SWOT Analysis / TOWS Matrix for Indoritel Makmur (Indonesia)
Based on various researches at Oak Spring University , Indoritel Makmur is operating in a macro-environment that has been destablized by – there is backlash against globalization, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing commodity prices,
central banks are concerned over increasing inflation, there is increasing trade war between United States & China, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Indoritel Makmur can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Indoritel Makmur, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Indoritel Makmur 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 Indoritel Makmur can be done for the following purposes –
1. Strategic planning of Indoritel Makmur
2. Improving business portfolio management of Indoritel Makmur
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Retail (Grocery) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Indoritel Makmur
Strengths of Indoritel Makmur | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Indoritel Makmur are -
Innovation driven organization
– Indoritel Makmur is one of the most innovative firm in Retail (Grocery) sector.
Superior customer experience
– The customer experience strategy of Indoritel Makmur in Retail (Grocery) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Indoritel Makmur
– The covid-19 pandemic has put organizational resilience at the centre of everthing Indoritel Makmur does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Indoritel Makmur 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 Retail (Grocery) industry. The technology infrastructure of Indonesia 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.
High brand equity
– Indoritel Makmur has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Indoritel Makmur to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Indoritel Makmur 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 Indoritel Makmur is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Indoritel Makmur emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Retail (Grocery) industry
– Indoritel Makmur has clearly differentiated products in the market place. This has enabled Indoritel Makmur to fetch slight price premium compare to the competitors in the Retail (Grocery) industry. The sustainable margins have also helped Indoritel Makmur to invest into research and development (R&D) and innovation.
Digital Transformation in Retail (Grocery) industry
- digital transformation varies from industry to industry. For Indoritel Makmur digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Indoritel Makmur 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 recruit top talent
– Indoritel Makmur is one of the leading players in the Retail (Grocery) 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.
Ability to lead change in Retail (Grocery)
– Indoritel Makmur is one of the leading players in the Retail (Grocery) industry in Indonesia. Over the years it has not only transformed the business landscape in the Retail (Grocery) industry in Indonesia but also across the existing markets. The ability to lead change has enabled Indoritel Makmur in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Indoritel Makmur comprises – understanding the underlying the factors in the Retail (Grocery) 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
– Indoritel Makmur has one of the best training and development program in Services 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 Indoritel Makmur | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indoritel Makmur are -
Need for greater diversity
– Indoritel Makmur 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.
Slow to strategic competitive environment developments
– As Indoritel Makmur is one of the leading players in the Retail (Grocery) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Grocery) industry in last five years.
Interest costs
– Compare to the competition, Indoritel Makmur 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.
Low market penetration in new markets
– Outside its home market of Indonesia, Indoritel Makmur needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Indoritel Makmur, in the dynamic environment of Retail (Grocery) industry it has struggled to respond to the nimble upstart competition. Indoritel Makmur has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring in Retail (Grocery) industry
– The stress on hiring functional specialists at Indoritel Makmur 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 bargaining power of channel partners in Retail (Grocery) industry
– because of the regulatory requirements in Indonesia, Indoritel Makmur 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 Retail (Grocery) industry.
Capital Spending Reduction
– Even during the low interest decade, Indoritel Makmur 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 Retail (Grocery) industry using digital technology.
Products dominated business model
– Even though Indoritel Makmur has some of the most successful models in the Retail (Grocery) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Indoritel Makmur should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, Indoritel Makmur has high operating costs in the Retail (Grocery) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Indoritel Makmur lucrative customers.
Compensation and incentives
– The revenue per employee of Indoritel Makmur is just above the Retail (Grocery) 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.
Indoritel Makmur Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Indoritel Makmur are -
Building a culture of innovation
– managers at Indoritel Makmur 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 Retail (Grocery) industry.
Manufacturing automation
– Indoritel Makmur can use the latest technology developments to improve its manufacturing and designing process in Retail (Grocery) 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Indoritel Makmur 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
– Indoritel Makmur has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Grocery) sector. This continuous investment in analytics has enabled Indoritel Makmur to build a competitive advantage using analytics. The analytics driven competitive advantage can help Indoritel Makmur to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Indoritel Makmur is facing challenges because of the dominance of functional experts in the organization. Indoritel Makmur can utilize new technology in the field of Retail (Grocery) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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 Indoritel Makmur 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.
Learning at scale
– Online learning technologies has now opened space for Indoritel Makmur 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Indoritel Makmur 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 Indoritel Makmur to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Indoritel Makmur can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Grocery) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Indoritel Makmur 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. Indoritel Makmur 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.
Use of Bitcoin and other crypto currencies for transactions in Retail (Grocery) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Indoritel Makmur in the Retail (Grocery) industry. Now Indoritel Makmur can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Indoritel Makmur to increase its market reach. Indoritel Makmur 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.
Creating value in data economy
– The success of analytics program of Indoritel Makmur has opened avenues for new revenue streams for the organization in Retail (Grocery) industry. This can help Indoritel Makmur to build a more holistic ecosystem for Indoritel Makmur products in the Retail (Grocery) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Indoritel Makmur External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Indoritel Makmur are -
Consumer confidence and its impact on Indoritel Makmur 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 Retail (Grocery) industry and other sectors.
Regulatory challenges
– Indoritel Makmur 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 Retail (Grocery) industry regulations.
Technology acceleration in Forth Industrial Revolution
– Indoritel Makmur has witnessed rapid integration of technology during Covid-19 in the Retail (Grocery) industry. As one of the leading players in the industry, Indoritel Makmur needs to keep up with the evolution of technology in the Retail (Grocery) 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.
High dependence on third party suppliers
– Indoritel Makmur 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.
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 Indoritel Makmur business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Indoritel Makmur may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Grocery) sector.
Environmental challenges
– Indoritel Makmur 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. Indoritel Makmur can take advantage of this fund but it will also bring new competitors in the Retail (Grocery) industry.
Easy access to finance
– Easy access to finance in Retail (Grocery) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Indoritel Makmur can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Indoritel Makmur 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 Indoritel Makmur prominent markets.
Stagnating economy with rate increase
– Indoritel Makmur 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 Retail (Grocery) industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Grocery) industry are lowering. It can presents Indoritel Makmur with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Grocery) sector.
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 Indoritel Makmur.
Shortening product life cycle
– it is one of the major threat that Indoritel Makmur is facing in Retail (Grocery) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Indoritel Makmur Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Indoritel Makmur 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 Indoritel Makmur 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 Indoritel Makmur 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 Indoritel Makmur 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 Indoritel Makmur needs to make to build a sustainable competitive advantage.