American Automobiles Limited: Production Planning SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of American Automobiles Limited: Production Planning
In 2015, the managers for a major car manufacturer in the United States, American Automobiles Limited, were faced with a pressing problem in their press shop. The press shop made body panels for the company's 10 different car models using a stamping process. In all, 137 different body panel parts were produced by six press machines. Each press had a distinct stroke rate that decided the time per stamping operation. Time was lost in changing dies, and there were limits on the lot sizes in which the panels could be stamped. Also, some panels could be stamped only on certain presses. The press shop's managers were seeking to allocate the parts to panels in such a way that total costs could be minimized. How could they accomplish this? Ajith J. Kumar, Soumitra Chakraborty and Ankit Dhaka are affiliated with XLRI-Xavier School of Management.
Authors :: Ajith J. Kumar, Soumitra Chakraborty, Ankit Dhaka
Swot Analysis of "American Automobiles Limited: Production Planning" written by Ajith J. Kumar, Soumitra Chakraborty, Ankit Dhaka includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Panels Press facing as an external strategic factors. Some of the topics covered in American Automobiles Limited: Production Planning case study are - Strategic Management Strategies, Manufacturing and Technology & Operations.
Some of the macro environment factors that can be used to understand the American Automobiles Limited: Production Planning casestudy better are - – there is increasing trade war between United States & China, geopolitical disruptions, there is backlash against globalization, supply chains are disrupted by pandemic , wage bills are increasing, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google,
increasing government debt because of Covid-19 spendings, technology disruption, etc
Introduction to SWOT Analysis of American Automobiles Limited: Production Planning
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in American Automobiles Limited: Production Planning case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Panels Press, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Panels Press 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 American Automobiles Limited: Production Planning can be done for the following purposes –
1. Strategic planning using facts provided in American Automobiles Limited: Production Planning case study
2. Improving business portfolio management of Panels Press
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Panels Press
Strengths American Automobiles Limited: Production Planning | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Panels Press in American Automobiles Limited: Production Planning Harvard Business Review case study are -
High switching costs
– The high switching costs that Panels Press 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.
Successful track record of launching new products
– Panels Press has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Panels Press 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.
Effective Research and Development (R&D)
– Panels Press 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 American Automobiles Limited: Production Planning - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Technology & Operations field
– Panels Press 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 Panels Press in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Panels Press 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 American Automobiles Limited: Production Planning HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Panels Press
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Panels Press does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Panels Press is one of the most innovative firm in sector. Manager in American Automobiles Limited: Production Planning Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Panels Press is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Technology & Operations industry
– American Automobiles Limited: Production Planning firm has clearly differentiated products in the market place. This has enabled Panels Press to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Panels Press to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Panels Press in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Panels Press in the sector have low bargaining power. American Automobiles Limited: Production Planning has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Panels Press to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Panels Press 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 Ajith J. Kumar, Soumitra Chakraborty, Ankit Dhaka 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 American Automobiles Limited: Production Planning | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of American Automobiles Limited: Production Planning are -
Slow decision making process
– As mentioned earlier in the report, Panels Press 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. Panels Press 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.
Lack of clear differentiation of Panels Press products
– To increase the profitability and margins on the products, Panels Press needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As American Automobiles Limited: Production Planning HBR case study mentions - Panels Press 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.
Capital Spending Reduction
– Even during the low interest decade, Panels Press 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Panels Press is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study American Automobiles Limited: Production Planning can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Panels Press 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study American Automobiles Limited: Production Planning, it seems that the employees of Panels Press don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on 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 Panels Press supply chain. Even after few cautionary changes mentioned in the HBR case study - American Automobiles Limited: Production Planning, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Panels Press vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Panels Press 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.
High cash cycle compare to competitors
Panels Press 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.
Low market penetration in new markets
– Outside its home market of Panels Press, firm in the HBR case study American Automobiles Limited: Production Planning needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities American Automobiles Limited: Production Planning | 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 American Automobiles Limited: Production Planning are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Panels Press 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, American Automobiles Limited: Production Planning, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Panels Press can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Panels Press 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 Panels Press to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Panels Press to increase its market reach. Panels Press 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Panels Press 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.
Loyalty marketing
– Panels Press 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 Panels Press can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Panels Press can use these opportunities to build new business models that can help the communities that Panels Press operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Using analytics as competitive advantage
– Panels Press 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 American Automobiles Limited: Production Planning - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Panels Press to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Panels Press is facing challenges because of the dominance of functional experts in the organization. American Automobiles Limited: Production Planning case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Panels Press can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Leveraging digital technologies
– Panels Press 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.
Buying journey improvements
– Panels Press can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. American Automobiles Limited: Production Planning 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 American Automobiles Limited: Production Planning External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study American Automobiles Limited: Production Planning are -
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.
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 Panels Press business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Panels Press 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.
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. Panels Press 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.
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.
High dependence on third party suppliers
– Panels Press 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study American Automobiles Limited: Production Planning, Panels Press may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Regulatory challenges
– Panels Press 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 Technology & Operations industry regulations.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Panels Press can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Panels Press in the Technology & Operations sector and impact the bottomline of the organization.
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. Panels Press needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Environmental challenges
– Panels Press 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. Panels Press can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing wage structure of Panels Press
– 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 Panels Press.
Weighted SWOT Analysis of American Automobiles Limited: Production Planning 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 American Automobiles Limited: Production Planning 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 American Automobiles Limited: Production Planning 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 American Automobiles Limited: Production Planning 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 American Automobiles Limited: Production Planning 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 Panels Press needs to make to build a sustainable competitive advantage.
