Thyssenkrupp AG (TKAG) SWOT Analysis / TOWS Matrix / MBA Resources
Misc. Fabricated Products
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Thyssenkrupp AG (Italy)
Based on various researches at Oak Spring University , Thyssenkrupp AG is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, increasing energy prices, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing household debt because of falling income levels,
technology disruption, there is increasing trade war between United States & China, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Thyssenkrupp AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Thyssenkrupp AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Thyssenkrupp AG 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 Thyssenkrupp AG can be done for the following purposes –
1. Strategic planning of Thyssenkrupp AG
2. Improving business portfolio management of Thyssenkrupp AG
3. Assessing feasibility of the new initiative in Italy
4. Making a Misc. Fabricated Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Thyssenkrupp AG
Strengths of Thyssenkrupp AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Thyssenkrupp AG are -
Cross disciplinary teams
– Horizontal connected teams at the Thyssenkrupp AG 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.
Analytics focus
– Thyssenkrupp AG 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 Misc. Fabricated Products industry. The technology infrastructure of Italy 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.
Diverse revenue streams
– Thyssenkrupp AG is present in almost all the verticals within the Misc. Fabricated Products industry. This has provided Thyssenkrupp AG 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.
Successful track record of launching new products
– Thyssenkrupp AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Thyssenkrupp AG 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 brand equity
– Thyssenkrupp AG has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Thyssenkrupp AG to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Thyssenkrupp AG is one of the leading players in the Misc. Fabricated Products industry in Italy. It is in a position to attract the best talent available in Italy. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Thyssenkrupp AG is one of the most innovative firm in Misc. Fabricated Products sector.
Effective Research and Development (R&D)
– Thyssenkrupp AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Thyssenkrupp AG staying ahead in the Misc. Fabricated Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Thyssenkrupp AG 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.
Learning organization
- Thyssenkrupp AG 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 Thyssenkrupp AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Thyssenkrupp AG emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Misc. Fabricated Products industry
– Thyssenkrupp AG has clearly differentiated products in the market place. This has enabled Thyssenkrupp AG to fetch slight price premium compare to the competitors in the Misc. Fabricated Products industry. The sustainable margins have also helped Thyssenkrupp AG to invest into research and development (R&D) and innovation.
Training and development
– Thyssenkrupp AG 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.
Weaknesses of Thyssenkrupp AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Thyssenkrupp AG are -
Products dominated business model
– Even though Thyssenkrupp AG has some of the most successful models in the Misc. Fabricated Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Thyssenkrupp AG should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– From the outside it seems that Thyssenkrupp AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Misc. Fabricated Products industry have deep experience in developing customer relationships. Marketing department at Thyssenkrupp AG can leverage the sales team experience to cultivate customer relationships as Thyssenkrupp AG is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Thyssenkrupp AG is just above the Misc. Fabricated Products 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 decision making process
– As mentioned earlier in the report, Thyssenkrupp AG has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Misc. Fabricated Products industry over the last five years. Thyssenkrupp AG 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.
Workers concerns about automation
– As automation is fast increasing in the Misc. Fabricated Products industry, Thyssenkrupp AG needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Thyssenkrupp AG is slow explore the new channels of communication. These new channels of communication can help Thyssenkrupp AG to provide better information regarding Misc. Fabricated Products products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Italy, Thyssenkrupp AG needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Thyssenkrupp AG is dominated by functional specialists. It is not different from other players in the Misc. Fabricated Products industry, but Thyssenkrupp AG needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Thyssenkrupp AG to focus more on services in the Misc. Fabricated Products industry rather than just following the product oriented approach.
Need for greater diversity
– Thyssenkrupp AG 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.
Ability to respond to the competition
– As the decision making is very deliberative at Thyssenkrupp AG, in the dynamic environment of Misc. Fabricated Products industry it has struggled to respond to the nimble upstart competition. Thyssenkrupp AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Thyssenkrupp AG products
– To increase the profitability and margins on the products, Thyssenkrupp AG needs to provide more differentiated products than what it is currently offering in the marketplace.
Thyssenkrupp AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Thyssenkrupp AG are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Misc. Fabricated Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Thyssenkrupp AG 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. Thyssenkrupp AG 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Thyssenkrupp AG can use these opportunities to build new business models that can help the communities that Thyssenkrupp AG operates in. Secondly it can use opportunities from government spending in Misc. Fabricated Products sector.
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. Thyssenkrupp AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Thyssenkrupp AG is facing challenges because of the dominance of functional experts in the organization. Thyssenkrupp AG can utilize new technology in the field of Misc. Fabricated Products industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Thyssenkrupp AG 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 Thyssenkrupp AG to increase its market reach. Thyssenkrupp AG 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Fabricated Products industry, but it has also influenced the consumer preferences. Thyssenkrupp AG can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Thyssenkrupp AG can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Thyssenkrupp AG can develop new processes and procedures in Misc. Fabricated 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.
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 Thyssenkrupp AG 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.
Buying journey improvements
– Thyssenkrupp AG can improve the customer journey of consumers in the Misc. Fabricated Products 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.
Leveraging digital technologies
– Thyssenkrupp AG 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.
Using analytics as competitive advantage
– Thyssenkrupp AG has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Fabricated Products sector. This continuous investment in analytics has enabled Thyssenkrupp AG to build a competitive advantage using analytics. The analytics driven competitive advantage can help Thyssenkrupp AG to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Thyssenkrupp AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Thyssenkrupp AG are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Misc. Fabricated Products industry are lowering. It can presents Thyssenkrupp AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Misc. Fabricated Products sector.
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.
Consumer confidence and its impact on Thyssenkrupp AG 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 Misc. Fabricated Products industry and other sectors.
Regulatory challenges
– Thyssenkrupp AG 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 Misc. Fabricated Products industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Thyssenkrupp AG 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 Thyssenkrupp AG 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. Thyssenkrupp AG 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.
Environmental challenges
– Thyssenkrupp AG 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. Thyssenkrupp AG can take advantage of this fund but it will also bring new competitors in the Misc. Fabricated Products industry.
Technology acceleration in Forth Industrial Revolution
– Thyssenkrupp AG has witnessed rapid integration of technology during Covid-19 in the Misc. Fabricated Products industry. As one of the leading players in the industry, Thyssenkrupp AG needs to keep up with the evolution of technology in the Misc. Fabricated Products 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Thyssenkrupp AG may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Fabricated Products sector.
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 Thyssenkrupp AG.
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.
Stagnating economy with rate increase
– Thyssenkrupp AG 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 Misc. Fabricated Products industry.
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. Thyssenkrupp AG needs to understand the core reasons impacting the Misc. Fabricated Products industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Thyssenkrupp AG Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Thyssenkrupp AG 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 Thyssenkrupp AG 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 Thyssenkrupp AG 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 Thyssenkrupp AG 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 Thyssenkrupp AG needs to make to build a sustainable competitive advantage.
