SWOT Analysis / TOWS Matrix for Toba Pulp Lestari (Indonesia)
Based on various researches at Oak Spring University , Toba Pulp Lestari is operating in a macro-environment that has been destablized by – wage bills are increasing, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels,
there is backlash against globalization, technology disruption, etc
Introduction to SWOT Analysis of Toba Pulp Lestari
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Toba Pulp Lestari can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toba Pulp Lestari, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toba Pulp Lestari 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 Toba Pulp Lestari can be done for the following purposes –
1. Strategic planning of Toba Pulp Lestari
2. Improving business portfolio management of Toba Pulp Lestari
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 Toba Pulp Lestari
Strengths of Toba Pulp Lestari | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toba Pulp Lestari are -
Training and development
– Toba Pulp Lestari has one of the best training and development program in Basic Materials 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.
Organizational Resilience of Toba Pulp Lestari
– The covid-19 pandemic has put organizational resilience at the centre of everthing Toba Pulp Lestari does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Toba Pulp Lestari 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.
Highly skilled collaborators
– Toba Pulp Lestari 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 Toba Pulp Lestari have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Paper & Paper Products industry
- digital transformation varies from industry to industry. For Toba Pulp Lestari digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Toba Pulp Lestari 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 lead change in Paper & Paper Products
– Toba Pulp Lestari 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 Toba Pulp Lestari in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Toba Pulp Lestari has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toba Pulp Lestari to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Toba Pulp Lestari is one of the most innovative firm in Paper & Paper Products sector.
Analytics focus
– Toba Pulp Lestari 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 Paper & Paper Products 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.
Low bargaining power of suppliers
– Suppliers of Toba Pulp Lestari in the Basic Materials sector have low bargaining power. Toba Pulp Lestari has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toba Pulp Lestari to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Toba Pulp Lestari 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 Toba Pulp Lestari is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Toba Pulp Lestari emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Toba Pulp Lestari has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Toba Pulp Lestari 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.
Weaknesses of Toba Pulp Lestari | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toba Pulp Lestari are -
No frontier risks strategy
– From the 10K / annual statement of Toba Pulp Lestari, it seems that company is thinking out the frontier risks that can impact Paper & Paper Products 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Toba Pulp Lestari is slow explore the new channels of communication. These new channels of communication can help Toba Pulp Lestari to provide better information regarding Paper & Paper Products products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Toba Pulp Lestari 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.
Slow to strategic competitive environment developments
– As Toba Pulp Lestari 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 Toba Pulp Lestari, in the dynamic environment of Paper & Paper Products industry it has struggled to respond to the nimble upstart competition. Toba Pulp Lestari has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Toba Pulp Lestari 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.
Low market penetration in new markets
– Outside its home market of Indonesia, Toba Pulp Lestari needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Toba Pulp Lestari 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.
Increasing silos among functional specialists
– The organizational structure of Toba Pulp Lestari is dominated by functional specialists. It is not different from other players in the Paper & Paper Products industry, but Toba Pulp Lestari needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toba Pulp Lestari to focus more on services in the Paper & Paper Products industry rather than just following the product oriented approach.
Employees’ less understanding of Toba Pulp Lestari strategy
– From the outside it seems that the employees of Toba Pulp Lestari 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.
High dependence on Toba Pulp Lestari ‘s star products
– The top 2 products and services of Toba Pulp Lestari still accounts for major business revenue. This dependence on star products in Paper & Paper Products industry has resulted into insufficient focus on developing new products, even though Toba Pulp Lestari has relatively successful track record of launching new products.
Toba Pulp Lestari Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Toba Pulp Lestari are -
Better consumer reach
– The expansion of the 5G network will help Toba Pulp Lestari to increase its market reach. Toba Pulp Lestari 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.
Developing new processes and practices
– Toba Pulp Lestari 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.
Building a culture of innovation
– managers at Toba Pulp Lestari 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 Paper & Paper Products industry.
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. Toba Pulp Lestari 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
– Toba Pulp Lestari 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.
Manufacturing automation
– Toba Pulp Lestari 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Toba Pulp Lestari is facing challenges because of the dominance of functional experts in the organization. Toba Pulp Lestari can utilize new technology in the field of Paper & Paper Products 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 Paper & Paper Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Toba Pulp Lestari in the Paper & Paper Products industry. Now Toba Pulp Lestari can target international markets with far fewer capital restrictions requirements than the existing system.
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. Toba Pulp Lestari 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, Toba Pulp Lestari can use these opportunities to build new business models that can help the communities that Toba Pulp Lestari operates in. Secondly it can use opportunities from government spending in Paper & Paper Products sector.
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. Toba Pulp Lestari 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. Toba Pulp Lestari 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 Toba Pulp Lestari 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 Toba Pulp Lestari 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.
Threats Toba Pulp Lestari External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Toba Pulp Lestari are -
Shortening product life cycle
– it is one of the major threat that Toba Pulp Lestari is facing in Paper & Paper Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Toba Pulp Lestari 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 Paper & Paper Products industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toba Pulp Lestari 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 Toba Pulp Lestari 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. Toba Pulp Lestari 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. Toba Pulp Lestari needs to understand the core reasons impacting the Paper & Paper Products industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Toba Pulp Lestari 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.
Increasing wage structure of Toba Pulp Lestari
– 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 Toba Pulp Lestari.
Environmental challenges
– Toba Pulp Lestari 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. Toba Pulp Lestari can take advantage of this fund but it will also bring new competitors in the Paper & Paper Products industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toba Pulp Lestari in Paper & Paper Products industry. The Paper & Paper Products 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.
Stagnating economy with rate increase
– Toba Pulp Lestari 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.
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. Toba Pulp Lestari can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Toba Pulp Lestari Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Toba Pulp Lestari 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 Toba Pulp Lestari 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 Toba Pulp Lestari 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 Toba Pulp Lestari 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 Toba Pulp Lestari needs to make to build a sustainable competitive advantage.