Based on various researches at Oak Spring University , Kuehne & Nagel is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models,
increasing energy prices, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kuehne & Nagel can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kuehne & Nagel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kuehne & Nagel 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 Kuehne & Nagel can be done for the following purposes –
1. Strategic planning of Kuehne & Nagel
2. Improving business portfolio management of Kuehne & Nagel
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Water Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kuehne & Nagel
Strengths of Kuehne & Nagel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kuehne & Nagel are -
Ability to recruit top talent
– Kuehne & Nagel is one of the leading players in the Water Transportation 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.
Highly skilled collaborators
– Kuehne & Nagel has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Transportation industry. Secondly the value chain collaborators of Kuehne & Nagel have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Kuehne & Nagel has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kuehne & Nagel staying ahead in the Water Transportation 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 Kuehne & Nagel 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.
Digital Transformation in Water Transportation industry
- digital transformation varies from industry to industry. For Kuehne & Nagel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kuehne & Nagel 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.
Training and development
– Kuehne & Nagel has one of the best training and development program in Transportation 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.
Sustainable margins compare to other players in Water Transportation industry
– Kuehne & Nagel has clearly differentiated products in the market place. This has enabled Kuehne & Nagel to fetch slight price premium compare to the competitors in the Water Transportation industry. The sustainable margins have also helped Kuehne & Nagel to invest into research and development (R&D) and innovation.
High brand equity
– Kuehne & Nagel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kuehne & Nagel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Water Transportation
– Kuehne & Nagel is one of the leading players in the Water Transportation industry in United Kingdom. Over the years it has not only transformed the business landscape in the Water Transportation industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Kuehne & Nagel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management in the Water Transportation industry
– Kuehne & Nagel 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 Kuehne & Nagel comprises – understanding the underlying the factors in the Water Transportation 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.
Superior customer experience
– The customer experience strategy of Kuehne & Nagel in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Kuehne & Nagel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kuehne & Nagel are -
High dependence on Kuehne & Nagel ‘s star products
– The top 2 products and services of Kuehne & Nagel still accounts for major business revenue. This dependence on star products in Water Transportation industry has resulted into insufficient focus on developing new products, even though Kuehne & Nagel has relatively successful track record of launching new products.
High bargaining power of channel partners in Water Transportation industry
– because of the regulatory requirements in United Kingdom, Kuehne & Nagel 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 Water Transportation industry.
Employees’ less understanding of Kuehne & Nagel strategy
– From the outside it seems that the employees of Kuehne & Nagel don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High operating costs
– Compare to the competitors, Kuehne & Nagel has high operating costs in the Water Transportation industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kuehne & Nagel lucrative customers.
Aligning sales with marketing
– From the outside it seems that Kuehne & Nagel needs to have more collaboration between its sales team and marketing team. Sales professionals in the Water Transportation industry have deep experience in developing customer relationships. Marketing department at Kuehne & Nagel can leverage the sales team experience to cultivate customer relationships as Kuehne & Nagel is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Kuehne & Nagel is dominated by functional specialists. It is not different from other players in the Water Transportation industry, but Kuehne & Nagel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kuehne & Nagel to focus more on services in the Water Transportation industry rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Kuehne & Nagel has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Water Transportation industry over the last five years. Kuehne & Nagel 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.
No frontier risks strategy
– From the 10K / annual statement of Kuehne & Nagel, it seems that company is thinking out the frontier risks that can impact Water Transportation 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.
Workers concerns about automation
– As automation is fast increasing in the Water Transportation industry, Kuehne & Nagel 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.
Products dominated business model
– Even though Kuehne & Nagel has some of the most successful models in the Water Transportation industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Kuehne & Nagel should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Kuehne & Nagel 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 Water Transportation industry using digital technology.
Kuehne & Nagel Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kuehne & Nagel are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Kuehne & Nagel 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Water Transportation industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kuehne & Nagel 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. Kuehne & Nagel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kuehne & Nagel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kuehne & Nagel 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 Kuehne & Nagel to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Kuehne & Nagel 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 Water Transportation industry.
Learning at scale
– Online learning technologies has now opened space for Kuehne & Nagel 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.
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. Kuehne & Nagel 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 Kuehne & Nagel has opened avenues for new revenue streams for the organization in Water Transportation industry. This can help Kuehne & Nagel to build a more holistic ecosystem for Kuehne & Nagel products in the Water Transportation industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Kuehne & Nagel can improve the customer journey of consumers in the Water Transportation 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.
Using analytics as competitive advantage
– Kuehne & Nagel has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Water Transportation sector. This continuous investment in analytics has enabled Kuehne & Nagel to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kuehne & Nagel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Kuehne & Nagel 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kuehne & Nagel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Water Transportation industry, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Water Transportation industry, but it has also influenced the consumer preferences. Kuehne & Nagel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Kuehne & Nagel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kuehne & Nagel 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 Kuehne & Nagel.
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. Kuehne & Nagel needs to understand the core reasons impacting the Water Transportation industry. This will help it in building a better workplace.
Increasing wage structure of Kuehne & Nagel
– 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 Kuehne & Nagel.
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.
Environmental challenges
– Kuehne & Nagel 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. Kuehne & Nagel can take advantage of this fund but it will also bring new competitors in the Water Transportation industry.
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. Kuehne & Nagel 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kuehne & Nagel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Water Transportation sector.
Stagnating economy with rate increase
– Kuehne & Nagel 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 Water Transportation industry.
Technology acceleration in Forth Industrial Revolution
– Kuehne & Nagel has witnessed rapid integration of technology during Covid-19 in the Water Transportation industry. As one of the leading players in the industry, Kuehne & Nagel needs to keep up with the evolution of technology in the Water Transportation 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.
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 Kuehne & Nagel in the Water Transportation sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Kuehne & Nagel 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.
Regulatory challenges
– Kuehne & Nagel 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 Water Transportation industry regulations.
Shortening product life cycle
– it is one of the major threat that Kuehne & Nagel is facing in Water Transportation sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Kuehne & Nagel Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel needs to make to build a sustainable competitive advantage.
