SWOT Analysis / TOWS Matrix for Marsh McLennan (United Kingdom)
Based on various researches at Oak Spring University , Marsh McLennan is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, technology disruption, geopolitical disruptions,
increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Marsh McLennan can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Marsh McLennan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Marsh McLennan 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 Marsh McLennan can be done for the following purposes –
1. Strategic planning of Marsh McLennan
2. Improving business portfolio management of Marsh McLennan
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Insurance (Miscellaneous) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Marsh McLennan
Strengths of Marsh McLennan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Marsh McLennan are -
Diverse revenue streams
– Marsh McLennan is present in almost all the verticals within the Insurance (Miscellaneous) industry. This has provided Marsh McLennan 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.
Ability to lead change in Insurance (Miscellaneous)
– Marsh McLennan is one of the leading players in the Insurance (Miscellaneous) industry in United Kingdom. Over the years it has not only transformed the business landscape in the Insurance (Miscellaneous) industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Marsh McLennan in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Marsh McLennan 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 Insurance (Miscellaneous) industry. The technology infrastructure of United Kingdom 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.
Superior customer experience
– The customer experience strategy of Marsh McLennan in Insurance (Miscellaneous) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Marsh McLennan is one of the leading players in the Insurance (Miscellaneous) industry in United Kingdom. It is in a position to attract the best talent available in United Kingdom. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Marsh McLennan has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Marsh McLennan to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Marsh McLennan in the Financial sector have low bargaining power. Marsh McLennan has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Marsh McLennan to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Marsh McLennan has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Marsh McLennan staying ahead in the Insurance (Miscellaneous) 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 Insurance (Miscellaneous) industry
– Marsh McLennan has clearly differentiated products in the market place. This has enabled Marsh McLennan to fetch slight price premium compare to the competitors in the Insurance (Miscellaneous) industry. The sustainable margins have also helped Marsh McLennan to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Marsh McLennan 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.
Training and development
– Marsh McLennan has one of the best training and development program in Financial 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.
Strong track record of project management in the Insurance (Miscellaneous) industry
– Marsh McLennan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Marsh McLennan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Marsh McLennan are -
Slow to strategic competitive environment developments
– As Marsh McLennan is one of the leading players in the Insurance (Miscellaneous) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Insurance (Miscellaneous) industry in last five years.
No frontier risks strategy
– From the 10K / annual statement of Marsh McLennan, it seems that company is thinking out the frontier risks that can impact Insurance (Miscellaneous) 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.
Interest costs
– Compare to the competition, Marsh McLennan 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.
Capital Spending Reduction
– Even during the low interest decade, Marsh McLennan 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 Insurance (Miscellaneous) industry using digital technology.
Aligning sales with marketing
– From the outside it seems that Marsh McLennan needs to have more collaboration between its sales team and marketing team. Sales professionals in the Insurance (Miscellaneous) industry have deep experience in developing customer relationships. Marketing department at Marsh McLennan can leverage the sales team experience to cultivate customer relationships as Marsh McLennan is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the Insurance (Miscellaneous) industry, Marsh McLennan 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.
High dependence on Marsh McLennan ‘s star products
– The top 2 products and services of Marsh McLennan still accounts for major business revenue. This dependence on star products in Insurance (Miscellaneous) industry has resulted into insufficient focus on developing new products, even though Marsh McLennan has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of Marsh McLennan is just above the Insurance (Miscellaneous) 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.
High operating costs
– Compare to the competitors, Marsh McLennan has high operating costs in the Insurance (Miscellaneous) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Marsh McLennan lucrative customers.
Lack of clear differentiation of Marsh McLennan products
– To increase the profitability and margins on the products, Marsh McLennan needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at Marsh McLennan, in the dynamic environment of Insurance (Miscellaneous) industry it has struggled to respond to the nimble upstart competition. Marsh McLennan has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Marsh McLennan Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Marsh McLennan are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Insurance (Miscellaneous) industry, but it has also influenced the consumer preferences. Marsh McLennan can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Marsh McLennan 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.
Creating value in data economy
– The success of analytics program of Marsh McLennan has opened avenues for new revenue streams for the organization in Insurance (Miscellaneous) industry. This can help Marsh McLennan to build a more holistic ecosystem for Marsh McLennan products in the Insurance (Miscellaneous) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Marsh McLennan is facing challenges because of the dominance of functional experts in the organization. Marsh McLennan can utilize new technology in the field of Insurance (Miscellaneous) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Marsh McLennan can improve the customer journey of consumers in the Insurance (Miscellaneous) 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.
Better consumer reach
– The expansion of the 5G network will help Marsh McLennan to increase its market reach. Marsh McLennan 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 Marsh McLennan in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Insurance (Miscellaneous) industry, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Marsh McLennan has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Insurance (Miscellaneous) sector. This continuous investment in analytics has enabled Marsh McLennan to build a competitive advantage using analytics. The analytics driven competitive advantage can help Marsh McLennan to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Marsh McLennan to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Marsh McLennan to hire the very best people irrespective of their geographical location.
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 Marsh McLennan 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.
Developing new processes and practices
– Marsh McLennan can develop new processes and procedures in Insurance (Miscellaneous) 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.
Loyalty marketing
– Marsh McLennan 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. Marsh McLennan can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Marsh McLennan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Marsh McLennan are -
Regulatory challenges
– Marsh McLennan 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 Insurance (Miscellaneous) industry regulations.
Environmental challenges
– Marsh McLennan 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. Marsh McLennan can take advantage of this fund but it will also bring new competitors in the Insurance (Miscellaneous) industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Marsh McLennan 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 Marsh McLennan prominent markets.
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.
High dependence on third party suppliers
– Marsh McLennan 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. Marsh McLennan 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Marsh McLennan in Insurance (Miscellaneous) industry. The Insurance (Miscellaneous) 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.
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 Marsh McLennan business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Marsh McLennan is facing in Insurance (Miscellaneous) 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 Insurance (Miscellaneous) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Marsh McLennan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Insurance (Miscellaneous) industry are lowering. It can presents Marsh McLennan with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Insurance (Miscellaneous) 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 Marsh McLennan.
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.
Weighted SWOT Analysis of Marsh McLennan Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan 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 Marsh McLennan needs to make to build a sustainable competitive advantage.