SWOT Analysis / TOWS Matrix for Traffic Technologies Ltd (Australia)
Based on various researches at Oak Spring University , Traffic Technologies Ltd is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, technology disruption, increasing commodity prices, increasing transportation and logistics costs, supply chains are disrupted by pandemic , increasing household debt because of falling income levels,
geopolitical disruptions, there is backlash against globalization, etc
Introduction to SWOT Analysis of Traffic Technologies Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Traffic Technologies Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Traffic Technologies Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Traffic Technologies 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 Traffic Technologies Ltd can be done for the following purposes –
1. Strategic planning of Traffic Technologies Ltd
2. Improving business portfolio management of Traffic Technologies Ltd
3. Assessing feasibility of the new initiative in Australia
4. Making a Security Systems & Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Traffic Technologies Ltd
Strengths of Traffic Technologies Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Traffic Technologies Ltd are -
High switching costs
– The high switching costs that Traffic Technologies Ltd 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.
Strong track record of project management in the Security Systems & Services industry
– Traffic Technologies 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.
Organizational Resilience of Traffic Technologies Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Traffic Technologies Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Traffic Technologies Ltd in the Services sector have low bargaining power. Traffic Technologies Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Traffic Technologies Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Traffic Technologies Ltd is present in almost all the verticals within the Security Systems & Services industry. This has provided Traffic Technologies 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.
Digital Transformation in Security Systems & Services industry
- digital transformation varies from industry to industry. For Traffic Technologies Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Traffic Technologies Ltd 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.
High brand equity
– Traffic Technologies Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Traffic Technologies Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Security Systems & Services
– Traffic Technologies Ltd is one of the leading players in the Security Systems & Services industry in Australia. Over the years it has not only transformed the business landscape in the Security Systems & Services industry in Australia but also across the existing markets. The ability to lead change has enabled Traffic Technologies Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Traffic Technologies Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Traffic Technologies Ltd staying ahead in the Security Systems & Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Security Systems & Services industry
– Traffic Technologies Ltd has clearly differentiated products in the market place. This has enabled Traffic Technologies Ltd to fetch slight price premium compare to the competitors in the Security Systems & Services industry. The sustainable margins have also helped Traffic Technologies Ltd to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Traffic Technologies 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.
Training and development
– Traffic Technologies Ltd 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 Traffic Technologies Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Traffic Technologies Ltd are -
Skills based hiring in Security Systems & Services industry
– The stress on hiring functional specialists at Traffic Technologies 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.
Low market penetration in new markets
– Outside its home market of Australia, Traffic Technologies Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Traffic Technologies Ltd has some of the most successful models in the Security Systems & Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Traffic Technologies Ltd should strive to include more intangible value offerings along with its core products and services.
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 Traffic Technologies Ltd supply chain. Even after few cautionary changes, Traffic Technologies Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Traffic Technologies Ltd vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Traffic Technologies Ltd is one of the leading players in the Security Systems & Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Security Systems & Services industry in last five years.
High dependence on Traffic Technologies Ltd ‘s star products
– The top 2 products and services of Traffic Technologies Ltd still accounts for major business revenue. This dependence on star products in Security Systems & Services industry has resulted into insufficient focus on developing new products, even though Traffic Technologies Ltd has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Traffic Technologies 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 Security Systems & Services industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of Traffic Technologies Ltd, it seems that company is thinking out the frontier risks that can impact Security Systems & Services 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, Traffic Technologies Ltd has high operating costs in the Security Systems & Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Traffic Technologies Ltd lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Traffic Technologies Ltd has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Security Systems & Services industry over the last five years. Traffic Technologies Ltd even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Traffic Technologies Ltd has a high cash cycle compare to other players in the Security Systems & Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Traffic Technologies Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Traffic Technologies Ltd are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Security Systems & Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Traffic Technologies Ltd 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. Traffic Technologies Ltd 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Traffic Technologies Ltd in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Security Systems & Services industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Traffic Technologies Ltd to increase its market reach. Traffic Technologies Ltd 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.
Loyalty marketing
– Traffic Technologies Ltd 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Traffic Technologies Ltd can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Traffic Technologies 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 Security Systems & Services industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Traffic Technologies Ltd is facing challenges because of the dominance of functional experts in the organization. Traffic Technologies Ltd can utilize new technology in the field of Security Systems & Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Security Systems & Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Traffic Technologies Ltd in the Security Systems & Services industry. Now Traffic Technologies Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Traffic Technologies Ltd has opened avenues for new revenue streams for the organization in Security Systems & Services industry. This can help Traffic Technologies Ltd to build a more holistic ecosystem for Traffic Technologies Ltd products in the Security Systems & Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Security Systems & Services industry, but it has also influenced the consumer preferences. Traffic Technologies Ltd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Traffic Technologies Ltd can use these opportunities to build new business models that can help the communities that Traffic Technologies Ltd operates in. Secondly it can use opportunities from government spending in Security Systems & Services sector.
Buying journey improvements
– Traffic Technologies Ltd can improve the customer journey of consumers in the Security Systems & Services 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.
Developing new processes and practices
– Traffic Technologies Ltd can develop new processes and procedures in Security Systems & Services 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.
Threats Traffic Technologies Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Traffic Technologies Ltd are -
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. Traffic Technologies 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Security Systems & Services industry are lowering. It can presents Traffic Technologies Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Security Systems & Services sector.
Consumer confidence and its impact on Traffic Technologies Ltd 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 Security Systems & Services industry and other sectors.
Regulatory challenges
– Traffic Technologies 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 Security Systems & Services industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Traffic Technologies Ltd in Security Systems & Services industry. The Security Systems & Services 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.
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 Traffic Technologies Ltd business can come under increasing regulations regarding data privacy, data security, etc.
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 Traffic Technologies Ltd in the Security Systems & Services sector and impact the bottomline of the organization.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Traffic Technologies Ltd may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Security Systems & Services sector.
Shortening product life cycle
– it is one of the major threat that Traffic Technologies Ltd is facing in Security Systems & Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Traffic Technologies Ltd.
Increasing wage structure of Traffic Technologies Ltd
– 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 Traffic Technologies Ltd.
Technology acceleration in Forth Industrial Revolution
– Traffic Technologies Ltd has witnessed rapid integration of technology during Covid-19 in the Security Systems & Services industry. As one of the leading players in the industry, Traffic Technologies Ltd needs to keep up with the evolution of technology in the Security Systems & Services 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.
Weighted SWOT Analysis of Traffic Technologies Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Traffic Technologies 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 Traffic Technologies 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 Traffic Technologies 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 Traffic Technologies 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 Traffic Technologies Ltd needs to make to build a sustainable competitive advantage.