HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE
To make its supply chain fit for the future, Hilti, a global player in the construction industry, is revising its current supply chain setup. In particular, the firm has identified three restructuring alternatives: (1) Low pain low gain: Keep the existing supply chain setup and pursue only minor changes. (2) Consolidate around existing structures: Increase the profitability of the existing structures and consolidate production. Closures of individual plants might be necessary. (3) Greenfield: Exploit the potential of a low-cost region and shift the entire production to new facilities in Eastern Europe. The case takes a look at the different options Hilti has and outlines the underlying strategic alternatives. Learning objectives: While discussing the case, students will specifically learn about the chances, difficulties and trade-offs between different objectives involved with supply chain reorganization.
Swot Analysis of "HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE" written by Ralf W. Seifert, Kerstin Langenberg includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hilti Supply facing as an external strategic factors. Some of the topics covered in HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE casestudy better are - – talent flight as more people leaving formal jobs, geopolitical disruptions, wage bills are increasing, increasing energy prices, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hilti Supply, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hilti Supply 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE can be done for the following purposes –
1. Strategic planning using facts provided in HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE case study
2. Improving business portfolio management of Hilti Supply
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hilti Supply
Strengths HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hilti Supply in HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE Harvard Business Review case study are -
Analytics focus
– Hilti Supply 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 Ralf W. Seifert, Kerstin Langenberg 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.
Cross disciplinary teams
– Horizontal connected teams at the Hilti Supply 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.
Effective Research and Development (R&D)
– Hilti Supply 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Hilti Supply has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hilti Supply to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Hilti Supply is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Hilti Supply in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Hilti Supply 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 Hilti Supply is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Hilti Supply 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Hilti Supply digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hilti Supply has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Hilti Supply has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hilti Supply 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.
Ability to lead change in Leadership & Managing People field
– Hilti Supply 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 Hilti Supply in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Hilti Supply in the sector have low bargaining power. HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hilti Supply to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE are -
Skills based hiring
– The stress on hiring functional specialists at Hilti Supply 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 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 Hilti Supply supply chain. Even after few cautionary changes mentioned in the HBR case study - HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hilti Supply vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Ralf W. Seifert, Kerstin Langenberg suggests that, Hilti Supply 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 Hilti Supply has relatively successful track record of launching new products.
Aligning sales with marketing
– It come across in the case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE can leverage the sales team experience to cultivate customer relationships as Hilti Supply is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE, in the dynamic environment Hilti Supply has struggled to respond to the nimble upstart competition. Hilti Supply has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE, is just above the industry average. Hilti Supply needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hilti Supply is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Hilti Supply 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.
Capital Spending Reduction
– Even during the low interest decade, Hilti Supply 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.
Low market penetration in new markets
– Outside its home market of Hilti Supply, firm in the HBR case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE | 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hilti Supply 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. Hilti Supply 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hilti Supply is facing challenges because of the dominance of functional experts in the organization. HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Hilti Supply can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Hilti Supply 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 Leadership & Managing People segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hilti Supply can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Hilti Supply 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hilti Supply 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, HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hilti Supply 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 Hilti Supply to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Hilti Supply 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.
Using analytics as competitive advantage
– Hilti Supply 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hilti Supply to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Hilti Supply can develop new processes and procedures in Leadership & Managing People 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.
Buying journey improvements
– Hilti Supply can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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.
Creating value in data economy
– The success of analytics program of Hilti Supply has opened avenues for new revenue streams for the organization in the industry. This can help Hilti Supply to build a more holistic ecosystem as suggested in the HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE case study. Hilti Supply can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE are -
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hilti Supply can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hilti Supply 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE .
Stagnating economy with rate increase
– Hilti Supply 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.
Technology acceleration in Forth Industrial Revolution
– Hilti Supply has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Hilti Supply needs to keep up with the evolution of technology in the Leadership & Managing People 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.
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 Hilti Supply.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE, Hilti Supply may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Hilti Supply business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hilti Supply in the Leadership & Managing People industry. The Leadership & Managing People 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.
Environmental challenges
– Hilti Supply 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. Hilti Supply can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Hilti Supply 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.
Consumer confidence and its impact on Hilti Supply 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.
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 Hilti Supply in the Leadership & Managing People sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Hilti Supply 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.
Weighted SWOT Analysis of HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 HILTI (A): GEARING THE SUPPLY CHAIN FOR THE FUTURE 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 Hilti Supply needs to make to build a sustainable competitive advantage.
