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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, wage bills are increasing,
there is backlash against globalization, increasing transportation and logistics costs, 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.
Organizational Resilience of Aluminum Alcoa
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aluminum Alcoa does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Superior customer experience
– The customer experience strategy of Aluminum Alcoa in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Aluminum Alcoa 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.
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.
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.
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.
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.
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.
Highly skilled collaborators
– Aluminum Alcoa 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 Alcoa: The Race to Light-Weighting HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Aluminum Alcoa 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 Andrew Hoffman, Jordan Siegel 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.
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 -
No frontier risks strategy
– After analyzing the HBR case study Alcoa: The Race to Light-Weighting, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
Lack of clear differentiation of Aluminum Alcoa products
– To increase the profitability and margins on the products, Aluminum Alcoa needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Need for greater diversity
– Aluminum Alcoa 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 Alcoa: The Race to Light-Weighting 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 Aluminum Alcoa 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Aluminum Alcoa is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Alcoa: The Race to Light-Weighting can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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 Aluminum Alcoa supply chain. Even after few cautionary changes mentioned in the HBR case study - Alcoa: The Race to Light-Weighting, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aluminum Alcoa vulnerable to further global disruptions in South East Asia.
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.
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.
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 -
Better consumer reach
– The expansion of the 5G network will help Aluminum Alcoa to increase its market reach. Aluminum Alcoa 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.
Building a culture of innovation
– managers at Aluminum Alcoa 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Aluminum Alcoa can use these opportunities to build new business models that can help the communities that Aluminum Alcoa operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Aluminum Alcoa can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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. Aluminum Alcoa can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Creating value in data economy
– The success of analytics program of Aluminum Alcoa has opened avenues for new revenue streams for the organization in the industry. This can help Aluminum Alcoa to build a more holistic ecosystem as suggested in the Alcoa: The Race to Light-Weighting case study. Aluminum Alcoa can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Aluminum Alcoa in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
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.
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 -
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.
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. Aluminum Alcoa 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.
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.
Stagnating economy with rate increase
– Aluminum Alcoa 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Aluminum Alcoa with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 .
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.
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.
Environmental challenges
– Aluminum Alcoa 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. Aluminum Alcoa can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
