Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry
Since the mid-1980s, Sona Steering Systems (later renamed as Sona Koyo Steering Systems Ltd) has been a competitive player in the Indian auto component industry. The firm has made remarkable progress in competitiveness through numerous initiatives over the past two decades. Starting as a single-source supplier of simple mechanical steering systems, the firm has systematically improved competitiveness, evolving into a capable Deming Prize-winning firm with capabilities across the industry value system. By November 2005, the firm had many customers and, for some of them, had designed entire systems to their specifications. This case provides a context for identifying Sona Koyo's sources of competitiveness through two important concepts. The versatile yet simple assets-processes-performance (APP) framework is used to identify relevant factors of competitiveness, while the concept of the "competitiveness journey" is introduced to examine different contexts, scenarios, strategies and initiatives as well as company performance. The case builds on analysis of data and insights culled from professionals at different levels of the company, up to the chairman.
Swot Analysis of "Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry" written by Kirankumar Momaya, Chintan Shivani includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sona Competitiveness facing as an external strategic factors. Some of the topics covered in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry case study are - Strategic Management Strategies, Change management, Joint ventures, Leadership, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, there is backlash against globalization,
central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sona Competitiveness, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sona Competitiveness 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry can be done for the following purposes –
1. Strategic planning using facts provided in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry case study
2. Improving business portfolio management of Sona Competitiveness
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 Sona Competitiveness
Strengths Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sona Competitiveness in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry Harvard Business Review case study are -
Ability to recruit top talent
– Sona Competitiveness is one of the leading recruiters in the industry. Managers in the Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Sona Competitiveness 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.
Learning organization
- Sona Competitiveness 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 Sona Competitiveness is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Sona Competitiveness has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sona Competitiveness 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
– Sona Competitiveness is present in almost all the verticals within the industry. This has provided firm in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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.
Analytics focus
– Sona Competitiveness 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 Kirankumar Momaya, Chintan Shivani 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.
Training and development
– Sona Competitiveness has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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.
Organizational Resilience of Sona Competitiveness
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sona Competitiveness does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Sona Competitiveness in the sector have low bargaining power. Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sona Competitiveness to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Sona Competitiveness is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry firm has clearly differentiated products in the market place. This has enabled Sona Competitiveness to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sona Competitiveness to invest into research and development (R&D) and innovation.
Weaknesses Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry are -
Workers concerns about automation
– As automation is fast increasing in the segment, Sona Competitiveness 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.
Slow to strategic competitive environment developments
– As Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry HBR case study mentions - Sona Competitiveness 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.
Skills based hiring
– The stress on hiring functional specialists at Sona Competitiveness 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.
Lack of clear differentiation of Sona Competitiveness products
– To increase the profitability and margins on the products, Sona Competitiveness needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Competitiveness 's lucrative customers.
High cash cycle compare to competitors
Sona Competitiveness 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry, in the dynamic environment Sona Competitiveness has struggled to respond to the nimble upstart competition. Sona Competitiveness has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Competitiveness has relatively successful track record of launching new products.
Products dominated business model
– Even though Sona Competitiveness 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 - Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Sona Competitiveness 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. Sona Competitiveness 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry, it seems that the employees of Sona Competitiveness 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.
Opportunities Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry | 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry are -
Developing new processes and practices
– Sona Competitiveness 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sona Competitiveness 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, Sona Competitiveness 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, Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Sona Competitiveness 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sona Competitiveness to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Sona Competitiveness 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 Sona Competitiveness can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Sona Competitiveness in the consumer business. Now Sona Competitiveness can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Sona Competitiveness 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.
Creating value in data economy
– The success of analytics program of Sona Competitiveness has opened avenues for new revenue streams for the organization in the industry. This can help Sona Competitiveness to build a more holistic ecosystem as suggested in the Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry case study. Sona Competitiveness can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Sona Competitiveness can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Sona Competitiveness 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.
Manufacturing automation
– Sona Competitiveness 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sona Competitiveness is facing challenges because of the dominance of functional experts in the organization. Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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.
Threats Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry are -
Environmental challenges
– Sona Competitiveness 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. Sona Competitiveness can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Sona Competitiveness needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Sona Competitiveness.
High dependence on third party suppliers
– Sona Competitiveness high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sona Competitiveness 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sona Competitiveness 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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 Sona Competitiveness business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Sona Competitiveness is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Sona Competitiveness has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sona Competitiveness 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.
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 Sona Competitiveness in the Strategy & Execution sector and impact the bottomline of the organization.
Consumer confidence and its impact on Sona Competitiveness 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.
Weighted SWOT Analysis of Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Koyo Steering Systems Limited: Spearheading Competitiveness in India's Automotive Components Industry 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 Sona Competitiveness needs to make to build a sustainable competitive advantage.
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