Richemont (0QMU) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Richemont (United Kingdom)

Based on various researches at Oak Spring University , Richemont is operating in a macro-environment that has been destablized by – increasing commodity prices, wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Richemont

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Richemont can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Richemont, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Richemont 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 Richemont can be done for the following purposes –
1. Strategic planning of Richemont
2. Improving business portfolio management of Richemont
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Jewelry & Silverware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Richemont

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

The strengths of Richemont are -

Ability to lead change in Jewelry & Silverware

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

Organizational Resilience of Richemont

– The covid-19 pandemic has put organizational resilience at the centre of everthing Richemont does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Successful track record of launching new products

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

– Richemont has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Richemont to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Richemont is one of the leading players in the Jewelry & Silverware 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.

Innovation driven organization

– Richemont is one of the most innovative firm in Jewelry & Silverware sector.

Digital Transformation in Jewelry & Silverware industry

- digital transformation varies from industry to industry. For Richemont digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Richemont 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.

Effective Research and Development (R&D)

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

Cross disciplinary teams

– Horizontal connected teams at the Richemont 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

– Richemont has one of the best training and development program in Consumer Cyclical 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.

Learning organization

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

Analytics focus

– Richemont 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 Jewelry & Silverware 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.

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

The weaknesses of Richemont are -

Compensation and incentives

– The revenue per employee of Richemont is just above the Jewelry & Silverware 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.

Interest costs

– Compare to the competition, Richemont 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.

High bargaining power of channel partners in Jewelry & Silverware industry

– because of the regulatory requirements in United Kingdom, Richemont 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 Jewelry & Silverware industry.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Richemont is slow explore the new channels of communication. These new channels of communication can help Richemont to provide better information regarding Jewelry & Silverware products and services. It can also build an online community to further reach out to potential customers.

Ability to respond to the competition

– As the decision making is very deliberative at Richemont, in the dynamic environment of Jewelry & Silverware industry it has struggled to respond to the nimble upstart competition. Richemont has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Need for greater diversity

– Richemont 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.

High operating costs

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

Increasing silos among functional specialists

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

High cash cycle compare to competitors

Richemont has a high cash cycle compare to other players in the Jewelry & Silverware industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Slow to strategic competitive environment developments

– As Richemont is one of the leading players in the Jewelry & Silverware industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Jewelry & Silverware industry in last five years.

Capital Spending Reduction

– Even during the low interest decade, Richemont 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 Jewelry & Silverware industry using digital technology.

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

The opportunities of Richemont are -

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Jewelry & Silverware industry, but it has also influenced the consumer preferences. Richemont can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Developing new processes and practices

– Richemont can develop new processes and procedures in Jewelry & Silverware 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.

Buying journey improvements

– Richemont can improve the customer journey of consumers in the Jewelry & Silverware 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.

Manufacturing automation

– Richemont can use the latest technology developments to improve its manufacturing and designing process in Jewelry & Silverware 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.

Use of Bitcoin and other crypto currencies for transactions in Jewelry & Silverware industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Richemont in the Jewelry & Silverware industry. Now Richemont can target international markets with far fewer capital restrictions requirements than the existing system.

Building a culture of innovation

– managers at Richemont 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 Jewelry & Silverware industry.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Richemont 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 Richemont to hire the very best people irrespective of their geographical location.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Jewelry & Silverware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Richemont 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. Richemont 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Richemont in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Jewelry & Silverware industry, and it will provide faster access to the consumers.

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 Richemont 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.

Increase in government spending

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

Leveraging digital technologies

– Richemont 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.

Harnessing reconfiguration of the global supply chains

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

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

The threats of Richemont are -

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 Richemont.

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.

Shortening product life cycle

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

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 Richemont in the Jewelry & Silverware sector and impact the bottomline of the organization.

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. Richemont needs to understand the core reasons impacting the Jewelry & Silverware industry. This will help it in building a better workplace.

Easy access to finance

– Easy access to finance in Jewelry & Silverware industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Richemont can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

High dependence on third party suppliers

– Richemont 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.

Learning curve for new practices

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

Increasing wage structure of Richemont

– 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 Richemont.

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. Richemont 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.

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 Richemont business can come under increasing regulations regarding data privacy, data security, etc.

Technology acceleration in Forth Industrial Revolution

– Richemont has witnessed rapid integration of technology during Covid-19 in the Jewelry & Silverware industry. As one of the leading players in the industry, Richemont needs to keep up with the evolution of technology in the Jewelry & Silverware 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 international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Richemont 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 Richemont prominent markets.

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Weighted SWOT Analysis of Richemont Template, Example

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

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