SWOT Analysis / TOWS Matrix for VRL Logistics Ltd (India)
Based on various researches at Oak Spring University , VRL Logistics Ltd is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, technology disruption,
increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of VRL Logistics Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that VRL Logistics Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the VRL Logistics Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which VRL Logistics Ltd 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 VRL Logistics Ltd can be done for the following purposes –
1. Strategic planning of VRL Logistics Ltd
2. Improving business portfolio management of VRL Logistics Ltd
3. Assessing feasibility of the new initiative in India
4. Making a Trucking sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of VRL Logistics Ltd
Strengths of VRL Logistics Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of VRL Logistics Ltd are -
Operational resilience
– The operational resilience strategy of VRL Logistics Ltd comprises – understanding the underlying the factors in the Trucking 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.
Cross disciplinary teams
– Horizontal connected teams at the VRL Logistics Ltd 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 Trucking industry
– VRL Logistics Ltd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– VRL Logistics Ltd has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Trucking industry. Secondly the value chain collaborators of VRL Logistics Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– VRL Logistics Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – VRL Logistics Ltd staying ahead in the Trucking industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of VRL Logistics Ltd in the Transportation sector have low bargaining power. VRL Logistics Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps VRL Logistics Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– VRL Logistics Ltd is present in almost all the verticals within the Trucking industry. This has provided VRL Logistics Ltd a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– VRL Logistics Ltd is one of the most innovative firm in Trucking sector.
Sustainable margins compare to other players in Trucking industry
– VRL Logistics Ltd has clearly differentiated products in the market place. This has enabled VRL Logistics Ltd to fetch slight price premium compare to the competitors in the Trucking industry. The sustainable margins have also helped VRL Logistics Ltd to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of VRL Logistics Ltd in Trucking industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- VRL Logistics Ltd 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 VRL Logistics Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at VRL Logistics Ltd emphasize – knowledge, initiative, and innovation.
Training and development
– VRL Logistics Ltd has one of the best training and development program in Transportation 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.
Weaknesses of VRL Logistics Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of VRL Logistics Ltd are -
High operating costs
– Compare to the competitors, VRL Logistics Ltd has high operating costs in the Trucking industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract VRL Logistics Ltd lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, VRL Logistics Ltd 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 Trucking industry using digital technology.
Aligning sales with marketing
– From the outside it seems that VRL Logistics Ltd needs to have more collaboration between its sales team and marketing team. Sales professionals in the Trucking industry have deep experience in developing customer relationships. Marketing department at VRL Logistics Ltd can leverage the sales team experience to cultivate customer relationships as VRL Logistics Ltd is planning to shift buying processes online.
Interest costs
– Compare to the competition, VRL Logistics Ltd 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 VRL Logistics Ltd is dominated by functional specialists. It is not different from other players in the Trucking industry, but VRL Logistics Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help VRL Logistics Ltd to focus more on services in the Trucking industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of VRL Logistics Ltd is just above the Trucking industry average. It 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.
High dependence on VRL Logistics Ltd ‘s star products
– The top 2 products and services of VRL Logistics Ltd still accounts for major business revenue. This dependence on star products in Trucking industry has resulted into insufficient focus on developing new products, even though VRL Logistics Ltd has relatively successful track record of launching new products.
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 VRL Logistics Ltd supply chain. Even after few cautionary changes, VRL Logistics Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left VRL Logistics Ltd vulnerable to further global disruptions in South East Asia.
Skills based hiring in Trucking industry
– The stress on hiring functional specialists at VRL Logistics Ltd 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.
Employees’ less understanding of VRL Logistics Ltd strategy
– From the outside it seems that the employees of VRL Logistics Ltd 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.
Low market penetration in new markets
– Outside its home market of India, VRL Logistics Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
VRL Logistics Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of VRL Logistics Ltd are -
Creating value in data economy
– The success of analytics program of VRL Logistics Ltd has opened avenues for new revenue streams for the organization in Trucking industry. This can help VRL Logistics Ltd to build a more holistic ecosystem for VRL Logistics Ltd products in the Trucking industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– VRL Logistics Ltd 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.
Using analytics as competitive advantage
– VRL Logistics Ltd has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Trucking sector. This continuous investment in analytics has enabled VRL Logistics Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help VRL Logistics Ltd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for VRL Logistics Ltd 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 VRL Logistics Ltd to hire the very best people irrespective of their geographical location.
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 VRL Logistics Ltd 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
– VRL Logistics Ltd can use the latest technology developments to improve its manufacturing and designing process in Trucking 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, VRL Logistics Ltd can use these opportunities to build new business models that can help the communities that VRL Logistics Ltd operates in. Secondly it can use opportunities from government spending in Trucking sector.
Learning at scale
– Online learning technologies has now opened space for VRL Logistics Ltd 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.
Use of Bitcoin and other crypto currencies for transactions in Trucking industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for VRL Logistics Ltd in the Trucking industry. Now VRL Logistics Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, VRL Logistics Ltd is facing challenges because of the dominance of functional experts in the organization. VRL Logistics Ltd can utilize new technology in the field of Trucking industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at VRL Logistics Ltd 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 Trucking industry.
Developing new processes and practices
– VRL Logistics Ltd can develop new processes and procedures in Trucking 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Trucking industry, but it has also influenced the consumer preferences. VRL Logistics Ltd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats VRL Logistics Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of VRL Logistics Ltd are -
Technology acceleration in Forth Industrial Revolution
– VRL Logistics Ltd has witnessed rapid integration of technology during Covid-19 in the Trucking industry. As one of the leading players in the industry, VRL Logistics Ltd needs to keep up with the evolution of technology in the Trucking 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for VRL Logistics Ltd in Trucking industry. The Trucking 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, VRL Logistics Ltd 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 VRL Logistics Ltd prominent markets.
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 VRL Logistics Ltd in the Trucking sector and impact the bottomline of the organization.
Regulatory challenges
– VRL Logistics Ltd 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 Trucking industry regulations.
Environmental challenges
– VRL Logistics Ltd 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. VRL Logistics Ltd can take advantage of this fund but it will also bring new competitors in the Trucking 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. VRL Logistics Ltd needs to understand the core reasons impacting the Trucking industry. This will help it in building a better workplace.
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 VRL Logistics Ltd.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Trucking industry are lowering. It can presents VRL Logistics Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Trucking sector.
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. VRL Logistics Ltd 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.
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 VRL Logistics Ltd business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– VRL Logistics Ltd 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 Trucking industry.
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.
Weighted SWOT Analysis of VRL Logistics Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at VRL Logistics Ltd 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 VRL Logistics Ltd 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 VRL Logistics Ltd 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 VRL Logistics Ltd 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 VRL Logistics Ltd needs to make to build a sustainable competitive advantage.