Nokian Renkaat Oyj (0FFY) SWOT Analysis / TOWS Matrix / MBA Resources
Tires
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Nokian Renkaat Oyj (United Kingdom)
Based on various researches at Oak Spring University , Nokian Renkaat Oyj is operating in a macro-environment that has been destablized by – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, there is backlash against globalization, etc
Introduction to SWOT Analysis of Nokian Renkaat Oyj
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nokian Renkaat Oyj can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nokian Renkaat Oyj, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nokian Renkaat Oyj 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 Nokian Renkaat Oyj can be done for the following purposes –
1. Strategic planning of Nokian Renkaat Oyj
2. Improving business portfolio management of Nokian Renkaat Oyj
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Tires sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nokian Renkaat Oyj
Strengths of Nokian Renkaat Oyj | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nokian Renkaat Oyj are -
Successful track record of launching new products
– Nokian Renkaat Oyj has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nokian Renkaat Oyj 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.
Strong track record of project management in the Tires industry
– Nokian Renkaat Oyj 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 Nokian Renkaat Oyj in the Consumer Cyclical sector have low bargaining power. Nokian Renkaat Oyj has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nokian Renkaat Oyj to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Nokian Renkaat Oyj has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to lead change in Tires
– Nokian Renkaat Oyj is one of the leading players in the Tires industry in United Kingdom. Over the years it has not only transformed the business landscape in the Tires industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Nokian Renkaat Oyj in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Nokian Renkaat Oyj 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.
Ability to recruit top talent
– Nokian Renkaat Oyj is one of the leading players in the Tires 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)
– Nokian Renkaat Oyj has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nokian Renkaat Oyj staying ahead in the Tires industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Nokian Renkaat Oyj is present in almost all the verticals within the Tires industry. This has provided Nokian Renkaat Oyj 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.
Analytics focus
– Nokian Renkaat Oyj 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 Tires 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.
Superior customer experience
– The customer experience strategy of Nokian Renkaat Oyj in Tires industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Nokian Renkaat Oyj 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 Nokian Renkaat Oyj is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Nokian Renkaat Oyj emphasize – knowledge, initiative, and innovation.
Weaknesses of Nokian Renkaat Oyj | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nokian Renkaat Oyj are -
Skills based hiring in Tires industry
– The stress on hiring functional specialists at Nokian Renkaat Oyj 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.
Lack of clear differentiation of Nokian Renkaat Oyj products
– To increase the profitability and margins on the products, Nokian Renkaat Oyj needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on Nokian Renkaat Oyj ‘s star products
– The top 2 products and services of Nokian Renkaat Oyj still accounts for major business revenue. This dependence on star products in Tires industry has resulted into insufficient focus on developing new products, even though Nokian Renkaat Oyj has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Nokian Renkaat Oyj has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Tires industry over the last five years. Nokian Renkaat Oyj 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 cash cycle compare to competitors
Nokian Renkaat Oyj has a high cash cycle compare to other players in the Tires industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– From the 10K / annual statement of Nokian Renkaat Oyj, it seems that company is thinking out the frontier risks that can impact Tires 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.
High bargaining power of channel partners in Tires industry
– because of the regulatory requirements in United Kingdom, Nokian Renkaat Oyj 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 Tires industry.
Increasing silos among functional specialists
– The organizational structure of Nokian Renkaat Oyj is dominated by functional specialists. It is not different from other players in the Tires industry, but Nokian Renkaat Oyj needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nokian Renkaat Oyj to focus more on services in the Tires industry rather than just following the product oriented approach.
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 Nokian Renkaat Oyj supply chain. Even after few cautionary changes, Nokian Renkaat Oyj is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nokian Renkaat Oyj vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nokian Renkaat Oyj is slow explore the new channels of communication. These new channels of communication can help Nokian Renkaat Oyj to provide better information regarding Tires products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Nokian Renkaat Oyj is one of the leading players in the Tires industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Tires industry in last five years.
Nokian Renkaat Oyj Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nokian Renkaat Oyj are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Tires industry, but it has also influenced the consumer preferences. Nokian Renkaat Oyj can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Nokian Renkaat Oyj has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Tires sector. This continuous investment in analytics has enabled Nokian Renkaat Oyj to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nokian Renkaat Oyj to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Nokian Renkaat Oyj to increase its market reach. Nokian Renkaat Oyj 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nokian Renkaat Oyj is facing challenges because of the dominance of functional experts in the organization. Nokian Renkaat Oyj can utilize new technology in the field of Tires industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Nokian Renkaat Oyj 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.
Leveraging digital technologies
– Nokian Renkaat Oyj 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.
Buying journey improvements
– Nokian Renkaat Oyj can improve the customer journey of consumers in the Tires industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Nokian Renkaat Oyj can use the latest technology developments to improve its manufacturing and designing process in Tires 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.
Building a culture of innovation
– managers at Nokian Renkaat Oyj 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 Tires industry.
Use of Bitcoin and other crypto currencies for transactions in Tires industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Nokian Renkaat Oyj in the Tires industry. Now Nokian Renkaat Oyj can target international markets with far fewer capital restrictions requirements than the existing system.
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. Nokian Renkaat Oyj 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 Nokian Renkaat Oyj has opened avenues for new revenue streams for the organization in Tires industry. This can help Nokian Renkaat Oyj to build a more holistic ecosystem for Nokian Renkaat Oyj products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nokian Renkaat Oyj 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 Nokian Renkaat Oyj to hire the very best people irrespective of their geographical location.
Threats Nokian Renkaat Oyj External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nokian Renkaat Oyj are -
Regulatory challenges
– Nokian Renkaat Oyj 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 Tires industry regulations.
Shortening product life cycle
– it is one of the major threat that Nokian Renkaat Oyj is facing in Tires sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing wage structure of Nokian Renkaat Oyj
– 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 Nokian Renkaat Oyj.
High dependence on third party suppliers
– Nokian Renkaat Oyj 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, Nokian Renkaat Oyj 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 Nokian Renkaat Oyj prominent markets.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nokian Renkaat Oyj in Tires industry. The Tires 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 Tires industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nokian Renkaat Oyj can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nokian Renkaat Oyj may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Tires sector.
Stagnating economy with rate increase
– Nokian Renkaat Oyj 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 Tires 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. Nokian Renkaat Oyj 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.
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. Nokian Renkaat Oyj needs to understand the core reasons impacting the Tires industry. This will help it in building a better workplace.
Environmental challenges
– Nokian Renkaat Oyj 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. Nokian Renkaat Oyj can take advantage of this fund but it will also bring new competitors in the Tires industry.
Weighted SWOT Analysis of Nokian Renkaat Oyj Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nokian Renkaat Oyj 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 Nokian Renkaat Oyj 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 Nokian Renkaat Oyj 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 Nokian Renkaat Oyj 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 Nokian Renkaat Oyj needs to make to build a sustainable competitive advantage.
