Tolaram: Innovating in Africa SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tolaram: Innovating in Africa
Tolaram is a Singaporean company that began operations selling textiles in Nigeria in the 1970s. Executives and brothers, Haresh and Sajesh Aswani, however saw an opportunity to create an instant noodle market in the country. In 1988, they began importing Indomie noodles. But in order to truly target the local market, Tolaram decided to build manufacturing and distribution capabilities in Nigeria at time when conventional wisdom advised against it. After a very difficult journey, Tolaram has grown to almost $1 billion in turnover, built and operates 13 manufacturing plants in Nigeria, and runs a 1,000+ plus truck logistics company. This case gives an overview of how Tolaram built Indomie noodles from obscurity to become one of the most recognized brands in Nigeria.
Swot Analysis of "Tolaram: Innovating in Africa" written by Derek van Bever, Efosa Ojomo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tolaram Nigeria facing as an external strategic factors. Some of the topics covered in Tolaram: Innovating in Africa case study are - Strategic Management Strategies, Disruptive innovation, Emerging markets, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tolaram: Innovating in Africa casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing energy prices, increasing government debt because of Covid-19 spendings, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Tolaram: Innovating in Africa
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tolaram: Innovating in Africa case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tolaram Nigeria, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tolaram Nigeria 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 Tolaram: Innovating in Africa can be done for the following purposes –
1. Strategic planning using facts provided in Tolaram: Innovating in Africa case study
2. Improving business portfolio management of Tolaram Nigeria
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 Tolaram Nigeria
Strengths Tolaram: Innovating in Africa | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tolaram Nigeria in Tolaram: Innovating in Africa Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Tolaram Nigeria in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Tolaram Nigeria 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 Derek van Bever, Efosa Ojomo 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 Strategy & Execution industry
– Tolaram: Innovating in Africa firm has clearly differentiated products in the market place. This has enabled Tolaram Nigeria to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Tolaram Nigeria to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Tolaram Nigeria in the sector have low bargaining power. Tolaram: Innovating in Africa has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tolaram Nigeria to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Tolaram Nigeria are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Tolaram: Innovating in Africa 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.
Training and development
– Tolaram Nigeria has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tolaram: Innovating in Africa 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.
Highly skilled collaborators
– Tolaram Nigeria 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 Tolaram: Innovating in Africa HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Tolaram Nigeria is present in almost all the verticals within the industry. This has provided firm in Tolaram: Innovating in Africa 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.
Learning organization
- Tolaram Nigeria 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 Tolaram Nigeria is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tolaram: Innovating in Africa Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Tolaram Nigeria 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.
Effective Research and Development (R&D)
– Tolaram Nigeria has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Tolaram: Innovating in Africa - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Tolaram: Innovating in Africa | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tolaram: Innovating in Africa are -
Increasing silos among functional specialists
– The organizational structure of Tolaram Nigeria is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tolaram Nigeria needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tolaram Nigeria to focus more on services rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Tolaram Nigeria 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.
Interest costs
– Compare to the competition, Tolaram Nigeria has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Tolaram: Innovating in Africa 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 Tolaram: Innovating in Africa can leverage the sales team experience to cultivate customer relationships as Tolaram Nigeria is planning to shift buying processes online.
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 Tolaram Nigeria supply chain. Even after few cautionary changes mentioned in the HBR case study - Tolaram: Innovating in Africa, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tolaram Nigeria vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Tolaram Nigeria 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.
Products dominated business model
– Even though Tolaram Nigeria has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Tolaram: Innovating in Africa should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Tolaram Nigeria products
– To increase the profitability and margins on the products, Tolaram Nigeria needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Tolaram Nigeria 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. Tolaram Nigeria 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 Tolaram: Innovating in Africa HBR case study mentions - Tolaram Nigeria 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.
Need for greater diversity
– Tolaram Nigeria 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.
Opportunities Tolaram: Innovating in Africa | 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 Tolaram: Innovating in Africa are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Tolaram Nigeria 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tolaram Nigeria 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, Tolaram: Innovating in Africa, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tolaram Nigeria can use these opportunities to build new business models that can help the communities that Tolaram Nigeria operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Tolaram Nigeria 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 Tolaram Nigeria 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 Tolaram Nigeria in the consumer business. Now Tolaram Nigeria can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tolaram Nigeria can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Tolaram Nigeria has opened avenues for new revenue streams for the organization in the industry. This can help Tolaram Nigeria to build a more holistic ecosystem as suggested in the Tolaram: Innovating in Africa case study. Tolaram Nigeria can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Tolaram Nigeria 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.
Buying journey improvements
– Tolaram Nigeria can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tolaram: Innovating in Africa 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.
Developing new processes and practices
– Tolaram Nigeria can develop new processes and procedures in Strategy & Execution 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.
Using analytics as competitive advantage
– Tolaram Nigeria 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 Tolaram: Innovating in Africa - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tolaram Nigeria to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Tolaram Nigeria 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 Strategy & Execution segment.
Threats Tolaram: Innovating in Africa External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tolaram: Innovating in Africa are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tolaram Nigeria can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Tolaram Nigeria needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Tolaram Nigeria can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Tolaram Nigeria 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.
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 Tolaram Nigeria business can come under increasing regulations regarding data privacy, data security, etc.
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. Tolaram Nigeria needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Tolaram Nigeria
– 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 Tolaram Nigeria.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tolaram Nigeria with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Tolaram Nigeria 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.
Technology acceleration in Forth Industrial Revolution
– Tolaram Nigeria has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Tolaram Nigeria 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.
Consumer confidence and its impact on Tolaram Nigeria 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tolaram Nigeria 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 Tolaram: Innovating in Africa .
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 Tolaram Nigeria in the Strategy & Execution sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Tolaram Nigeria is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Tolaram: Innovating in Africa 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 Tolaram: Innovating in Africa 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 Tolaram: Innovating in Africa 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 Tolaram: Innovating in Africa 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 Tolaram: Innovating in Africa 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 Tolaram Nigeria needs to make to build a sustainable competitive advantage.
