SWOT Analysis / TOWS Matrix for Avenue Supermarts (India)
Based on various researches at Oak Spring University , Avenue Supermarts is operating in a macro-environment that has been destablized by – wage bills are increasing, there is backlash against globalization, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , technology disruption, geopolitical disruptions, increasing household debt because of falling income levels,
increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Avenue Supermarts
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Avenue Supermarts can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Avenue Supermarts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Avenue Supermarts 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 Avenue Supermarts can be done for the following purposes –
1. Strategic planning of Avenue Supermarts
2. Improving business portfolio management of Avenue Supermarts
3. Assessing feasibility of the new initiative in India
4. Making a Retail (Grocery) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Avenue Supermarts
Strengths of Avenue Supermarts | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Avenue Supermarts are -
Ability to recruit top talent
– Avenue Supermarts is one of the leading players in the Retail (Grocery) industry in India. It is in a position to attract the best talent available in India. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Retail (Grocery) industry
– Avenue Supermarts has clearly differentiated products in the market place. This has enabled Avenue Supermarts to fetch slight price premium compare to the competitors in the Retail (Grocery) industry. The sustainable margins have also helped Avenue Supermarts to invest into research and development (R&D) and innovation.
Learning organization
- Avenue Supermarts 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 Avenue Supermarts is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Avenue Supermarts emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Avenue Supermarts 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.
Strong track record of project management in the Retail (Grocery) industry
– Avenue Supermarts is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Avenue Supermarts
– The covid-19 pandemic has put organizational resilience at the centre of everthing Avenue Supermarts does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Avenue Supermarts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Avenue Supermarts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Retail (Grocery)
– Avenue Supermarts is one of the leading players in the Retail (Grocery) industry in India. Over the years it has not only transformed the business landscape in the Retail (Grocery) industry in India but also across the existing markets. The ability to lead change has enabled Avenue Supermarts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Avenue Supermarts has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Avenue Supermarts staying ahead in the Retail (Grocery) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Avenue Supermarts in Retail (Grocery) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Avenue Supermarts is one of the most innovative firm in Retail (Grocery) sector.
Digital Transformation in Retail (Grocery) industry
- digital transformation varies from industry to industry. For Avenue Supermarts digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Avenue Supermarts 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.
Weaknesses of Avenue Supermarts | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Avenue Supermarts are -
Ability to respond to the competition
– As the decision making is very deliberative at Avenue Supermarts, in the dynamic environment of Retail (Grocery) industry it has struggled to respond to the nimble upstart competition. Avenue Supermarts has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– From the 10K / annual statement of Avenue Supermarts, it seems that company is thinking out the frontier risks that can impact Retail (Grocery) industry. 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.
Interest costs
– Compare to the competition, Avenue Supermarts 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.
Need for greater diversity
– Avenue Supermarts has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Workers concerns about automation
– As automation is fast increasing in the Retail (Grocery) industry, Avenue Supermarts 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.
Capital Spending Reduction
– Even during the low interest decade, Avenue Supermarts 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 Retail (Grocery) industry using digital technology.
Lack of clear differentiation of Avenue Supermarts products
– To increase the profitability and margins on the products, Avenue Supermarts needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Avenue Supermarts has a high cash cycle compare to other players in the Retail (Grocery) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Retail (Grocery) industry
– The stress on hiring functional specialists at Avenue Supermarts has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Avenue Supermarts is dominated by functional specialists. It is not different from other players in the Retail (Grocery) industry, but Avenue Supermarts needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Avenue Supermarts to focus more on services in the Retail (Grocery) industry rather than just following the product oriented approach.
High bargaining power of channel partners in Retail (Grocery) industry
– because of the regulatory requirements in India, Avenue Supermarts 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 Retail (Grocery) industry.
Avenue Supermarts Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Avenue Supermarts are -
Buying journey improvements
– Avenue Supermarts can improve the customer journey of consumers in the Retail (Grocery) industry by using analytics and artificial intelligence. It 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.
Loyalty marketing
– Avenue Supermarts 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Avenue Supermarts can use these opportunities to build new business models that can help the communities that Avenue Supermarts operates in. Secondly it can use opportunities from government spending in Retail (Grocery) sector.
Manufacturing automation
– Avenue Supermarts can use the latest technology developments to improve its manufacturing and designing process in Retail (Grocery) sector. 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.
Using analytics as competitive advantage
– Avenue Supermarts has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Grocery) sector. This continuous investment in analytics has enabled Avenue Supermarts to build a competitive advantage using analytics. The analytics driven competitive advantage can help Avenue Supermarts to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions in Retail (Grocery) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Avenue Supermarts in the Retail (Grocery) industry. Now Avenue Supermarts can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Avenue Supermarts to increase its market reach. Avenue Supermarts 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Avenue Supermarts 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 Avenue Supermarts to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Avenue Supermarts to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Avenue Supermarts in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Grocery) industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Avenue Supermarts has opened avenues for new revenue streams for the organization in Retail (Grocery) industry. This can help Avenue Supermarts to build a more holistic ecosystem for Avenue Supermarts products in the Retail (Grocery) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Avenue Supermarts 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 Retail (Grocery) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Avenue Supermarts 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. Avenue Supermarts can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Avenue Supermarts External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Avenue Supermarts are -
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. Avenue Supermarts needs to understand the core reasons impacting the Retail (Grocery) industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Avenue Supermarts 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 Retail (Grocery) industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Avenue Supermarts may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Grocery) sector.
Consumer confidence and its impact on Avenue Supermarts 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 Retail (Grocery) industry and other sectors.
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.
Regulatory challenges
– Avenue Supermarts 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 Retail (Grocery) industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Grocery) industry are lowering. It can presents Avenue Supermarts with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Grocery) sector.
Increasing wage structure of Avenue Supermarts
– 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 Avenue Supermarts.
Technology acceleration in Forth Industrial Revolution
– Avenue Supermarts has witnessed rapid integration of technology during Covid-19 in the Retail (Grocery) industry. As one of the leading players in the industry, Avenue Supermarts needs to keep up with the evolution of technology in the Retail (Grocery) 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 Avenue Supermarts.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Avenue Supermarts in Retail (Grocery) industry. The Retail (Grocery) 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.
High dependence on third party suppliers
– Avenue Supermarts 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.
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. Avenue Supermarts 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.
Weighted SWOT Analysis of Avenue Supermarts Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Avenue Supermarts 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 Avenue Supermarts 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 Avenue Supermarts 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 Avenue Supermarts 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 Avenue Supermarts needs to make to build a sustainable competitive advantage.