United Utilities (UU) SWOT Analysis / TOWS Matrix / MBA Resources
Water Utilities
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for United Utilities (United Kingdom)
Based on various researches at Oak Spring University , United Utilities is operating in a macro-environment that has been destablized by – increasing energy prices, wage bills are increasing, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, there is increasing trade war between United States & China, there is backlash against globalization, supply chains are disrupted by pandemic ,
competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that United Utilities can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the United Utilities, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which United Utilities 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 United Utilities can be done for the following purposes –
1. Strategic planning of United Utilities
2. Improving business portfolio management of United Utilities
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Water Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of United Utilities
Strengths of United Utilities | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of United Utilities are -
Successful track record of launching new products
– United Utilities has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. United Utilities 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.
Sustainable margins compare to other players in Water Utilities industry
– United Utilities has clearly differentiated products in the market place. This has enabled United Utilities to fetch slight price premium compare to the competitors in the Water Utilities industry. The sustainable margins have also helped United Utilities to invest into research and development (R&D) and innovation.
High brand equity
– United Utilities has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled United Utilities to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– United Utilities is one of the most innovative firm in Water Utilities sector.
Operational resilience
– The operational resilience strategy of United Utilities comprises – understanding the underlying the factors in the Water Utilities 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.
Learning organization
- United Utilities 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 United Utilities is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at United Utilities emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– United Utilities has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – United Utilities staying ahead in the Water Utilities industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– United Utilities has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Utilities industry. Secondly the value chain collaborators of United Utilities have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management in the Water Utilities industry
– United Utilities is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of United Utilities in the Utilities sector have low bargaining power. United Utilities has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps United Utilities to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– United Utilities 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 Water Utilities 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.
Ability to lead change in Water Utilities
– United Utilities is one of the leading players in the Water Utilities industry in United Kingdom. Over the years it has not only transformed the business landscape in the Water Utilities industry in United Kingdom but also across the existing markets. The ability to lead change has enabled United Utilities in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of United Utilities | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of United Utilities are -
High bargaining power of channel partners in Water Utilities industry
– because of the regulatory requirements in United Kingdom, United Utilities 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 Utilities industry.
High cash cycle compare to competitors
United Utilities has a high cash cycle compare to other players in the Water Utilities industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, United Utilities has high operating costs in the Water Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract United Utilities lucrative customers.
Aligning sales with marketing
– From the outside it seems that United Utilities needs to have more collaboration between its sales team and marketing team. Sales professionals in the Water Utilities industry have deep experience in developing customer relationships. Marketing department at United Utilities can leverage the sales team experience to cultivate customer relationships as United Utilities is planning to shift buying processes online.
Products dominated business model
– Even though United Utilities has some of the most successful models in the Water Utilities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. United Utilities should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As United Utilities is one of the leading players in the Water Utilities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Water Utilities industry in last five years.
Skills based hiring in Water Utilities industry
– The stress on hiring functional specialists at United Utilities 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.
Ability to respond to the competition
– As the decision making is very deliberative at United Utilities, in the dynamic environment of Water Utilities industry it has struggled to respond to the nimble upstart competition. United Utilities has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of United Utilities products
– To increase the profitability and margins on the products, United Utilities needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of United Utilities, it seems that company is thinking out the frontier risks that can impact Water Utilities 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.
Capital Spending Reduction
– Even during the low interest decade, United Utilities 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 Utilities industry using digital technology.
United Utilities Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of United Utilities are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, United Utilities is facing challenges because of the dominance of functional experts in the organization. United Utilities can utilize new technology in the field of Water Utilities industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of United Utilities has opened avenues for new revenue streams for the organization in Water Utilities industry. This can help United Utilities to build a more holistic ecosystem for United Utilities products in the Water Utilities industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– United Utilities can develop new processes and procedures in Water Utilities 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.
Building a culture of innovation
– managers at United Utilities 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 Utilities industry.
Manufacturing automation
– United Utilities can use the latest technology developments to improve its manufacturing and designing process in Water Utilities 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, United Utilities 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 United Utilities to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. United Utilities can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Water Utilities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. United Utilities 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. United Utilities 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for United Utilities 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 United Utilities to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, United Utilities can use these opportunities to build new business models that can help the communities that United Utilities operates in. Secondly it can use opportunities from government spending in Water Utilities sector.
Use of Bitcoin and other crypto currencies for transactions in Water Utilities industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for United Utilities in the Water Utilities industry. Now United Utilities can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– United Utilities can improve the customer journey of consumers in the Water Utilities 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects United Utilities can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats United Utilities External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of United Utilities are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Water Utilities industry are lowering. It can presents United Utilities with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Utilities sector.
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. United Utilities needs to understand the core reasons impacting the Water Utilities industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Water Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. United Utilities can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, United Utilities 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 United Utilities prominent markets.
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. United Utilities 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.
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.
Stagnating economy with rate increase
– United Utilities 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 Utilities industry.
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 United Utilities business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– United Utilities has witnessed rapid integration of technology during Covid-19 in the Water Utilities industry. As one of the leading players in the industry, United Utilities needs to keep up with the evolution of technology in the Water Utilities 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 dependence on third party suppliers
– United Utilities 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, United Utilities 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 Utilities sector.
Regulatory challenges
– United Utilities 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 Utilities industry regulations.
Environmental challenges
– United Utilities 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. United Utilities can take advantage of this fund but it will also bring new competitors in the Water Utilities industry.
Weighted SWOT Analysis of United Utilities Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at United Utilities 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 United Utilities 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 United Utilities 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 United Utilities 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 United Utilities needs to make to build a sustainable competitive advantage.