Based on various researches at Oak Spring University , Spirax Sarco Engineering Plc is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion,
customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Spirax Sarco Engineering Plc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Spirax Sarco Engineering Plc can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Spirax Sarco Engineering Plc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc can be done for the following purposes –
1. Strategic planning of Spirax Sarco Engineering Plc
2. Improving business portfolio management of Spirax Sarco Engineering Plc
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Misc. Fabricated Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Spirax Sarco Engineering Plc
Strengths of Spirax Sarco Engineering Plc | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Spirax Sarco Engineering Plc are -
Effective Research and Development (R&D)
– Spirax Sarco Engineering Plc has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Spirax Sarco Engineering Plc staying ahead in the Misc. Fabricated Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Spirax Sarco Engineering Plc is one of the most innovative firm in Misc. Fabricated Products sector.
Diverse revenue streams
– Spirax Sarco Engineering Plc is present in almost all the verticals within the Misc. Fabricated Products industry. This has provided Spirax Sarco Engineering Plc 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.
Low bargaining power of suppliers
– Suppliers of Spirax Sarco Engineering Plc in the Basic Materials sector have low bargaining power. Spirax Sarco Engineering Plc has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Spirax Sarco Engineering Plc to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Spirax Sarco Engineering Plc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Spirax Sarco Engineering Plc 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
– Spirax Sarco Engineering Plc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Spirax Sarco Engineering Plc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Misc. Fabricated Products industry
- digital transformation varies from industry to industry. For Spirax Sarco Engineering Plc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Spirax Sarco Engineering Plc 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.
Sustainable margins compare to other players in Misc. Fabricated Products industry
– Spirax Sarco Engineering Plc has clearly differentiated products in the market place. This has enabled Spirax Sarco Engineering Plc to fetch slight price premium compare to the competitors in the Misc. Fabricated Products industry. The sustainable margins have also helped Spirax Sarco Engineering Plc to invest into research and development (R&D) and innovation.
Organizational Resilience of Spirax Sarco Engineering Plc
– The covid-19 pandemic has put organizational resilience at the centre of everthing Spirax Sarco Engineering Plc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Spirax Sarco Engineering Plc 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.
Analytics focus
– Spirax Sarco Engineering Plc 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 Misc. Fabricated Products 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.
Training and development
– Spirax Sarco Engineering Plc has one of the best training and development program in Basic Materials 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.
Weaknesses of Spirax Sarco Engineering Plc | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Spirax Sarco Engineering Plc are -
Slow decision making process
– As mentioned earlier in the report, Spirax Sarco Engineering Plc has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Misc. Fabricated Products industry over the last five years. Spirax Sarco Engineering Plc 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.
Workers concerns about automation
– As automation is fast increasing in the Misc. Fabricated Products industry, Spirax Sarco Engineering Plc 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.
Ability to respond to the competition
– As the decision making is very deliberative at Spirax Sarco Engineering Plc, in the dynamic environment of Misc. Fabricated Products industry it has struggled to respond to the nimble upstart competition. Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc products
– To increase the profitability and margins on the products, Spirax Sarco Engineering Plc needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Spirax Sarco Engineering Plc has some of the most successful models in the Misc. Fabricated Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Spirax Sarco Engineering Plc should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, Spirax Sarco Engineering Plc has high operating costs in the Misc. Fabricated Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Spirax Sarco Engineering Plc lucrative customers.
Skills based hiring in Misc. Fabricated Products industry
– The stress on hiring functional specialists at Spirax Sarco Engineering Plc 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.
Low market penetration in new markets
– Outside its home market of United Kingdom, Spirax Sarco Engineering Plc needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ less understanding of Spirax Sarco Engineering Plc strategy
– From the outside it seems that the employees of Spirax Sarco Engineering Plc 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.
Need for greater diversity
– Spirax Sarco Engineering Plc 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.
Interest costs
– Compare to the competition, Spirax Sarco Engineering Plc 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.
Spirax Sarco Engineering Plc Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Spirax Sarco Engineering Plc are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Spirax Sarco Engineering Plc can use these opportunities to build new business models that can help the communities that Spirax Sarco Engineering Plc operates in. Secondly it can use opportunities from government spending in Misc. Fabricated Products sector.
Developing new processes and practices
– Spirax Sarco Engineering Plc can develop new processes and procedures in Misc. Fabricated Products 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Spirax Sarco Engineering Plc 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 Misc. Fabricated Products industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Misc. Fabricated Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Spirax Sarco Engineering Plc 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. Spirax Sarco Engineering Plc 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Fabricated Products industry, but it has also influenced the consumer preferences. Spirax Sarco Engineering Plc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Spirax Sarco Engineering Plc 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.
Creating value in data economy
– The success of analytics program of Spirax Sarco Engineering Plc has opened avenues for new revenue streams for the organization in Misc. Fabricated Products industry. This can help Spirax Sarco Engineering Plc to build a more holistic ecosystem for Spirax Sarco Engineering Plc products in the Misc. Fabricated Products industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Spirax Sarco Engineering Plc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Fabricated Products industry, and it will provide faster access to the consumers.
Manufacturing automation
– Spirax Sarco Engineering Plc can use the latest technology developments to improve its manufacturing and designing process in Misc. Fabricated Products 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.
Leveraging digital technologies
– Spirax Sarco Engineering Plc 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.
Better consumer reach
– The expansion of the 5G network will help Spirax Sarco Engineering Plc to increase its market reach. Spirax Sarco Engineering Plc 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.
Threats Spirax Sarco Engineering Plc External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Spirax Sarco Engineering Plc are -
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. Spirax Sarco Engineering Plc 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.
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 Spirax Sarco Engineering Plc in the Misc. Fabricated Products sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Spirax Sarco Engineering Plc in Misc. Fabricated Products industry. The Misc. Fabricated Products 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Spirax Sarco Engineering Plc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Fabricated Products sector.
Easy access to finance
– Easy access to finance in Misc. Fabricated Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Spirax Sarco Engineering Plc 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
– Spirax Sarco Engineering Plc 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Misc. Fabricated Products industry are lowering. It can presents Spirax Sarco Engineering Plc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Misc. Fabricated Products sector.
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.
Stagnating economy with rate increase
– Spirax Sarco Engineering Plc 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 Misc. Fabricated Products industry.
Technology acceleration in Forth Industrial Revolution
– Spirax Sarco Engineering Plc has witnessed rapid integration of technology during Covid-19 in the Misc. Fabricated Products industry. As one of the leading players in the industry, Spirax Sarco Engineering Plc needs to keep up with the evolution of technology in the Misc. Fabricated Products 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.
Shortening product life cycle
– it is one of the major threat that Spirax Sarco Engineering Plc is facing in Misc. Fabricated Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Spirax Sarco Engineering Plc Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc 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 Spirax Sarco Engineering Plc needs to make to build a sustainable competitive advantage.