Bakrie Sumatera (UNSP) SWOT Analysis / TOWS Matrix / MBA Resources
Crops
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Bakrie Sumatera (Indonesia)
Based on various researches at Oak Spring University , Bakrie Sumatera is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, technology disruption, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, increasing energy prices, geopolitical disruptions,
wage bills are increasing, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Bakrie Sumatera can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bakrie Sumatera, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bakrie Sumatera 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 Bakrie Sumatera can be done for the following purposes –
1. Strategic planning of Bakrie Sumatera
2. Improving business portfolio management of Bakrie Sumatera
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Crops sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Bakrie Sumatera
Strengths of Bakrie Sumatera | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bakrie Sumatera are -
High switching costs
– The high switching costs that Bakrie Sumatera 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.
Ability to lead change in Crops
– Bakrie Sumatera is one of the leading players in the Crops industry in Indonesia. Over the years it has not only transformed the business landscape in the Crops industry in Indonesia but also across the existing markets. The ability to lead change has enabled Bakrie Sumatera in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Bakrie Sumatera has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bakrie Sumatera has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Bakrie Sumatera 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.
Learning organization
- Bakrie Sumatera 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 Bakrie Sumatera is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Bakrie Sumatera emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Bakrie Sumatera is one of the leading players in the Crops 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.
Effective Research and Development (R&D)
– Bakrie Sumatera has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Bakrie Sumatera staying ahead in the Crops industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Bakrie Sumatera 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 Crops 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 Bakrie Sumatera in the Consumer/Non-Cyclical sector have low bargaining power. Bakrie Sumatera has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bakrie Sumatera to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Bakrie Sumatera is one of the most innovative firm in Crops sector.
Organizational Resilience of Bakrie Sumatera
– The covid-19 pandemic has put organizational resilience at the centre of everthing Bakrie Sumatera does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Crops industry
– Bakrie Sumatera has clearly differentiated products in the market place. This has enabled Bakrie Sumatera to fetch slight price premium compare to the competitors in the Crops industry. The sustainable margins have also helped Bakrie Sumatera to invest into research and development (R&D) and innovation.
Weaknesses of Bakrie Sumatera | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Bakrie Sumatera are -
Employees’ less understanding of Bakrie Sumatera strategy
– From the outside it seems that the employees of Bakrie Sumatera 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.
Compensation and incentives
– The revenue per employee of Bakrie Sumatera is just above the Crops 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.
Ability to respond to the competition
– As the decision making is very deliberative at Bakrie Sumatera, in the dynamic environment of Crops industry it has struggled to respond to the nimble upstart competition. Bakrie Sumatera 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, Bakrie Sumatera 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 Crops industry using digital technology.
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 Bakrie Sumatera supply chain. Even after few cautionary changes, Bakrie Sumatera is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bakrie Sumatera vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bakrie Sumatera is slow explore the new channels of communication. These new channels of communication can help Bakrie Sumatera to provide better information regarding Crops products and services. It can also build an online community to further reach out to potential customers.
High dependence on Bakrie Sumatera ‘s star products
– The top 2 products and services of Bakrie Sumatera still accounts for major business revenue. This dependence on star products in Crops industry has resulted into insufficient focus on developing new products, even though Bakrie Sumatera has relatively successful track record of launching new products.
Need for greater diversity
– Bakrie Sumatera 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.
High cash cycle compare to competitors
Bakrie Sumatera has a high cash cycle compare to other players in the Crops industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Bakrie Sumatera has some of the most successful models in the Crops industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Bakrie Sumatera should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– From the 10K / annual statement of Bakrie Sumatera, it seems that company is thinking out the frontier risks that can impact Crops industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Bakrie Sumatera Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Bakrie Sumatera are -
Learning at scale
– Online learning technologies has now opened space for Bakrie Sumatera 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.
Developing new processes and practices
– Bakrie Sumatera can develop new processes and procedures in Crops 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.
Buying journey improvements
– Bakrie Sumatera can improve the customer journey of consumers in the Crops industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bakrie Sumatera 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 Bakrie Sumatera to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bakrie Sumatera 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 Bakrie Sumatera to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Crops industry, but it has also influenced the consumer preferences. Bakrie Sumatera can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Bakrie Sumatera has opened avenues for new revenue streams for the organization in Crops industry. This can help Bakrie Sumatera to build a more holistic ecosystem for Bakrie Sumatera products in the Crops industry by providing – data insight services, data privacy related products, data based consulting services, 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. Bakrie Sumatera can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bakrie Sumatera can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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 Bakrie Sumatera 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.
Loyalty marketing
– Bakrie Sumatera 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.
Better consumer reach
– The expansion of the 5G network will help Bakrie Sumatera to increase its market reach. Bakrie Sumatera 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bakrie Sumatera can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Bakrie Sumatera External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Bakrie Sumatera are -
Increasing wage structure of Bakrie Sumatera
– 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 Bakrie Sumatera.
Stagnating economy with rate increase
– Bakrie Sumatera 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 Crops industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Bakrie Sumatera may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Crops sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bakrie Sumatera in Crops industry. The Crops 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.
Regulatory challenges
– Bakrie Sumatera needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Crops industry regulations.
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. Bakrie Sumatera needs to understand the core reasons impacting the Crops industry. This will help it in building a better workplace.
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 Bakrie Sumatera in the Crops sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Bakrie Sumatera has witnessed rapid integration of technology during Covid-19 in the Crops industry. As one of the leading players in the industry, Bakrie Sumatera needs to keep up with the evolution of technology in the Crops 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.
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 Bakrie Sumatera business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Crops industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Bakrie Sumatera can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Bakrie Sumatera 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 Bakrie Sumatera prominent markets.
High dependence on third party suppliers
– Bakrie Sumatera 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.
Weighted SWOT Analysis of Bakrie Sumatera Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Bakrie Sumatera 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 Bakrie Sumatera 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 Bakrie Sumatera 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 Bakrie Sumatera 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 Bakrie Sumatera needs to make to build a sustainable competitive advantage.
