SWOT Analysis / TOWS Matrix for Honeywell Automation (India)
Based on various researches at Oak Spring University , Honeywell Automation is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption,
increasing transportation and logistics costs, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Honeywell Automation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Honeywell Automation can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Honeywell Automation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Honeywell Automation 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 Honeywell Automation can be done for the following purposes –
1. Strategic planning of Honeywell Automation
2. Improving business portfolio management of Honeywell Automation
3. Assessing feasibility of the new initiative in India
4. Making a Appliance & Tool sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Honeywell Automation
Strengths of Honeywell Automation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Honeywell Automation are -
Highly skilled collaborators
– Honeywell Automation has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Appliance & Tool industry. Secondly the value chain collaborators of Honeywell Automation have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Honeywell Automation 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.
Ability to recruit top talent
– Honeywell Automation is one of the leading players in the Appliance & Tool 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.
Low bargaining power of suppliers
– Suppliers of Honeywell Automation in the Consumer Cyclical sector have low bargaining power. Honeywell Automation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Honeywell Automation to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Honeywell Automation 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 Honeywell Automation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Honeywell Automation emphasize – knowledge, initiative, and innovation.
Ability to lead change in Appliance & Tool
– Honeywell Automation is one of the leading players in the Appliance & Tool industry in India. Over the years it has not only transformed the business landscape in the Appliance & Tool industry in India but also across the existing markets. The ability to lead change has enabled Honeywell Automation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management in the Appliance & Tool industry
– Honeywell Automation is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Honeywell Automation comprises – understanding the underlying the factors in the Appliance & Tool 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.
Training and development
– Honeywell Automation has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Appliance & Tool industry
– Honeywell Automation has clearly differentiated products in the market place. This has enabled Honeywell Automation to fetch slight price premium compare to the competitors in the Appliance & Tool industry. The sustainable margins have also helped Honeywell Automation to invest into research and development (R&D) and innovation.
Organizational Resilience of Honeywell Automation
– The covid-19 pandemic has put organizational resilience at the centre of everthing Honeywell Automation does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Appliance & Tool industry
- digital transformation varies from industry to industry. For Honeywell Automation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Honeywell Automation 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 Honeywell Automation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Honeywell Automation are -
Interest costs
– Compare to the competition, Honeywell Automation 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.
Increasing silos among functional specialists
– The organizational structure of Honeywell Automation is dominated by functional specialists. It is not different from other players in the Appliance & Tool industry, but Honeywell Automation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Honeywell Automation to focus more on services in the Appliance & Tool industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, Honeywell Automation has high operating costs in the Appliance & Tool industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Honeywell Automation lucrative customers.
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 Honeywell Automation supply chain. Even after few cautionary changes, Honeywell Automation is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Honeywell Automation vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners in Appliance & Tool industry
– because of the regulatory requirements in India, Honeywell Automation 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 Appliance & Tool industry.
Employees’ less understanding of Honeywell Automation strategy
– From the outside it seems that the employees of Honeywell Automation 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Honeywell Automation is slow explore the new channels of communication. These new channels of communication can help Honeywell Automation to provide better information regarding Appliance & Tool products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the Appliance & Tool industry, Honeywell Automation 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.
High dependence on Honeywell Automation ‘s star products
– The top 2 products and services of Honeywell Automation still accounts for major business revenue. This dependence on star products in Appliance & Tool industry has resulted into insufficient focus on developing new products, even though Honeywell Automation has relatively successful track record of launching new products.
Skills based hiring in Appliance & Tool industry
– The stress on hiring functional specialists at Honeywell Automation 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.
Slow decision making process
– As mentioned earlier in the report, Honeywell Automation has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Appliance & Tool industry over the last five years. Honeywell Automation 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.
Honeywell Automation Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Honeywell Automation are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Honeywell Automation 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 Honeywell Automation to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Honeywell Automation to increase its market reach. Honeywell Automation 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Honeywell Automation is facing challenges because of the dominance of functional experts in the organization. Honeywell Automation can utilize new technology in the field of Appliance & Tool industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Honeywell Automation has opened avenues for new revenue streams for the organization in Appliance & Tool industry. This can help Honeywell Automation to build a more holistic ecosystem for Honeywell Automation products in the Appliance & Tool industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Honeywell Automation 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.
Buying journey improvements
– Honeywell Automation can improve the customer journey of consumers in the Appliance & Tool 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Honeywell Automation 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.
Using analytics as competitive advantage
– Honeywell Automation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Appliance & Tool sector. This continuous investment in analytics has enabled Honeywell Automation to build a competitive advantage using analytics. The analytics driven competitive advantage can help Honeywell Automation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Honeywell Automation 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
– Honeywell Automation can use the latest technology developments to improve its manufacturing and designing process in Appliance & Tool 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.
Loyalty marketing
– Honeywell Automation has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Honeywell Automation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Honeywell Automation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Appliance & Tool industry, and it will provide faster access to the consumers.
Threats Honeywell Automation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Honeywell Automation are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Honeywell Automation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Appliance & Tool sector.
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 Honeywell Automation in the Appliance & Tool sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Honeywell Automation 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 Appliance & Tool industry.
Consumer confidence and its impact on Honeywell Automation 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 Appliance & Tool industry and other sectors.
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 Honeywell Automation.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Honeywell Automation in Appliance & Tool industry. The Appliance & Tool 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.
Increasing wage structure of Honeywell Automation
– 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 Honeywell Automation.
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 Honeywell Automation business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Honeywell Automation 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 Honeywell Automation prominent markets.
Easy access to finance
– Easy access to finance in Appliance & Tool industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Honeywell Automation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Honeywell Automation 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.
Shortening product life cycle
– it is one of the major threat that Honeywell Automation is facing in Appliance & Tool sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Honeywell Automation needs to understand the core reasons impacting the Appliance & Tool industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Honeywell Automation Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Honeywell Automation 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 Honeywell Automation 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 Honeywell Automation 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 Honeywell Automation 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 Honeywell Automation needs to make to build a sustainable competitive advantage.
