siegel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aluminum Alcoa facing as an external strategic factors. Some of the topics covered in Alcoa: The Race to Light-Weighting case study are - Strategic Management Strategies, International business, Research & development, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Alcoa: The Race to Light-Weighting casestudy better are - – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , increasing commodity prices, increasing government debt because of Covid-19 spendings,
increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Alcoa: The Race to Light-Weighting
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Alcoa: The Race to Light-Weighting case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aluminum Alcoa, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aluminum Alcoa 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 Alcoa: The Race to Light-Weighting can be done for the following purposes –
1. Strategic planning using facts provided in Alcoa: The Race to Light-Weighting case study
2. Improving business portfolio management of Aluminum Alcoa
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Aluminum Alcoa
Strengths Alcoa: The Race to Light-Weighting | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aluminum Alcoa in Alcoa: The Race to Light-Weighting Harvard Business Review case study are -
Ability to recruit top talent
– Aluminum Alcoa is one of the leading recruiters in the industry. Managers in the Alcoa: The Race to Light-Weighting are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Aluminum Alcoa has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Alcoa: The Race to Light-Weighting Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Aluminum Alcoa is present in almost all the verticals within the industry. This has provided firm in Alcoa: The Race to Light-Weighting 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Alcoa: The Race to Light-Weighting firm has clearly differentiated products in the market place. This has enabled Aluminum Alcoa to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aluminum Alcoa to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Aluminum Alcoa digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Aluminum Alcoa 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.
Successful track record of launching new products
– Aluminum Alcoa has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Aluminum Alcoa 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.
Low bargaining power of suppliers
– Suppliers of Aluminum Alcoa in the sector have low bargaining power. Alcoa: The Race to Light-Weighting has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Aluminum Alcoa to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Aluminum Alcoa is one of the most innovative firm in sector. Manager in Alcoa: The Race to Light-Weighting Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Alcoa: The Race to Light-Weighting 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.
High brand equity
– Aluminum Alcoa has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aluminum Alcoa to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Aluminum Alcoa is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Aluminum Alcoa in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Aluminum Alcoa 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.
Weaknesses Alcoa: The Race to Light-Weighting | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alcoa: The Race to Light-Weighting are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Alcoa: The Race to Light-Weighting, it seems that the employees of Aluminum Alcoa 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 star products
– The top 2 products and services of the firm as mentioned in the Alcoa: The Race to Light-Weighting HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Aluminum Alcoa has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrew Hoffman, Jordan Siegel suggests that, Aluminum Alcoa is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Aluminum Alcoa, firm in the HBR case study Alcoa: The Race to Light-Weighting needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Aluminum Alcoa 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Alcoa: The Race to Light-Weighting, in the dynamic environment Aluminum Alcoa has struggled to respond to the nimble upstart competition. Aluminum Alcoa has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Aluminum Alcoa is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Aluminum Alcoa needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Aluminum Alcoa to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Aluminum Alcoa 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.
Capital Spending Reduction
– Even during the low interest decade, Aluminum Alcoa 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.
Aligning sales with marketing
– It come across in the case study Alcoa: The Race to Light-Weighting that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Alcoa: The Race to Light-Weighting can leverage the sales team experience to cultivate customer relationships as Aluminum Alcoa is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Aluminum Alcoa 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. Aluminum Alcoa 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.
Opportunities Alcoa: The Race to Light-Weighting | 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 Alcoa: The Race to Light-Weighting are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aluminum Alcoa can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Aluminum Alcoa 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 Alcoa: The Race to Light-Weighting - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aluminum Alcoa to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Aluminum Alcoa can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Loyalty marketing
– Aluminum Alcoa 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Aluminum Alcoa 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, Alcoa: The Race to Light-Weighting, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Aluminum Alcoa can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Alcoa: The Race to Light-Weighting 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Aluminum Alcoa is facing challenges because of the dominance of functional experts in the organization. Alcoa: The Race to Light-Weighting 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.
Manufacturing automation
– Aluminum Alcoa can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Aluminum Alcoa 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. Aluminum Alcoa 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aluminum Alcoa 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.
Learning at scale
– Online learning technologies has now opened space for Aluminum Alcoa to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Aluminum Alcoa to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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 Aluminum Alcoa in the consumer business. Now Aluminum Alcoa can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Alcoa: The Race to Light-Weighting External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Alcoa: The Race to Light-Weighting are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Alcoa: The Race to Light-Weighting, Aluminum Alcoa may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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 Aluminum Alcoa business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Aluminum Alcoa
– 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 Aluminum Alcoa.
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.
Technology acceleration in Forth Industrial Revolution
– Aluminum Alcoa has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aluminum Alcoa needs to keep up with the evolution of technology in the Strategy & Execution 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.
Shortening product life cycle
– it is one of the major threat that Aluminum Alcoa is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Aluminum Alcoa.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aluminum Alcoa in the Strategy & Execution industry. The Strategy & Execution 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.
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 Aluminum Alcoa in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Aluminum Alcoa 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.
Consumer confidence and its impact on Aluminum Alcoa 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.
Regulatory challenges
– Aluminum Alcoa 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 Strategy & Execution industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Aluminum Alcoa 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 Alcoa: The Race to Light-Weighting .
Weighted SWOT Analysis of Alcoa: The Race to Light-Weighting 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 Alcoa: The Race to Light-Weighting 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 Alcoa: The Race to Light-Weighting 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 Alcoa: The Race to Light-Weighting 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 Alcoa: The Race to Light-Weighting 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 Aluminum Alcoa needs to make to build a sustainable competitive advantage.