SWOT Analysis / TOWS Matrix for Latrobe Magnesium Ltd (Australia)
Based on various researches at Oak Spring University , Latrobe Magnesium Ltd is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, technology disruption, geopolitical disruptions, there is backlash against globalization, increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Latrobe Magnesium Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Latrobe Magnesium Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Latrobe Magnesium Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd can be done for the following purposes –
1. Strategic planning of Latrobe Magnesium Ltd
2. Improving business portfolio management of Latrobe Magnesium Ltd
3. Assessing feasibility of the new initiative in Australia
4. Making a Metal Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Latrobe Magnesium Ltd
Strengths of Latrobe Magnesium Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Latrobe Magnesium Ltd are -
Low bargaining power of suppliers
– Suppliers of Latrobe Magnesium Ltd in the Basic Materials sector have low bargaining power. Latrobe Magnesium Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Latrobe Magnesium Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Latrobe Magnesium Ltd emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Latrobe Magnesium Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Latrobe Magnesium Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Latrobe Magnesium Ltd 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.
Organizational Resilience of Latrobe Magnesium Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Latrobe Magnesium Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Metal Mining industry
- digital transformation varies from industry to industry. For Latrobe Magnesium Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Latrobe Magnesium Ltd has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Latrobe Magnesium Ltd is one of the most innovative firm in Metal Mining sector.
Effective Research and Development (R&D)
– Latrobe Magnesium Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Latrobe Magnesium Ltd 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.
Sustainable margins compare to other players in Metal Mining industry
– Latrobe Magnesium Ltd has clearly differentiated products in the market place. This has enabled Latrobe Magnesium Ltd to fetch slight price premium compare to the competitors in the Metal Mining industry. The sustainable margins have also helped Latrobe Magnesium Ltd to invest into research and development (R&D) and innovation.
Strong track record of project management in the Metal Mining industry
– Latrobe Magnesium Ltd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Latrobe Magnesium Ltd 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.
Weaknesses of Latrobe Magnesium Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Latrobe Magnesium Ltd are -
High cash cycle compare to competitors
Latrobe Magnesium Ltd has a high cash cycle compare to other players in the Metal 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.
Low market penetration in new markets
– Outside its home market of Australia, Latrobe Magnesium Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Metal Mining industry
– because of the regulatory requirements in Australia, Latrobe Magnesium Ltd 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 Metal Mining industry.
Workers concerns about automation
– As automation is fast increasing in the Metal Mining industry, Latrobe Magnesium Ltd 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.
Lack of clear differentiation of Latrobe Magnesium Ltd products
– To increase the profitability and margins on the products, Latrobe Magnesium Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Latrobe Magnesium Ltd has high operating costs in the Metal Mining industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Latrobe Magnesium Ltd lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Latrobe Magnesium Ltd 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. Latrobe Magnesium Ltd 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.
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 Latrobe Magnesium Ltd supply chain. Even after few cautionary changes, Latrobe Magnesium Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Latrobe Magnesium Ltd vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Latrobe Magnesium Ltd 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. Latrobe Magnesium Ltd should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Latrobe Magnesium Ltd 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.
Ability to respond to the competition
– As the decision making is very deliberative at Latrobe Magnesium Ltd, in the dynamic environment of Metal Mining industry it has struggled to respond to the nimble upstart competition. Latrobe Magnesium Ltd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Latrobe Magnesium Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Latrobe Magnesium Ltd are -
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 Latrobe Magnesium Ltd in the Metal Mining industry. Now Latrobe Magnesium Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Latrobe Magnesium Ltd 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 Metal Mining industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Latrobe Magnesium Ltd can use these opportunities to build new business models that can help the communities that Latrobe Magnesium Ltd operates in. Secondly it can use opportunities from government spending in Metal Mining sector.
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. Latrobe Magnesium Ltd 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. Latrobe Magnesium Ltd 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.
Learning at scale
– Online learning technologies has now opened space for Latrobe Magnesium Ltd 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Metal Mining industry, but it has also influenced the consumer preferences. Latrobe Magnesium Ltd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Latrobe Magnesium Ltd can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Latrobe Magnesium Ltd has opened avenues for new revenue streams for the organization in Metal Mining industry. This can help Latrobe Magnesium Ltd to build a more holistic ecosystem for Latrobe Magnesium Ltd products in the Metal Mining industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Latrobe Magnesium Ltd to increase its market reach. Latrobe Magnesium Ltd 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Latrobe Magnesium Ltd 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Latrobe Magnesium Ltd is facing challenges because of the dominance of functional experts in the organization. Latrobe Magnesium Ltd can utilize new technology in the field of Metal Mining industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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 Latrobe Magnesium Ltd 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.
Threats Latrobe Magnesium Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Latrobe Magnesium Ltd are -
Technology acceleration in Forth Industrial Revolution
– Latrobe Magnesium Ltd has witnessed rapid integration of technology during Covid-19 in the Metal Mining industry. As one of the leading players in the industry, Latrobe Magnesium Ltd 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.
Shortening product life cycle
– it is one of the major threat that Latrobe Magnesium Ltd is facing in Metal Mining sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Latrobe Magnesium Ltd 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. Latrobe Magnesium Ltd can take advantage of this fund but it will also bring new competitors in the Metal Mining industry.
Increasing wage structure of Latrobe Magnesium Ltd
– 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 Latrobe Magnesium Ltd.
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 Latrobe Magnesium Ltd.
Consumer confidence and its impact on Latrobe Magnesium Ltd 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 Metal Mining industry and other sectors.
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 Latrobe Magnesium Ltd business can come under increasing regulations regarding data privacy, data security, 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. Latrobe Magnesium Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Latrobe Magnesium Ltd may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Metal Mining sector.
High dependence on third party suppliers
– Latrobe Magnesium Ltd 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.
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. Latrobe Magnesium Ltd 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.
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 Latrobe Magnesium Ltd in the Metal Mining sector and impact the bottomline of the organization.
Regulatory challenges
– Latrobe Magnesium Ltd 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.
Weighted SWOT Analysis of Latrobe Magnesium Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd 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 Latrobe Magnesium Ltd needs to make to build a sustainable competitive advantage.