Pearson (PSON) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Pearson (United Kingdom)

Based on various researches at Oak Spring University , Pearson is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, increasing energy prices, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, technology disruption, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Pearson

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

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

The strengths of Pearson are -

High brand equity

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

Cross disciplinary teams

– Horizontal connected teams at the Pearson 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.

Learning organization

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

Ability to recruit top talent

– Pearson is one of the leading players in the Printing & Publishing 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.

Effective Research and Development (R&D)

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

Ability to lead change in Printing & Publishing

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

Organizational Resilience of Pearson

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

Sustainable margins compare to other players in Printing & Publishing industry

– Pearson has clearly differentiated products in the market place. This has enabled Pearson to fetch slight price premium compare to the competitors in the Printing & Publishing industry. The sustainable margins have also helped Pearson to invest into research and development (R&D) and innovation.

Operational resilience

– The operational resilience strategy of Pearson comprises – understanding the underlying the factors in the Printing & Publishing 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.

Training and development

– Pearson has one of the best training and development program in Services 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.

Analytics focus

– Pearson 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 Printing & Publishing 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.

Innovation driven organization

– Pearson is one of the most innovative firm in Printing & Publishing sector.

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

The weaknesses of Pearson are -

Workers concerns about automation

– As automation is fast increasing in the Printing & Publishing industry, Pearson 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.

Skills based hiring in Printing & Publishing industry

– The stress on hiring functional specialists at Pearson 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, Pearson has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Printing & Publishing industry over the last five years. Pearson 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 operating costs

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

Products dominated business model

– Even though Pearson has some of the most successful models in the Printing & Publishing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Pearson should strive to include more intangible value offerings along with its core products and services.

Ability to respond to the competition

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

Capital Spending Reduction

– Even during the low interest decade, Pearson 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 Printing & Publishing industry using digital technology.

Employees’ less understanding of Pearson strategy

– From the outside it seems that the employees of Pearson 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 dependence on Pearson ‘s star products

– The top 2 products and services of Pearson still accounts for major business revenue. This dependence on star products in Printing & Publishing industry has resulted into insufficient focus on developing new products, even though Pearson has relatively successful track record of launching new products.

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 Pearson supply chain. Even after few cautionary changes, Pearson is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pearson vulnerable to further global disruptions in South East Asia.

Slow to strategic competitive environment developments

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

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

The opportunities of Pearson are -

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 Pearson 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

– Pearson can develop new processes and procedures in Printing & Publishing 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.

Use of Bitcoin and other crypto currencies for transactions in Printing & Publishing industry

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

Increase in government spending

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

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. Pearson can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Finding new ways to collaborate

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

Redefining models of collaboration and team work

– As explained in the weaknesses section, Pearson is facing challenges because of the dominance of functional experts in the organization. Pearson can utilize new technology in the field of Printing & Publishing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Pearson can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Lowering marketing communication costs

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

Creating value in data economy

– The success of analytics program of Pearson has opened avenues for new revenue streams for the organization in Printing & Publishing industry. This can help Pearson to build a more holistic ecosystem for Pearson products in the Printing & Publishing industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Changes in consumer behavior post Covid-19

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

Buying journey improvements

– Pearson can improve the customer journey of consumers in the Printing & Publishing 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.

Building a culture of innovation

– managers at Pearson 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 Printing & Publishing industry.

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

The threats of Pearson are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Pearson in Printing & Publishing industry. The Printing & Publishing 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.

Easy access to finance

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

Environmental challenges

– Pearson 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. Pearson can take advantage of this fund but it will also bring new competitors in the Printing & Publishing industry.

Increasing international competition and downward pressure on margins

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

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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Printing & Publishing industry are lowering. It can presents Pearson with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Printing & Publishing sector.

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

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.

Increasing wage structure of Pearson

– 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 Pearson.

Stagnating economy with rate increase

– Pearson 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 Printing & Publishing industry.

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 Pearson in the Printing & Publishing sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Pearson has witnessed rapid integration of technology during Covid-19 in the Printing & Publishing industry. As one of the leading players in the industry, Pearson needs to keep up with the evolution of technology in the Printing & Publishing 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.

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. Pearson needs to understand the core reasons impacting the Printing & Publishing industry. This will help it in building a better workplace.

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Weighted SWOT Analysis of Pearson Template, Example

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

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