Indah Kiat Pulp & Paper (INKP) SWOT Analysis / TOWS Matrix / MBA Resources
Paper & Paper Products
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Indah Kiat Pulp & Paper (Indonesia)
Based on various researches at Oak Spring University , Indah Kiat Pulp & Paper is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing household debt because of falling income levels, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic ,
central banks are concerned over increasing inflation, technology disruption, etc
Introduction to SWOT Analysis of Indah Kiat Pulp & Paper
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Indah Kiat Pulp & Paper can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Indah Kiat Pulp & Paper, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper can be done for the following purposes –
1. Strategic planning of Indah Kiat Pulp & Paper
2. Improving business portfolio management of Indah Kiat Pulp & Paper
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Paper & Paper Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Indah Kiat Pulp & Paper
Strengths of Indah Kiat Pulp & Paper | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Indah Kiat Pulp & Paper are -
Cross disciplinary teams
– Horizontal connected teams at the Indah Kiat Pulp & Paper 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.
Learning organization
- Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Indah Kiat Pulp & Paper emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Indah Kiat Pulp & Paper has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Indah Kiat Pulp & Paper staying ahead in the Paper & Paper Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Indah Kiat Pulp & Paper is one of the leading players in the Paper & Paper Products industry in Indonesia. It is in a position to attract the best talent available in Indonesia. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy of Indah Kiat Pulp & Paper comprises – understanding the underlying the factors in the Paper & Paper Products 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.
Highly skilled collaborators
– Indah Kiat Pulp & Paper has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Paper & Paper Products industry. Secondly the value chain collaborators of Indah Kiat Pulp & Paper have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management in the Paper & Paper Products industry
– Indah Kiat Pulp & Paper is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Paper & Paper Products industry
– Indah Kiat Pulp & Paper has clearly differentiated products in the market place. This has enabled Indah Kiat Pulp & Paper to fetch slight price premium compare to the competitors in the Paper & Paper Products industry. The sustainable margins have also helped Indah Kiat Pulp & Paper to invest into research and development (R&D) and innovation.
Ability to lead change in Paper & Paper Products
– Indah Kiat Pulp & Paper is one of the leading players in the Paper & Paper Products industry in Indonesia. Over the years it has not only transformed the business landscape in the Paper & Paper Products industry in Indonesia but also across the existing markets. The ability to lead change has enabled Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper in Paper & Paper Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Indah Kiat Pulp & Paper is present in almost all the verticals within the Paper & Paper Products industry. This has provided Indah Kiat Pulp & Paper 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.
Low bargaining power of suppliers
– Suppliers of Indah Kiat Pulp & Paper in the Basic Materials sector have low bargaining power. Indah Kiat Pulp & Paper has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Indah Kiat Pulp & Paper to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of Indah Kiat Pulp & Paper | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indah Kiat Pulp & Paper are -
Need for greater diversity
– Indah Kiat Pulp & Paper 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
Indah Kiat Pulp & Paper has a high cash cycle compare to other players in the Paper & Paper Products industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Indah Kiat Pulp & Paper 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 Paper & Paper Products industry using digital technology.
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 Indah Kiat Pulp & Paper supply chain. Even after few cautionary changes, Indah Kiat Pulp & Paper is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Indah Kiat Pulp & Paper vulnerable to further global disruptions in South East Asia.
Skills based hiring in Paper & Paper Products industry
– The stress on hiring functional specialists at Indah Kiat Pulp & Paper 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.
Compensation and incentives
– The revenue per employee of Indah Kiat Pulp & Paper is just above the Paper & Paper Products 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.
Workers concerns about automation
– As automation is fast increasing in the Paper & Paper Products industry, Indah Kiat Pulp & Paper 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.
Interest costs
– Compare to the competition, Indah Kiat Pulp & Paper 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 operating costs
– Compare to the competitors, Indah Kiat Pulp & Paper has high operating costs in the Paper & Paper Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Indah Kiat Pulp & Paper lucrative customers.
Slow to strategic competitive environment developments
– As Indah Kiat Pulp & Paper is one of the leading players in the Paper & Paper Products industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Paper & Paper Products industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative at Indah Kiat Pulp & Paper, in the dynamic environment of Paper & Paper Products industry it has struggled to respond to the nimble upstart competition. Indah Kiat Pulp & Paper has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Indah Kiat Pulp & Paper Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Indah Kiat Pulp & Paper are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Indah Kiat Pulp & Paper can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Paper & Paper Products industry, but it has also influenced the consumer preferences. Indah Kiat Pulp & Paper can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Indah Kiat Pulp & Paper can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Indah Kiat Pulp & Paper can use the latest technology developments to improve its manufacturing and designing process in Paper & Paper Products 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Paper & Paper Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Indah Kiat Pulp & Paper 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. Indah Kiat Pulp & Paper 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.
Developing new processes and practices
– Indah Kiat Pulp & Paper can develop new processes and procedures in Paper & Paper Products 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Indah Kiat Pulp & Paper can use these opportunities to build new business models that can help the communities that Indah Kiat Pulp & Paper operates in. Secondly it can use opportunities from government spending in Paper & Paper Products sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Indah Kiat Pulp & Paper in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Paper & Paper Products industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Indah Kiat Pulp & Paper 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.
Creating value in data economy
– The success of analytics program of Indah Kiat Pulp & Paper has opened avenues for new revenue streams for the organization in Paper & Paper Products industry. This can help Indah Kiat Pulp & Paper to build a more holistic ecosystem for Indah Kiat Pulp & Paper products in the Paper & Paper Products industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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 Indah Kiat Pulp & Paper 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.
Threats Indah Kiat Pulp & Paper External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Indah Kiat Pulp & Paper are -
Easy access to finance
– Easy access to finance in Paper & Paper Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Indah Kiat Pulp & Paper can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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. Indah Kiat Pulp & Paper needs to understand the core reasons impacting the Paper & Paper Products industry. This will help it in building a better workplace.
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 Indah Kiat Pulp & Paper business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Indah Kiat Pulp & Paper
– 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 Indah Kiat Pulp & Paper.
Technology acceleration in Forth Industrial Revolution
– Indah Kiat Pulp & Paper has witnessed rapid integration of technology during Covid-19 in the Paper & Paper Products industry. As one of the leading players in the industry, Indah Kiat Pulp & Paper needs to keep up with the evolution of technology in the Paper & Paper Products 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.
Stagnating economy with rate increase
– Indah Kiat Pulp & Paper 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 Paper & Paper Products industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Paper & Paper Products industry are lowering. It can presents Indah Kiat Pulp & Paper with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Paper & Paper Products sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Indah Kiat Pulp & Paper may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Paper & Paper Products sector.
Consumer confidence and its impact on Indah Kiat Pulp & Paper 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 Paper & Paper Products industry and other sectors.
High dependence on third party suppliers
– Indah Kiat Pulp & Paper 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.
Environmental challenges
– Indah Kiat Pulp & Paper 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. Indah Kiat Pulp & Paper can take advantage of this fund but it will also bring new competitors in the Paper & Paper Products industry.
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. Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper 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 Indah Kiat Pulp & Paper needs to make to build a sustainable competitive advantage.