K+S AG (SDFGn) SWOT Analysis / TOWS Matrix / MBA Resources
Non-Metallic Mining
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for K+S AG (Italy)
Based on various researches at Oak Spring University , K+S AG is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing commodity prices, increasing energy prices,
supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that K+S AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the K+S AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which K+S 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 K+S AG can be done for the following purposes –
1. Strategic planning of K+S AG
2. Improving business portfolio management of K+S AG
3. Assessing feasibility of the new initiative in Italy
4. Making a Non-Metallic Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of K+S AG
Strengths of K+S AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of K+S AG are -
High switching costs
– The high switching costs that K+S 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
- K+S 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 K+S AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at K+S AG emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– K+S AG is present in almost all the verticals within the Non-Metallic Mining industry. This has provided K+S 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.
Highly skilled collaborators
– K+S AG has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Non-Metallic Mining industry. Secondly the value chain collaborators of K+S AG have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– K+S 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 Non-Metallic Mining 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.
Sustainable margins compare to other players in Non-Metallic Mining industry
– K+S AG has clearly differentiated products in the market place. This has enabled K+S AG to fetch slight price premium compare to the competitors in the Non-Metallic Mining industry. The sustainable margins have also helped K+S AG to invest into research and development (R&D) and innovation.
Training and development
– K+S 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.
Low bargaining power of suppliers
– Suppliers of K+S AG in the Basic Materials sector have low bargaining power. K+S AG has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps K+S AG to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of K+S AG in Non-Metallic Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of K+S AG
– The covid-19 pandemic has put organizational resilience at the centre of everthing K+S AG does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management in the Non-Metallic Mining industry
– K+S AG is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– K+S AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – K+S AG staying ahead in the Non-Metallic Mining industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses of K+S AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of K+S AG are -
Ability to respond to the competition
– As the decision making is very deliberative at K+S AG, in the dynamic environment of Non-Metallic Mining industry it has struggled to respond to the nimble upstart competition. K+S AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring in Non-Metallic Mining industry
– The stress on hiring functional specialists at K+S AG has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow decision making process
– As mentioned earlier in the report, K+S 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 Non-Metallic Mining industry over the last five years. K+S 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, K+S AG is slow explore the new channels of communication. These new channels of communication can help K+S AG to provide better information regarding Non-Metallic Mining products and services. It can also build an online community to further reach out to potential customers.
High dependence on K+S AG ‘s star products
– The top 2 products and services of K+S AG still accounts for major business revenue. This dependence on star products in Non-Metallic Mining industry has resulted into insufficient focus on developing new products, even though K+S AG has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of K+S AG is dominated by functional specialists. It is not different from other players in the Non-Metallic Mining industry, but K+S AG needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help K+S AG to focus more on services in the Non-Metallic Mining industry rather than just following the product oriented approach.
High cash cycle compare to competitors
K+S AG has a high cash cycle compare to other players in the Non-Metallic Mining industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– From the outside it seems that K+S AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Non-Metallic Mining industry have deep experience in developing customer relationships. Marketing department at K+S AG can leverage the sales team experience to cultivate customer relationships as K+S AG is planning to shift buying processes online.
No frontier risks strategy
– From the 10K / annual statement of K+S AG, it seems that company is thinking out the frontier risks that can impact Non-Metallic Mining 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.
Lack of clear differentiation of K+S AG products
– To increase the profitability and margins on the products, K+S AG needs to provide more differentiated products than what it is currently offering in the marketplace.
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 K+S AG supply chain. Even after few cautionary changes, K+S AG is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left K+S AG vulnerable to further global disruptions in South East Asia.
K+S AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of K+S AG are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, K+S AG can use these opportunities to build new business models that can help the communities that K+S AG operates in. Secondly it can use opportunities from government spending in Non-Metallic Mining sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects K+S AG can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions in Non-Metallic Mining industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for K+S AG in the Non-Metallic Mining industry. Now K+S AG can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, K+S AG 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for K+S AG in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Non-Metallic Mining industry, and it will provide faster access to the consumers.
Developing new processes and practices
– K+S AG can develop new processes and procedures in Non-Metallic 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.
Better consumer reach
– The expansion of the 5G network will help K+S AG to increase its market reach. K+S 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.
Building a culture of innovation
– managers at K+S AG 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 Non-Metallic Mining industry.
Buying journey improvements
– K+S AG can improve the customer journey of consumers in the Non-Metallic 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.
Loyalty marketing
– K+S 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.
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. K+S AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– K+S AG can use the latest technology developments to improve its manufacturing and designing process in Non-Metallic Mining 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.
Creating value in data economy
– The success of analytics program of K+S AG has opened avenues for new revenue streams for the organization in Non-Metallic Mining industry. This can help K+S AG to build a more holistic ecosystem for K+S AG products in the Non-Metallic Mining industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats K+S AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of K+S AG are -
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. K+S AG needs to understand the core reasons impacting the Non-Metallic Mining 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 K+S AG in the Non-Metallic Mining sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– K+S AG has witnessed rapid integration of technology during Covid-19 in the Non-Metallic Mining industry. As one of the leading players in the industry, K+S AG needs to keep up with the evolution of technology in the Non-Metallic 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.
Increasing wage structure of K+S AG
– 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 K+S AG.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, K+S 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 K+S AG prominent markets.
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 K+S AG.
Regulatory challenges
– K+S 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 Non-Metallic Mining 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.
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 K+S AG business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Non-Metallic Mining industry are lowering. It can presents K+S AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Non-Metallic Mining sector.
Stagnating economy with rate increase
– K+S 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 Non-Metallic Mining 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.
Consumer confidence and its impact on K+S 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 Non-Metallic Mining industry and other sectors.
Weighted SWOT Analysis of K+S AG Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at K+S 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 K+S 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 K+S 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 K+S 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 K+S AG needs to make to build a sustainable competitive advantage.
