Based on various researches at Oak Spring University , Merlin Entertainments PLC is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, increasing government debt because of Covid-19 spendings, there is backlash against globalization, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies,
digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Merlin Entertainments PLC
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Merlin Entertainments PLC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merlin Entertainments PLC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merlin Entertainments 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 Merlin Entertainments PLC can be done for the following purposes –
1. Strategic planning of Merlin Entertainments PLC
2. Improving business portfolio management of Merlin Entertainments PLC
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Recreational Activities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Merlin Entertainments PLC
Strengths of Merlin Entertainments PLC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merlin Entertainments PLC are -
Diverse revenue streams
– Merlin Entertainments PLC is present in almost all the verticals within the Recreational Activities industry. This has provided Merlin Entertainments 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.
Training and development
– Merlin Entertainments PLC 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
– Merlin Entertainments 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 Recreational Activities 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.
Highly skilled collaborators
– Merlin Entertainments PLC has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Recreational Activities industry. Secondly the value chain collaborators of Merlin Entertainments PLC have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy of Merlin Entertainments PLC comprises – understanding the underlying the factors in the Recreational Activities 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.
Low bargaining power of suppliers
– Suppliers of Merlin Entertainments PLC in the Services sector have low bargaining power. Merlin Entertainments PLC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merlin Entertainments PLC to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Recreational Activities
– Merlin Entertainments PLC is one of the leading players in the Recreational Activities industry in United Kingdom. Over the years it has not only transformed the business landscape in the Recreational Activities industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Merlin Entertainments PLC in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Merlin Entertainments PLC
– The covid-19 pandemic has put organizational resilience at the centre of everthing Merlin Entertainments PLC does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Merlin Entertainments PLC has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merlin Entertainments PLC to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management in the Recreational Activities industry
– Merlin Entertainments PLC is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Merlin Entertainments 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.
Successful track record of launching new products
– Merlin Entertainments PLC has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merlin Entertainments 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.
Weaknesses of Merlin Entertainments PLC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Merlin Entertainments PLC are -
Capital Spending Reduction
– Even during the low interest decade, Merlin Entertainments PLC 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 Recreational Activities industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Merlin Entertainments PLC is dominated by functional specialists. It is not different from other players in the Recreational Activities industry, but Merlin Entertainments PLC needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merlin Entertainments PLC to focus more on services in the Recreational Activities industry rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Merlin Entertainments PLC is one of the leading players in the Recreational Activities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Recreational Activities industry in last five years.
Compensation and incentives
– The revenue per employee of Merlin Entertainments PLC is just above the Recreational Activities industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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 Merlin Entertainments PLC supply chain. Even after few cautionary changes, Merlin Entertainments PLC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merlin Entertainments PLC vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Merlin Entertainments PLC has some of the most successful models in the Recreational Activities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Merlin Entertainments PLC should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Merlin Entertainments PLC products
– To increase the profitability and margins on the products, Merlin Entertainments PLC needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on Merlin Entertainments PLC ‘s star products
– The top 2 products and services of Merlin Entertainments PLC still accounts for major business revenue. This dependence on star products in Recreational Activities industry has resulted into insufficient focus on developing new products, even though Merlin Entertainments PLC has relatively successful track record of launching new products.
Need for greater diversity
– Merlin Entertainments 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.
High cash cycle compare to competitors
Merlin Entertainments PLC has a high cash cycle compare to other players in the Recreational Activities 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 Merlin Entertainments PLC, it seems that company is thinking out the frontier risks that can impact Recreational Activities 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.
Merlin Entertainments PLC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Merlin Entertainments PLC are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merlin Entertainments 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 Recreational Activities industry, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Merlin Entertainments PLC can use these opportunities to build new business models that can help the communities that Merlin Entertainments PLC operates in. Secondly it can use opportunities from government spending in Recreational Activities sector.
Loyalty marketing
– Merlin Entertainments PLC has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Merlin Entertainments PLC can improve the customer journey of consumers in the Recreational Activities 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Recreational Activities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Merlin Entertainments 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. Merlin Entertainments 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.
Learning at scale
– Online learning technologies has now opened space for Merlin Entertainments 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Merlin Entertainments PLC can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merlin Entertainments PLC can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Leveraging digital technologies
– Merlin Entertainments 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merlin Entertainments 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 Merlin Entertainments 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.
Developing new processes and practices
– Merlin Entertainments PLC can develop new processes and procedures in Recreational Activities 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.
Manufacturing automation
– Merlin Entertainments PLC can use the latest technology developments to improve its manufacturing and designing process in Recreational Activities 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.
Better consumer reach
– The expansion of the 5G network will help Merlin Entertainments PLC to increase its market reach. Merlin Entertainments 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 Merlin Entertainments PLC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Merlin Entertainments PLC are -
Regulatory challenges
– Merlin Entertainments PLC 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 Recreational Activities industry regulations.
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. Merlin Entertainments PLC needs to understand the core reasons impacting the Recreational Activities industry. This will help it in building a better workplace.
Increasing wage structure of Merlin Entertainments PLC
– 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 Merlin Entertainments PLC.
Shortening product life cycle
– it is one of the major threat that Merlin Entertainments PLC is facing in Recreational Activities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Recreational Activities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Merlin Entertainments PLC can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Merlin Entertainments 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 Recreational Activities industry.
Environmental challenges
– Merlin Entertainments PLC 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. Merlin Entertainments PLC can take advantage of this fund but it will also bring new competitors in the Recreational Activities 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 Merlin Entertainments PLC business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Merlin Entertainments 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 Recreational Activities sector.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Merlin Entertainments PLC.
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.
Consumer confidence and its impact on Merlin Entertainments PLC demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Recreational Activities industry and other sectors.
Weighted SWOT Analysis of Merlin Entertainments PLC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Merlin Entertainments 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 Merlin Entertainments 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 Merlin Entertainments 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 Merlin Entertainments 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 Merlin Entertainments PLC needs to make to build a sustainable competitive advantage.