SWOT Analysis / TOWS Matrix for Tata Coffee (India)
Based on various researches at Oak Spring University , Tata Coffee is operating in a macro-environment that has been destablized by – wage bills are increasing, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, geopolitical disruptions, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion,
talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Tata Coffee can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tata Coffee, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tata Coffee 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 Tata Coffee can be done for the following purposes –
1. Strategic planning of Tata Coffee
2. Improving business portfolio management of Tata Coffee
3. Assessing feasibility of the new initiative in India
4. Making a Crops sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tata Coffee
Strengths of Tata Coffee | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tata Coffee are -
Effective Research and Development (R&D)
– Tata Coffee has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Tata Coffee staying ahead in the Crops industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Crops
– Tata Coffee is one of the leading players in the Crops industry in India. Over the years it has not only transformed the business landscape in the Crops industry in India but also across the existing markets. The ability to lead change has enabled Tata Coffee in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Tata Coffee in Crops industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Tata Coffee has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tata Coffee to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Tata Coffee has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tata Coffee has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Tata Coffee has one of the best training and development program in Consumer/Non-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.
Analytics focus
– Tata Coffee 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 Crops 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.
Strong track record of project management in the Crops industry
– Tata Coffee is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Tata Coffee in the Consumer/Non-Cyclical sector have low bargaining power. Tata Coffee has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tata Coffee to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Tata Coffee 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 Tata Coffee is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Tata Coffee emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Tata Coffee 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.
Innovation driven organization
– Tata Coffee is one of the most innovative firm in Crops sector.
Weaknesses of Tata Coffee | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Tata Coffee 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 Tata Coffee supply chain. Even after few cautionary changes, Tata Coffee is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tata Coffee vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tata Coffee is slow explore the new channels of communication. These new channels of communication can help Tata Coffee to provide better information regarding Crops products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Tata Coffee has some of the most successful models in the Crops industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Tata Coffee should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Tata Coffee is dominated by functional specialists. It is not different from other players in the Crops industry, but Tata Coffee needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tata Coffee to focus more on services in the Crops industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, Tata Coffee has high operating costs in the Crops industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Tata Coffee lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the Crops industry, Tata Coffee 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.
Need for greater diversity
– Tata Coffee 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.
Aligning sales with marketing
– From the outside it seems that Tata Coffee needs to have more collaboration between its sales team and marketing team. Sales professionals in the Crops industry have deep experience in developing customer relationships. Marketing department at Tata Coffee can leverage the sales team experience to cultivate customer relationships as Tata Coffee is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Tata Coffee 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 Crops industry using digital technology.
High bargaining power of channel partners in Crops industry
– because of the regulatory requirements in India, Tata Coffee 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 Crops industry.
High dependence on Tata Coffee ‘s star products
– The top 2 products and services of Tata Coffee still accounts for major business revenue. This dependence on star products in Crops industry has resulted into insufficient focus on developing new products, even though Tata Coffee has relatively successful track record of launching new products.
Tata Coffee Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Tata Coffee are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Crops industry, but it has also influenced the consumer preferences. Tata Coffee can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Tata Coffee 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.
Building a culture of innovation
– managers at Tata Coffee 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 Crops industry.
Learning at scale
– Online learning technologies has now opened space for Tata Coffee 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tata Coffee 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.
Loyalty marketing
– Tata Coffee 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, Tata Coffee can use these opportunities to build new business models that can help the communities that Tata Coffee operates in. Secondly it can use opportunities from government spending in Crops sector.
Creating value in data economy
– The success of analytics program of Tata Coffee has opened avenues for new revenue streams for the organization in Crops industry. This can help Tata Coffee to build a more holistic ecosystem for Tata Coffee products in the Crops industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions in Crops industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tata Coffee in the Crops industry. Now Tata Coffee can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Tata Coffee 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.
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. Tata Coffee can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Tata Coffee has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Crops sector. This continuous investment in analytics has enabled Tata Coffee to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tata Coffee to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Tata Coffee can use the latest technology developments to improve its manufacturing and designing process in Crops 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.
Threats Tata Coffee External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Tata Coffee are -
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.
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.
Increasing wage structure of Tata Coffee
– 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 Tata Coffee.
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 Tata Coffee in the Crops sector and impact the bottomline of the organization.
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. Tata Coffee needs to understand the core reasons impacting the Crops industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Tata Coffee 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 Crops industry are lowering. It can presents Tata Coffee with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Crops sector.
Shortening product life cycle
– it is one of the major threat that Tata Coffee is facing in Crops sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tata Coffee 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 Tata Coffee prominent markets.
Regulatory challenges
– Tata Coffee 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 Crops industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Tata Coffee may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Crops sector.
Consumer confidence and its impact on Tata Coffee 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 Crops industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tata Coffee in Crops industry. The Crops 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.
Weighted SWOT Analysis of Tata Coffee Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Tata Coffee 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 Tata Coffee 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 Tata Coffee 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 Tata Coffee 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 Tata Coffee needs to make to build a sustainable competitive advantage.