AB Sandvik Saws & Tools: The Ergo Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AB Sandvik Saws & Tools: The Ergo Strategy
Sandvik's saws and tools division has invested heavily in developing a world-class competency in ergonomic handtool design and manufacture. The Ergo strategy appears to be working in Europe, but North American results are disappointing. Goran Gezelius, division president, must decide how to proceed with the Ergo strategy.
Swot Analysis of "AB Sandvik Saws & Tools: The Ergo Strategy" written by Roderick E. White, Julian Birkinshaw includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ergo Saws facing as an external strategic factors. Some of the topics covered in AB Sandvik Saws & Tools: The Ergo Strategy case study are - Strategic Management Strategies, Marketing, Strategy execution and Global Business.
Some of the macro environment factors that can be used to understand the AB Sandvik Saws & Tools: The Ergo Strategy casestudy better are - – increasing transportation and logistics costs, increasing household debt because of falling income levels, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, wage bills are increasing,
challanges to central banks by blockchain based private currencies, technology disruption, etc
Introduction to SWOT Analysis of AB Sandvik Saws & Tools: The Ergo Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AB Sandvik Saws & Tools: The Ergo Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ergo Saws, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ergo Saws 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 AB Sandvik Saws & Tools: The Ergo Strategy can be done for the following purposes –
1. Strategic planning using facts provided in AB Sandvik Saws & Tools: The Ergo Strategy case study
2. Improving business portfolio management of Ergo Saws
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ergo Saws
Strengths AB Sandvik Saws & Tools: The Ergo Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ergo Saws in AB Sandvik Saws & Tools: The Ergo Strategy Harvard Business Review case study are -
Ability to lead change in Global Business field
– Ergo Saws 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 Ergo Saws in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Ergo Saws 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
- Ergo Saws 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 Ergo Saws is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AB Sandvik Saws & Tools: The Ergo Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Ergo Saws has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ergo Saws 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.
Low bargaining power of suppliers
– Suppliers of Ergo Saws in the sector have low bargaining power. AB Sandvik Saws & Tools: The Ergo Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ergo Saws to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Ergo Saws is present in almost all the verticals within the industry. This has provided firm in AB Sandvik Saws & Tools: The Ergo Strategy 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.
High brand equity
– Ergo Saws has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ergo Saws to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Ergo Saws 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.
Innovation driven organization
– Ergo Saws is one of the most innovative firm in sector. Manager in AB Sandvik Saws & Tools: The Ergo Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Ergo Saws 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 AB Sandvik Saws & Tools: The Ergo Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the AB Sandvik Saws & Tools: The Ergo Strategy 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.
Superior customer experience
– The customer experience strategy of Ergo Saws in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses AB Sandvik Saws & Tools: The Ergo Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AB Sandvik Saws & Tools: The Ergo Strategy are -
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 Ergo Saws supply chain. Even after few cautionary changes mentioned in the HBR case study - AB Sandvik Saws & Tools: The Ergo Strategy, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ergo Saws vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study AB Sandvik Saws & Tools: The Ergo Strategy 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 Ergo Saws 's lucrative customers.
Lack of clear differentiation of Ergo Saws products
– To increase the profitability and margins on the products, Ergo Saws needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AB Sandvik Saws & Tools: The Ergo Strategy, it seems that the employees of Ergo Saws 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 bargaining power of channel partners
– Because of the regulatory requirements, Roderick E. White, Julian Birkinshaw suggests that, Ergo Saws 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.
Slow decision making process
– As mentioned earlier in the report, Ergo Saws 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. Ergo Saws 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.
No frontier risks strategy
– After analyzing the HBR case study AB Sandvik Saws & Tools: The Ergo Strategy, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Ergo Saws 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.
Increasing silos among functional specialists
– The organizational structure of Ergo Saws is dominated by functional specialists. It is not different from other players in the Global Business segment. Ergo Saws needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ergo Saws to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As AB Sandvik Saws & Tools: The Ergo Strategy HBR case study mentions - Ergo Saws 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.
Low market penetration in new markets
– Outside its home market of Ergo Saws, firm in the HBR case study AB Sandvik Saws & Tools: The Ergo Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities AB Sandvik Saws & Tools: The Ergo Strategy | 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 AB Sandvik Saws & Tools: The Ergo Strategy are -
Developing new processes and practices
– Ergo Saws can develop new processes and procedures in Global Business 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, Ergo Saws 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.
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 Ergo Saws in the consumer business. Now Ergo Saws can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ergo Saws 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, AB Sandvik Saws & Tools: The Ergo Strategy, 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
– Ergo Saws can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AB Sandvik Saws & Tools: The Ergo Strategy 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ergo Saws 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 Ergo Saws to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Ergo Saws 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.
Using analytics as competitive advantage
– Ergo Saws 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 AB Sandvik Saws & Tools: The Ergo Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ergo Saws to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ergo Saws can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ergo Saws 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. Ergo Saws 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.
Leveraging digital technologies
– Ergo Saws 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.
Manufacturing automation
– Ergo Saws can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Building a culture of innovation
– managers at Ergo Saws 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 Global Business segment.
Threats AB Sandvik Saws & Tools: The Ergo Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AB Sandvik Saws & Tools: The Ergo Strategy are -
Regulatory challenges
– Ergo Saws 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 Global Business industry regulations.
Environmental challenges
– Ergo Saws 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. Ergo Saws can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ergo Saws 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 AB Sandvik Saws & Tools: The Ergo Strategy .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ergo Saws in the Global Business industry. The Global Business 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.
Stagnating economy with rate increase
– Ergo Saws can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Ergo Saws business can come under increasing regulations regarding data privacy, data security, etc.
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.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ergo Saws can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Ergo Saws 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. Ergo Saws 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.
Increasing wage structure of Ergo Saws
– 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 Ergo Saws.
Shortening product life cycle
– it is one of the major threat that Ergo Saws is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Ergo Saws.
Weighted SWOT Analysis of AB Sandvik Saws & Tools: The Ergo Strategy 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 AB Sandvik Saws & Tools: The Ergo Strategy 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 AB Sandvik Saws & Tools: The Ergo Strategy 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 AB Sandvik Saws & Tools: The Ergo Strategy 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 AB Sandvik Saws & Tools: The Ergo Strategy 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 Ergo Saws needs to make to build a sustainable competitive advantage.
