SWOT Analysis / TOWS Matrix for Malindo Feedmill (Indonesia)
Based on various researches at Oak Spring University , Malindo Feedmill is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, increasing energy prices, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing commodity prices, increasing government debt because of Covid-19 spendings,
increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Malindo Feedmill can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Malindo Feedmill, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Malindo Feedmill 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 Malindo Feedmill can be done for the following purposes –
1. Strategic planning of Malindo Feedmill
2. Improving business portfolio management of Malindo Feedmill
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Malindo Feedmill
Strengths of Malindo Feedmill | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Malindo Feedmill are -
High brand equity
– Malindo Feedmill has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Malindo Feedmill to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Malindo Feedmill 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 Malindo Feedmill is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Malindo Feedmill emphasize – knowledge, initiative, and innovation.
Digital Transformation in Food Processing industry
- digital transformation varies from industry to industry. For Malindo Feedmill digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Malindo Feedmill 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.
Organizational Resilience of Malindo Feedmill
– The covid-19 pandemic has put organizational resilience at the centre of everthing Malindo Feedmill 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 Malindo Feedmill in the Consumer/Non-Cyclical sector have low bargaining power. Malindo Feedmill has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Malindo Feedmill to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Malindo Feedmill 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 Food Processing industry
– Malindo Feedmill is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Malindo Feedmill is one of the most innovative firm in Food Processing sector.
Highly skilled collaborators
– Malindo Feedmill has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Food Processing industry. Secondly the value chain collaborators of Malindo Feedmill have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Malindo Feedmill is present in almost all the verticals within the Food Processing industry. This has provided Malindo Feedmill 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.
Sustainable margins compare to other players in Food Processing industry
– Malindo Feedmill has clearly differentiated products in the market place. This has enabled Malindo Feedmill to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped Malindo Feedmill to invest into research and development (R&D) and innovation.
Ability to lead change in Food Processing
– Malindo Feedmill is one of the leading players in the Food Processing industry in Indonesia. Over the years it has not only transformed the business landscape in the Food Processing industry in Indonesia but also across the existing markets. The ability to lead change has enabled Malindo Feedmill in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Malindo Feedmill | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Malindo Feedmill are -
High cash cycle compare to competitors
Malindo Feedmill has a high cash cycle compare to other players in the Food Processing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Food Processing industry
– The stress on hiring functional specialists at Malindo Feedmill 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Malindo Feedmill is slow explore the new channels of communication. These new channels of communication can help Malindo Feedmill to provide better information regarding Food Processing products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, Malindo Feedmill has high operating costs in the Food Processing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Malindo Feedmill lucrative customers.
High bargaining power of channel partners in Food Processing industry
– because of the regulatory requirements in Indonesia, Malindo Feedmill 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 Food Processing industry.
Lack of clear differentiation of Malindo Feedmill products
– To increase the profitability and margins on the products, Malindo Feedmill needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Malindo Feedmill 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.
Ability to respond to the competition
– As the decision making is very deliberative at Malindo Feedmill, in the dynamic environment of Food Processing industry it has struggled to respond to the nimble upstart competition. Malindo Feedmill has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Malindo Feedmill 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 Food Processing industry using digital technology.
Compensation and incentives
– The revenue per employee of Malindo Feedmill is just above the Food Processing 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.
Employees’ less understanding of Malindo Feedmill strategy
– From the outside it seems that the employees of Malindo Feedmill don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Malindo Feedmill Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Malindo Feedmill are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Malindo Feedmill 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 Malindo Feedmill to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Malindo Feedmill can develop new processes and procedures in Food Processing 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Malindo Feedmill 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 Malindo Feedmill to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Malindo Feedmill can use the latest technology developments to improve its manufacturing and designing process in Food Processing 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.
Using analytics as competitive advantage
– Malindo Feedmill has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled Malindo Feedmill to build a competitive advantage using analytics. The analytics driven competitive advantage can help Malindo Feedmill to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Malindo Feedmill can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Malindo Feedmill can use these opportunities to build new business models that can help the communities that Malindo Feedmill operates in. Secondly it can use opportunities from government spending in Food Processing sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Malindo Feedmill in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Food Processing industry, and it will provide faster access to the consumers.
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 Malindo Feedmill to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Malindo Feedmill 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 Food Processing industry.
Better consumer reach
– The expansion of the 5G network will help Malindo Feedmill to increase its market reach. Malindo Feedmill 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.
Use of Bitcoin and other crypto currencies for transactions in Food Processing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Malindo Feedmill in the Food Processing industry. Now Malindo Feedmill can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Malindo Feedmill can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Malindo Feedmill External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Malindo Feedmill are -
Technology acceleration in Forth Industrial Revolution
– Malindo Feedmill has witnessed rapid integration of technology during Covid-19 in the Food Processing industry. As one of the leading players in the industry, Malindo Feedmill needs to keep up with the evolution of technology in the Food Processing 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents Malindo Feedmill with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing sector.
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 Malindo Feedmill business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Malindo Feedmill
– 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 Malindo Feedmill.
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. Malindo Feedmill 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.
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. Malindo Feedmill needs to understand the core reasons impacting the Food Processing industry. This will help it in building a better workplace.
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.
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 Malindo Feedmill in the Food Processing sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Malindo Feedmill 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 Malindo Feedmill prominent markets.
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 Malindo Feedmill.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Malindo Feedmill in Food Processing industry. The Food Processing 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.
High dependence on third party suppliers
– Malindo Feedmill 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Malindo Feedmill may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Food Processing sector.
Weighted SWOT Analysis of Malindo Feedmill Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Malindo Feedmill 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 Malindo Feedmill 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 Malindo Feedmill 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 Malindo Feedmill 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 Malindo Feedmill needs to make to build a sustainable competitive advantage.
