Based on various researches at Oak Spring University , Larsen & Toubro Infotech is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, technology disruption, there is backlash against globalization,
increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Larsen & Toubro Infotech
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Larsen & Toubro Infotech can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Larsen & Toubro Infotech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Larsen & Toubro Infotech 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 Larsen & Toubro Infotech can be done for the following purposes –
1. Strategic planning of Larsen & Toubro Infotech
2. Improving business portfolio management of Larsen & Toubro Infotech
3. Assessing feasibility of the new initiative in India
4. Making a Software & Programming sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Larsen & Toubro Infotech
Strengths of Larsen & Toubro Infotech | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Larsen & Toubro Infotech are -
Superior customer experience
– The customer experience strategy of Larsen & Toubro Infotech in Software & Programming industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Larsen & Toubro Infotech 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 Software & Programming industry. The technology infrastructure of India is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Low bargaining power of suppliers
– Suppliers of Larsen & Toubro Infotech in the Technology sector have low bargaining power. Larsen & Toubro Infotech has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Larsen & Toubro Infotech to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Larsen & Toubro Infotech is one of the leading players in the Software & Programming 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.
Operational resilience
– The operational resilience strategy of Larsen & Toubro Infotech comprises – understanding the underlying the factors in the Software & Programming 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.
Organizational Resilience of Larsen & Toubro Infotech
– The covid-19 pandemic has put organizational resilience at the centre of everthing Larsen & Toubro Infotech does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Larsen & Toubro Infotech has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Larsen & Toubro Infotech staying ahead in the Software & Programming industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Larsen & Toubro Infotech has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Larsen & Toubro Infotech to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Software & Programming industry
- digital transformation varies from industry to industry. For Larsen & Toubro Infotech digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Larsen & Toubro Infotech 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.
Ability to lead change in Software & Programming
– Larsen & Toubro Infotech is one of the leading players in the Software & Programming industry in India. Over the years it has not only transformed the business landscape in the Software & Programming industry in India but also across the existing markets. The ability to lead change has enabled Larsen & Toubro Infotech in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Software & Programming industry
– Larsen & Toubro Infotech has clearly differentiated products in the market place. This has enabled Larsen & Toubro Infotech to fetch slight price premium compare to the competitors in the Software & Programming industry. The sustainable margins have also helped Larsen & Toubro Infotech to invest into research and development (R&D) and innovation.
Strong track record of project management in the Software & Programming industry
– Larsen & Toubro Infotech is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Larsen & Toubro Infotech | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Larsen & Toubro Infotech 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 Larsen & Toubro Infotech supply chain. Even after few cautionary changes, Larsen & Toubro Infotech is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Larsen & Toubro Infotech vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Larsen & Toubro Infotech 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.
High bargaining power of channel partners in Software & Programming industry
– because of the regulatory requirements in India, Larsen & Toubro Infotech 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 Software & Programming industry.
Need for greater diversity
– Larsen & Toubro Infotech 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.
High cash cycle compare to competitors
Larsen & Toubro Infotech has a high cash cycle compare to other players in the Software & Programming industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Larsen & Toubro Infotech is dominated by functional specialists. It is not different from other players in the Software & Programming industry, but Larsen & Toubro Infotech needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Larsen & Toubro Infotech to focus more on services in the Software & Programming industry rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Larsen & Toubro Infotech is one of the leading players in the Software & Programming industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Software & Programming industry in last five years.
Employees’ less understanding of Larsen & Toubro Infotech strategy
– From the outside it seems that the employees of Larsen & Toubro Infotech 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.
Aligning sales with marketing
– From the outside it seems that Larsen & Toubro Infotech needs to have more collaboration between its sales team and marketing team. Sales professionals in the Software & Programming industry have deep experience in developing customer relationships. Marketing department at Larsen & Toubro Infotech can leverage the sales team experience to cultivate customer relationships as Larsen & Toubro Infotech is planning to shift buying processes online.
Skills based hiring in Software & Programming industry
– The stress on hiring functional specialists at Larsen & Toubro Infotech 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 Larsen & Toubro Infotech ‘s star products
– The top 2 products and services of Larsen & Toubro Infotech still accounts for major business revenue. This dependence on star products in Software & Programming industry has resulted into insufficient focus on developing new products, even though Larsen & Toubro Infotech has relatively successful track record of launching new products.
Larsen & Toubro Infotech Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Larsen & Toubro Infotech are -
Use of Bitcoin and other crypto currencies for transactions in Software & Programming industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Larsen & Toubro Infotech in the Software & Programming industry. Now Larsen & Toubro Infotech can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Larsen & Toubro Infotech 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
– Larsen & Toubro Infotech has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Software & Programming sector. This continuous investment in analytics has enabled Larsen & Toubro Infotech to build a competitive advantage using analytics. The analytics driven competitive advantage can help Larsen & Toubro Infotech to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Larsen & Toubro Infotech can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Larsen & Toubro Infotech 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 Software & Programming industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Larsen & Toubro Infotech 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 Larsen & Toubro Infotech to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Software & Programming industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Larsen & Toubro Infotech 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. Larsen & Toubro Infotech 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Larsen & Toubro Infotech 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 Larsen & Toubro Infotech to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Larsen & Toubro Infotech can use these opportunities to build new business models that can help the communities that Larsen & Toubro Infotech operates in. Secondly it can use opportunities from government spending in Software & Programming sector.
Better consumer reach
– The expansion of the 5G network will help Larsen & Toubro Infotech to increase its market reach. Larsen & Toubro Infotech 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.
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 Larsen & Toubro Infotech 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.
Manufacturing automation
– Larsen & Toubro Infotech can use the latest technology developments to improve its manufacturing and designing process in Software & Programming 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.
Buying journey improvements
– Larsen & Toubro Infotech can improve the customer journey of consumers in the Software & Programming 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.
Threats Larsen & Toubro Infotech External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Larsen & Toubro Infotech are -
Increasing wage structure of Larsen & Toubro Infotech
– 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 Larsen & Toubro Infotech.
Shortening product life cycle
– it is one of the major threat that Larsen & Toubro Infotech is facing in Software & Programming sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Larsen & Toubro Infotech may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Software & Programming sector.
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 Larsen & Toubro Infotech business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Larsen & Toubro Infotech 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Software & Programming industry are lowering. It can presents Larsen & Toubro Infotech with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Software & Programming sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Larsen & Toubro Infotech 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 Larsen & Toubro Infotech prominent markets.
Environmental challenges
– Larsen & Toubro Infotech 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. Larsen & Toubro Infotech can take advantage of this fund but it will also bring new competitors in the Software & Programming industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Larsen & Toubro Infotech needs to understand the core reasons impacting the Software & Programming industry. This will help it in building a better workplace.
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 Larsen & Toubro Infotech in the Software & Programming sector and impact the bottomline of the organization.
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.
Regulatory challenges
– Larsen & Toubro Infotech 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 Software & Programming industry regulations.
Weighted SWOT Analysis of Larsen & Toubro Infotech Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Larsen & Toubro Infotech 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 Larsen & Toubro Infotech 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 Larsen & Toubro Infotech 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 Larsen & Toubro Infotech 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 Larsen & Toubro Infotech needs to make to build a sustainable competitive advantage.