Sumber Energi Andalan (ITMA) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Sumber Energi Andalan (Indonesia)

Based on various researches at Oak Spring University , Sumber Energi Andalan is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, cloud computing is disrupting traditional business models, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc

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Introduction to SWOT Analysis of Sumber Energi Andalan

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sumber Energi Andalan can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sumber Energi Andalan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sumber Energi Andalan 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 Sumber Energi Andalan can be done for the following purposes –
1. Strategic planning of Sumber Energi Andalan
2. Improving business portfolio management of Sumber Energi Andalan
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Coal sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sumber Energi Andalan

Strengths of Sumber Energi Andalan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Sumber Energi Andalan are -

Cross disciplinary teams

– Horizontal connected teams at the Sumber Energi Andalan 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.

High switching costs

– The high switching costs that Sumber Energi Andalan 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.

Training and development

– Sumber Energi Andalan has one of the best training and development program in Energy 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.

Ability to recruit top talent

– Sumber Energi Andalan is one of the leading players in the Coal industry in Indonesia. It is in a position to attract the best talent available in Indonesia. The firm has a robust talent identification program that helps in identifying the brightest.

High brand equity

– Sumber Energi Andalan has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sumber Energi Andalan to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Sustainable margins compare to other players in Coal industry

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

Low bargaining power of suppliers

– Suppliers of Sumber Energi Andalan in the Energy sector have low bargaining power. Sumber Energi Andalan has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sumber Energi Andalan to manage not only supply disruptions but also source products at highly competitive prices.

Superior customer experience

– The customer experience strategy of Sumber Energi Andalan in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Strong track record of project management in the Coal industry

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

Operational resilience

– The operational resilience strategy of Sumber Energi Andalan comprises – understanding the underlying the factors in the Coal 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

- Sumber Energi Andalan 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 Sumber Energi Andalan is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sumber Energi Andalan emphasize – knowledge, initiative, and innovation.

Digital Transformation in Coal industry

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

Weaknesses of Sumber Energi Andalan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Sumber Energi Andalan are -

Lack of clear differentiation of Sumber Energi Andalan products

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

High bargaining power of channel partners in Coal industry

– because of the regulatory requirements in Indonesia, Sumber Energi Andalan 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 Coal industry.

Slow to harness new channels of communication

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

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

Employees’ less understanding of Sumber Energi Andalan strategy

– From the outside it seems that the employees of Sumber Energi Andalan 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 operating costs

– Compare to the competitors, Sumber Energi Andalan has high operating costs in the Coal industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sumber Energi Andalan lucrative customers.

No frontier risks strategy

– From the 10K / annual statement of Sumber Energi Andalan, it seems that company is thinking out the frontier risks that can impact Coal 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 cash cycle compare to competitors

Sumber Energi Andalan has a high cash cycle compare to other players in the Coal industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Ability to respond to the competition

– As the decision making is very deliberative at Sumber Energi Andalan, in the dynamic environment of Coal industry it has struggled to respond to the nimble upstart competition. Sumber Energi Andalan 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, Sumber Energi Andalan 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 Coal industry using digital technology.

Products dominated business model

– Even though Sumber Energi Andalan has some of the most successful models in the Coal industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Sumber Energi Andalan should strive to include more intangible value offerings along with its core products and services.

Sumber Energi Andalan Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Sumber Energi Andalan are -

Loyalty marketing

– Sumber Energi Andalan 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sumber Energi Andalan 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 Sumber Energi Andalan to hire the very best people irrespective of their geographical location.

Creating value in data economy

– The success of analytics program of Sumber Energi Andalan has opened avenues for new revenue streams for the organization in Coal industry. This can help Sumber Energi Andalan to build a more holistic ecosystem for Sumber Energi Andalan products in the Coal 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 Coal industry, but it has also influenced the consumer preferences. Sumber Energi Andalan 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, Sumber Energi Andalan can use these opportunities to build new business models that can help the communities that Sumber Energi Andalan operates in. Secondly it can use opportunities from government spending in Coal sector.

Leveraging digital technologies

– Sumber Energi Andalan 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.

Buying journey improvements

– Sumber Energi Andalan can improve the customer journey of consumers in the Coal 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Sumber Energi Andalan is facing challenges because of the dominance of functional experts in the organization. Sumber Energi Andalan can utilize new technology in the field of Coal industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

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. Sumber Energi Andalan can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Using analytics as competitive advantage

– Sumber Energi Andalan has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Coal sector. This continuous investment in analytics has enabled Sumber Energi Andalan to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sumber Energi Andalan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Building a culture of innovation

– managers at Sumber Energi Andalan 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 Coal industry.

Reforming the budgeting process

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

Learning at scale

– Online learning technologies has now opened space for Sumber Energi Andalan 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 Sumber Energi Andalan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Sumber Energi Andalan are -

High dependence on third party suppliers

– Sumber Energi Andalan 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.

Technology acceleration in Forth Industrial Revolution

– Sumber Energi Andalan has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, Sumber Energi Andalan needs to keep up with the evolution of technology in the Coal 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.

Regulatory challenges

– Sumber Energi Andalan 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 Coal industry regulations.

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 Sumber Energi Andalan.

Barriers of entry lowering

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

Stagnating economy with rate increase

– Sumber Energi Andalan 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 Coal industry.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Sumber Energi Andalan may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Coal sector.

Easy access to finance

– Easy access to finance in Coal industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sumber Energi Andalan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Environmental challenges

– Sumber Energi Andalan 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. Sumber Energi Andalan can take advantage of this fund but it will also bring new competitors in the Coal industry.

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 Sumber Energi Andalan in the Coal sector and impact the bottomline of the organization.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Sumber Energi Andalan 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 Sumber Energi Andalan prominent markets.

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 Sumber Energi Andalan business can come under increasing regulations regarding data privacy, data security, etc.

Consumer confidence and its impact on Sumber Energi Andalan 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 Coal industry and other sectors.

Weighted SWOT Analysis of Sumber Energi Andalan Template, Example

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

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