Tata Chemicals Magadi: Confronting Poverty in Rural Africa SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Tata Chemicals Magadi: Confronting Poverty in Rural Africa
In the summer of 2013, the managing director of Tata Chemicals Magadi, Africa's largest soda ash manufacturer and one of the oldest and largest export earners in Kenya, was wondering how he was going to respond to a growing number of challenges. As a producer of a commodity product, the company was vulnerable to escalating energy costs, oversupply and economic cycles. Global growth had been sluggish since the 2008 economic recession and competition was intense, especially since the emergence of Chinese producers. Magadi Township, where the company's production facility was located, was one of the poorest in the country, subject to droughts and without many of the basic public services typically provided by government such as roads, health care, electricity, water and education. To address these needs, the company migrated from a top-down, paternal, ad hoc and resource-intensive approach to a bottom-up, collaborative, holistic and resource-sharing style that focused on community capacity building and self-governance. However, the issue now is how to best balance the strong need to reduce costs while remaining committed to the sustainability of the surrounding community. Michael Valente is affiliated with York University.
Swot Analysis of "Tata Chemicals Magadi: Confronting Poverty in Rural Africa" written by Michael Valente includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Magadi Tata facing as an external strategic factors. Some of the topics covered in Tata Chemicals Magadi: Confronting Poverty in Rural Africa case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Tata Chemicals Magadi: Confronting Poverty in Rural Africa casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, technology disruption, talent flight as more people leaving formal jobs,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Tata Chemicals Magadi: Confronting Poverty in Rural Africa
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Tata Chemicals Magadi: Confronting Poverty in Rural Africa case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Magadi Tata, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Magadi Tata 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 Tata Chemicals Magadi: Confronting Poverty in Rural Africa can be done for the following purposes –
1. Strategic planning using facts provided in Tata Chemicals Magadi: Confronting Poverty in Rural Africa case study
2. Improving business portfolio management of Magadi Tata
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 Magadi Tata
Strengths Tata Chemicals Magadi: Confronting Poverty in Rural Africa | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Magadi Tata in Tata Chemicals Magadi: Confronting Poverty in Rural Africa Harvard Business Review case study are -
Successful track record of launching new products
– Magadi Tata has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Magadi Tata 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.
Diverse revenue streams
– Magadi Tata is present in almost all the verticals within the industry. This has provided firm in Tata Chemicals Magadi: Confronting Poverty in Rural 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.
Ability to lead change in Strategy & Execution field
– Magadi Tata 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 Magadi Tata in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Magadi Tata has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Magadi Tata to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Tata Chemicals Magadi: Confronting Poverty in Rural 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.
Innovation driven organization
– Magadi Tata is one of the most innovative firm in sector. Manager in Tata Chemicals Magadi: Confronting Poverty in Rural Africa Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Magadi Tata 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 Magadi Tata is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Tata Chemicals Magadi: Confronting Poverty in Rural Africa Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Strategy & Execution industry
– Tata Chemicals Magadi: Confronting Poverty in Rural Africa firm has clearly differentiated products in the market place. This has enabled Magadi Tata to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Magadi Tata to invest into research and development (R&D) and innovation.
Strong track record of project management
– Magadi Tata 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 Magadi Tata 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.
Ability to recruit top talent
– Magadi Tata is one of the leading recruiters in the industry. Managers in the Tata Chemicals Magadi: Confronting Poverty in Rural Africa 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
– Magadi Tata has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Tata Chemicals Magadi: Confronting Poverty in Rural 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.
Weaknesses Tata Chemicals Magadi: Confronting Poverty in Rural Africa | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tata Chemicals Magadi: Confronting Poverty in Rural Africa are -
Interest costs
– Compare to the competition, Magadi Tata 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.
High cash cycle compare to competitors
Magadi Tata has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Magadi Tata 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.
Increasing silos among functional specialists
– The organizational structure of Magadi Tata is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Magadi Tata needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Magadi Tata to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Magadi Tata products
– To increase the profitability and margins on the products, Magadi Tata needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural Africa can leverage the sales team experience to cultivate customer relationships as Magadi Tata is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Tata Chemicals Magadi: Confronting Poverty in Rural Africa, it seems that the employees of Magadi Tata 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.
Need for greater diversity
– Magadi Tata 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Tata Chemicals Magadi: Confronting Poverty in Rural Africa 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 Magadi Tata has relatively successful track record of launching new products.
Products dominated business model
– Even though Magadi Tata 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 - Tata Chemicals Magadi: Confronting Poverty in Rural Africa should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– After analyzing the HBR case study Tata Chemicals Magadi: Confronting Poverty in Rural Africa, 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.
Opportunities Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural Africa are -
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 Magadi Tata in the consumer business. Now Magadi Tata can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Magadi Tata 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Magadi Tata can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Magadi Tata 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Magadi Tata 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, Tata Chemicals Magadi: Confronting Poverty in Rural 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.
Buying journey improvements
– Magadi Tata can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Tata Chemicals Magadi: Confronting Poverty in Rural 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.
Building a culture of innovation
– managers at Magadi Tata 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.
Using analytics as competitive advantage
– Magadi Tata 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 Tata Chemicals Magadi: Confronting Poverty in Rural Africa - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Magadi Tata to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Magadi Tata 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.
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 Magadi Tata 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Magadi Tata to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Magadi Tata to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Magadi Tata 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.
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. Magadi Tata 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. Magadi Tata 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.
Threats Tata Chemicals Magadi: Confronting Poverty in Rural Africa External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Tata Chemicals Magadi: Confronting Poverty in Rural Africa are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Magadi Tata 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.
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 Magadi Tata.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Magadi Tata with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Magadi Tata in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Magadi Tata 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.
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 Magadi Tata business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Magadi Tata 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. Magadi Tata can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Tata Chemicals Magadi: Confronting Poverty in Rural Africa, Magadi Tata 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 .
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. Magadi Tata needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Magadi Tata 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.
Regulatory challenges
– Magadi Tata 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.
Consumer confidence and its impact on Magadi Tata 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 Magadi Tata
– 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 Magadi Tata.
Weighted SWOT Analysis of Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural 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 Tata Chemicals Magadi: Confronting Poverty in Rural 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 Magadi Tata needs to make to build a sustainable competitive advantage.
