SWOT Analysis / TOWS Matrix for Alakasa Industrindo Tbk (Indonesia)
Based on various researches at Oak Spring University , Alakasa Industrindo Tbk is operating in a macro-environment that has been destablized by – there is backlash against globalization, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, talent flight as more people leaving formal jobs,
geopolitical disruptions, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Alakasa Industrindo Tbk
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Alakasa Industrindo Tbk can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alakasa Industrindo Tbk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk can be done for the following purposes –
1. Strategic planning of Alakasa Industrindo Tbk
2. Improving business portfolio management of Alakasa Industrindo Tbk
3. Assessing feasibility of the new initiative in Indonesia
4. Making a Metal Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Alakasa Industrindo Tbk
Strengths of Alakasa Industrindo Tbk | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alakasa Industrindo Tbk are -
Organizational Resilience of Alakasa Industrindo Tbk
– The covid-19 pandemic has put organizational resilience at the centre of everthing Alakasa Industrindo Tbk does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Alakasa Industrindo Tbk has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Alakasa Industrindo Tbk 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.
High switching costs
– The high switching costs that Alakasa Industrindo Tbk 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.
Cross disciplinary teams
– Horizontal connected teams at the Alakasa Industrindo Tbk 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.
Sustainable margins compare to other players in Metal Mining industry
– Alakasa Industrindo Tbk has clearly differentiated products in the market place. This has enabled Alakasa Industrindo Tbk to fetch slight price premium compare to the competitors in the Metal Mining industry. The sustainable margins have also helped Alakasa Industrindo Tbk to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Alakasa Industrindo Tbk in Metal Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Alakasa Industrindo Tbk has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Alakasa Industrindo Tbk staying ahead in the Metal Mining industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Alakasa Industrindo Tbk comprises – understanding the underlying the factors in the Metal Mining 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.
Diverse revenue streams
– Alakasa Industrindo Tbk is present in almost all the verticals within the Metal Mining industry. This has provided Alakasa Industrindo Tbk 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.
High brand equity
– Alakasa Industrindo Tbk has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Alakasa Industrindo Tbk to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Alakasa Industrindo Tbk has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Metal Mining industry. Secondly the value chain collaborators of Alakasa Industrindo Tbk have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Alakasa Industrindo Tbk 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 Metal Mining 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.
Weaknesses of Alakasa Industrindo Tbk | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Alakasa Industrindo Tbk are -
Interest costs
– Compare to the competition, Alakasa Industrindo Tbk 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alakasa Industrindo Tbk is slow explore the new channels of communication. These new channels of communication can help Alakasa Industrindo Tbk to provide better information regarding Metal Mining 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 Alakasa Industrindo Tbk supply chain. Even after few cautionary changes, Alakasa Industrindo Tbk is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Alakasa Industrindo Tbk vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Alakasa Industrindo Tbk has some of the most successful models in the Metal Mining industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Alakasa Industrindo Tbk should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Alakasa Industrindo Tbk products
– To increase the profitability and margins on the products, Alakasa Industrindo Tbk needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Alakasa Industrindo Tbk 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 Metal Mining industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Alakasa Industrindo Tbk has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Metal Mining industry over the last five years. Alakasa Industrindo Tbk 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.
Increasing silos among functional specialists
– The organizational structure of Alakasa Industrindo Tbk is dominated by functional specialists. It is not different from other players in the Metal Mining industry, but Alakasa Industrindo Tbk needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Alakasa Industrindo Tbk to focus more on services in the Metal Mining industry rather than just following the product oriented approach.
High dependence on Alakasa Industrindo Tbk ‘s star products
– The top 2 products and services of Alakasa Industrindo Tbk still accounts for major business revenue. This dependence on star products in Metal Mining industry has resulted into insufficient focus on developing new products, even though Alakasa Industrindo Tbk has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of Alakasa Industrindo Tbk is just above the Metal Mining 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.
Slow to strategic competitive environment developments
– As Alakasa Industrindo Tbk is one of the leading players in the Metal Mining industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Metal Mining industry in last five years.
Alakasa Industrindo Tbk Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Alakasa Industrindo Tbk are -
Better consumer reach
– The expansion of the 5G network will help Alakasa Industrindo Tbk to increase its market reach. Alakasa Industrindo Tbk 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Alakasa Industrindo Tbk in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Metal Mining industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Alakasa Industrindo Tbk has opened avenues for new revenue streams for the organization in Metal Mining industry. This can help Alakasa Industrindo Tbk to build a more holistic ecosystem for Alakasa Industrindo Tbk products in the Metal Mining industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Alakasa Industrindo Tbk 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.
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. Alakasa Industrindo Tbk can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Alakasa Industrindo Tbk has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Metal Mining sector. This continuous investment in analytics has enabled Alakasa Industrindo Tbk to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alakasa Industrindo Tbk to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Alakasa Industrindo Tbk can improve the customer journey of consumers in the Metal Mining 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Alakasa Industrindo Tbk can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Alakasa Industrindo Tbk 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.
Developing new processes and practices
– Alakasa Industrindo Tbk can develop new processes and procedures in Metal Mining 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.
Use of Bitcoin and other crypto currencies for transactions in Metal Mining industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Alakasa Industrindo Tbk in the Metal Mining industry. Now Alakasa Industrindo Tbk can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Metal Mining industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Alakasa Industrindo Tbk 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. Alakasa Industrindo Tbk 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.
Threats Alakasa Industrindo Tbk External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Alakasa Industrindo Tbk are -
Shortening product life cycle
– it is one of the major threat that Alakasa Industrindo Tbk is facing in Metal Mining sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Metal Mining industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Alakasa Industrindo Tbk can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Alakasa Industrindo Tbk needs to understand the core reasons impacting the Metal Mining industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk prominent markets.
Technology acceleration in Forth Industrial Revolution
– Alakasa Industrindo Tbk has witnessed rapid integration of technology during Covid-19 in the Metal Mining industry. As one of the leading players in the industry, Alakasa Industrindo Tbk needs to keep up with the evolution of technology in the Metal Mining 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alakasa Industrindo Tbk in Metal Mining industry. The Metal Mining 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.
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.
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 Alakasa Industrindo Tbk business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Alakasa Industrindo Tbk 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 Metal Mining industry regulations.
Stagnating economy with rate increase
– Alakasa Industrindo Tbk 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 Metal Mining industry.
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 Alakasa Industrindo Tbk.
High dependence on third party suppliers
– Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk
– 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 Alakasa Industrindo Tbk.
Weighted SWOT Analysis of Alakasa Industrindo Tbk Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk 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 Alakasa Industrindo Tbk needs to make to build a sustainable competitive advantage.
