PP London Sumatra (LSIP) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for PP London Sumatra (Indonesia)

Based on various researches at Oak Spring University , PP London Sumatra is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, etc

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Introduction to SWOT Analysis of PP London Sumatra

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that PP London Sumatra can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the PP London Sumatra, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which PP London Sumatra 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of PP London Sumatra can be done for the following purposes –
1. Strategic planning of PP London Sumatra
2. Improving business portfolio management of PP London Sumatra
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Crops sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of PP London Sumatra

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Strengths of PP London Sumatra | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of PP London Sumatra are -

Ability to lead change in Crops

– PP London Sumatra is one of the leading players in the Crops industry in Indonesia. Over the years it has not only transformed the business landscape in the Crops industry in Indonesia but also across the existing markets. The ability to lead change has enabled PP London Sumatra in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Sustainable margins compare to other players in Crops industry

– PP London Sumatra has clearly differentiated products in the market place. This has enabled PP London Sumatra to fetch slight price premium compare to the competitors in the Crops industry. The sustainable margins have also helped PP London Sumatra to invest into research and development (R&D) and innovation.

Low bargaining power of suppliers

– Suppliers of PP London Sumatra in the Consumer/Non-Cyclical sector have low bargaining power. PP London Sumatra has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps PP London Sumatra to manage not only supply disruptions but also source products at highly competitive prices.

Training and development

– PP London Sumatra 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.

Digital Transformation in Crops industry

- digital transformation varies from industry to industry. For PP London Sumatra digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. PP London Sumatra 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.

Strong track record of project management in the Crops industry

– PP London Sumatra is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Diverse revenue streams

– PP London Sumatra is present in almost all the verticals within the Crops industry. This has provided PP London Sumatra 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.

Operational resilience

– The operational resilience strategy of PP London Sumatra comprises – understanding the underlying the factors in the Crops 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.

Learning organization

- PP London Sumatra 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 PP London Sumatra is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at PP London Sumatra emphasize – knowledge, initiative, and innovation.

High switching costs

– The high switching costs that PP London Sumatra 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.

Effective Research and Development (R&D)

– PP London Sumatra has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – PP London Sumatra 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.

Superior customer experience

– The customer experience strategy of PP London Sumatra in Crops industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of PP London Sumatra | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of PP London Sumatra 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 PP London Sumatra supply chain. Even after few cautionary changes, PP London Sumatra is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left PP London Sumatra vulnerable to further global disruptions in South East Asia.

Low market penetration in new markets

– Outside its home market of Indonesia, PP London Sumatra needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Aligning sales with marketing

– From the outside it seems that PP London Sumatra 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 PP London Sumatra can leverage the sales team experience to cultivate customer relationships as PP London Sumatra is planning to shift buying processes online.

High bargaining power of channel partners in Crops industry

– because of the regulatory requirements in Indonesia, PP London Sumatra 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, PP London Sumatra is slow explore the new channels of communication. These new channels of communication can help PP London Sumatra to provide better information regarding Crops products and services. It can also build an online community to further reach out to potential customers.

No frontier risks strategy

– From the 10K / annual statement of PP London Sumatra, it seems that company is thinking out the frontier risks that can impact Crops industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.

High operating costs

– Compare to the competitors, PP London Sumatra 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 PP London Sumatra lucrative customers.

Lack of clear differentiation of PP London Sumatra products

– To increase the profitability and margins on the products, PP London Sumatra needs to provide more differentiated products than what it is currently offering in the marketplace.

High dependence on PP London Sumatra ‘s star products

– The top 2 products and services of PP London Sumatra 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 PP London Sumatra has relatively successful track record of launching new products.

High cash cycle compare to competitors

PP London Sumatra has a high cash cycle compare to other players in the Crops industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Need for greater diversity

– PP London Sumatra 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.

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PP London Sumatra Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of PP London Sumatra are -

Manufacturing automation

– PP London Sumatra 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.

Buying journey improvements

– PP London Sumatra can improve the customer journey of consumers in the Crops 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.

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. PP London Sumatra can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Learning at scale

– Online learning technologies has now opened space for PP London Sumatra 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Crops industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. PP London Sumatra 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. PP London Sumatra 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, PP London Sumatra can use these opportunities to build new business models that can help the communities that PP London Sumatra operates in. Secondly it can use opportunities from government spending in Crops sector.

Low interest rates

– Even though inflation is raising its head in most developed economies, PP London Sumatra 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.

Leveraging digital technologies

– PP London Sumatra 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.

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 PP London Sumatra 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects PP London Sumatra can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

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. PP London Sumatra can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Loyalty marketing

– PP London Sumatra 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.

Creating value in data economy

– The success of analytics program of PP London Sumatra has opened avenues for new revenue streams for the organization in Crops industry. This can help PP London Sumatra to build a more holistic ecosystem for PP London Sumatra products in the Crops industry by providing – data insight services, data privacy related products, data based consulting services, etc.

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Threats PP London Sumatra External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of PP London Sumatra are -

Increasing wage structure of PP London Sumatra

– 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 PP London Sumatra.

Regulatory challenges

– PP London Sumatra 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.

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. PP London Sumatra needs to understand the core reasons impacting the Crops industry. This will help it in building a better workplace.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, PP London Sumatra 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 PP London Sumatra prominent markets.

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. PP London Sumatra 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 PP London Sumatra 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, PP London Sumatra 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.

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 PP London Sumatra in the Crops sector and impact the bottomline of the organization.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Crops industry are lowering. It can presents PP London Sumatra with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Crops 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 PP London Sumatra.

Shortening product life cycle

– it is one of the major threat that PP London Sumatra is facing in Crops sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Environmental challenges

– PP London Sumatra 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. PP London Sumatra can take advantage of this fund but it will also bring new competitors in the Crops industry.

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Weighted SWOT Analysis of PP London Sumatra Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at PP London Sumatra 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 PP London Sumatra 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 PP London Sumatra 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 PP London Sumatra 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 PP London Sumatra needs to make to build a sustainable competitive advantage.

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