Shagrir (SHGR) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Shagrir (Israel)

Based on various researches at Oak Spring University , Shagrir is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing commodity prices, challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, etc

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Introduction to SWOT Analysis of Shagrir

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shagrir can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shagrir, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shagrir 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Shagrir can be done for the following purposes –
1. Strategic planning of Shagrir
2. Improving business portfolio management of Shagrir
3. Assessing feasibility of the new initiative in Israel
4. Making a Business Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shagrir

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Strengths of Shagrir | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Shagrir are -

Successful track record of launching new products

– Shagrir has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shagrir 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.

Ability to recruit top talent

– Shagrir is one of the leading players in the Business Services industry in Israel. It is in a position to attract the best talent available in Israel. The firm has a robust talent identification program that helps in identifying the brightest.

Learning organization

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

Cross disciplinary teams

– Horizontal connected teams at the Shagrir 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.

Strong track record of project management in the Business Services industry

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

Training and development

– Shagrir has one of the best training and development program in Services 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.

Low bargaining power of suppliers

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

Ability to lead change in Business Services

– Shagrir is one of the leading players in the Business Services industry in Israel. Over the years it has not only transformed the business landscape in the Business Services industry in Israel but also across the existing markets. The ability to lead change has enabled Shagrir in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Effective Research and Development (R&D)

– Shagrir has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shagrir staying ahead in the Business Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Analytics focus

– Shagrir 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 Business Services industry. The technology infrastructure of Israel 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.

Sustainable margins compare to other players in Business Services industry

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

Superior customer experience

– The customer experience strategy of Shagrir in Business Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Shagrir | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Shagrir are -

High dependence on Shagrir ‘s star products

– The top 2 products and services of Shagrir still accounts for major business revenue. This dependence on star products in Business Services industry has resulted into insufficient focus on developing new products, even though Shagrir has relatively successful track record of launching new products.

Capital Spending Reduction

– Even during the low interest decade, Shagrir 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 Business Services industry using digital technology.

High bargaining power of channel partners in Business Services industry

– because of the regulatory requirements in Israel, Shagrir 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 Business Services industry.

High operating costs

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

Increasing silos among functional specialists

– The organizational structure of Shagrir is dominated by functional specialists. It is not different from other players in the Business Services industry, but Shagrir needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shagrir to focus more on services in the Business Services industry rather than just following the product oriented approach.

Products dominated business model

– Even though Shagrir has some of the most successful models in the Business Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Shagrir 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 Shagrir, it seems that company is thinking out the frontier risks that can impact Business Services 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.

Employees’ less understanding of Shagrir strategy

– From the outside it seems that the employees of Shagrir 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.

Lack of clear differentiation of Shagrir products

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

Interest costs

– Compare to the competition, Shagrir 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.

Low market penetration in new markets

– Outside its home market of Israel, Shagrir needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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Shagrir Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Shagrir are -

Reforming the budgeting process

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

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Shagrir 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 Shagrir to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Loyalty marketing

– Shagrir 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shagrir can use these opportunities to build new business models that can help the communities that Shagrir operates in. Secondly it can use opportunities from government spending in Business Services sector.

Redefining models of collaboration and team work

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

Creating value in data economy

– The success of analytics program of Shagrir has opened avenues for new revenue streams for the organization in Business Services industry. This can help Shagrir to build a more holistic ecosystem for Shagrir products in the Business Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Buying journey improvements

– Shagrir can improve the customer journey of consumers in the Business Services 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.

Developing new processes and practices

– Shagrir can develop new processes and procedures in Business Services 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.

Learning at scale

– Online learning technologies has now opened space for Shagrir 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Business Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shagrir 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. Shagrir 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.

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 Shagrir 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.

Manufacturing automation

– Shagrir can use the latest technology developments to improve its manufacturing and designing process in Business Services 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.

Leveraging digital technologies

– Shagrir 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.

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Threats Shagrir External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Shagrir are -

High dependence on third party suppliers

– Shagrir 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.

Environmental challenges

– Shagrir 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. Shagrir can take advantage of this fund but it will also bring new competitors in the Business Services industry.

Regulatory challenges

– Shagrir 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 Business Services industry regulations.

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 acceleration in Forth Industrial Revolution

– Shagrir has witnessed rapid integration of technology during Covid-19 in the Business Services industry. As one of the leading players in the industry, Shagrir needs to keep up with the evolution of technology in the Business Services 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.

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 Shagrir in the Business Services sector and impact the bottomline of the organization.

Increasing wage structure of Shagrir

– 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 Shagrir.

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. Shagrir needs to understand the core reasons impacting the Business Services 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, Shagrir 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 Shagrir prominent markets.

Learning curve for new practices

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

Stagnating economy with rate increase

– Shagrir 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 Business Services industry.

Shortening product life cycle

– it is one of the major threat that Shagrir is facing in Business Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Consumer confidence and its impact on Shagrir 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 Business Services industry and other sectors.

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Weighted SWOT Analysis of Shagrir Template, Example

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

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