K+S AG (0Q2N) SWOT Analysis / TOWS Matrix / MBA Resources
Non-Metallic Mining
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for K+S AG (United Kingdom)
Based on various researches at Oak Spring University , K+S AG is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, increasing government debt because of Covid-19 spendings, technology disruption, supply chains are disrupted by pandemic , increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
increasing household debt because of falling income levels, there is increasing trade war between United States & China, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that K+S AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the K+S AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which K+S AG 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 K+S AG can be done for the following purposes –
1. Strategic planning of K+S AG
2. Improving business portfolio management of K+S AG
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Non-Metallic Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of K+S AG
Strengths of K+S AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of K+S AG are -
Sustainable margins compare to other players in Non-Metallic Mining industry
– K+S AG has clearly differentiated products in the market place. This has enabled K+S AG to fetch slight price premium compare to the competitors in the Non-Metallic Mining industry. The sustainable margins have also helped K+S AG to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the K+S AG 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.
Training and development
– K+S AG 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.
Analytics focus
– K+S AG 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 Non-Metallic Mining 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 K+S AG in Non-Metallic Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of K+S AG in the Basic Materials sector have low bargaining power. K+S AG has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps K+S AG to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– K+S AG is one of the most innovative firm in Non-Metallic Mining sector.
Ability to recruit top talent
– K+S AG is one of the leading players in the Non-Metallic Mining 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.
Learning organization
- K+S AG 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 K+S AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at K+S AG emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– K+S AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – K+S AG staying ahead in the Non-Metallic Mining industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Non-Metallic Mining
– K+S AG is one of the leading players in the Non-Metallic Mining industry in United Kingdom. Over the years it has not only transformed the business landscape in the Non-Metallic Mining industry in United Kingdom but also across the existing markets. The ability to lead change has enabled K+S AG in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– K+S AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. K+S AG 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 K+S AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of K+S AG are -
Need for greater diversity
– K+S AG 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 operating costs
– Compare to the competitors, K+S AG has high operating costs in the Non-Metallic Mining industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract K+S AG lucrative customers.
Slow decision making process
– As mentioned earlier in the report, K+S AG has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Non-Metallic Mining industry over the last five years. K+S AG 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.
Products dominated business model
– Even though K+S AG has some of the most successful models in the Non-Metallic Mining industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. K+S AG should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of K+S AG products
– To increase the profitability and margins on the products, K+S AG needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the Non-Metallic Mining industry, K+S AG 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.
Low market penetration in new markets
– Outside its home market of United Kingdom, K+S AG needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 K+S AG supply chain. Even after few cautionary changes, K+S AG is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left K+S AG vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that K+S AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Non-Metallic Mining industry have deep experience in developing customer relationships. Marketing department at K+S AG can leverage the sales team experience to cultivate customer relationships as K+S AG is planning to shift buying processes online.
High dependence on K+S AG ‘s star products
– The top 2 products and services of K+S AG still accounts for major business revenue. This dependence on star products in Non-Metallic Mining industry has resulted into insufficient focus on developing new products, even though K+S AG has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, K+S AG is slow explore the new channels of communication. These new channels of communication can help K+S AG to provide better information regarding Non-Metallic Mining products and services. It can also build an online community to further reach out to potential customers.
K+S AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of K+S AG are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Non-Metallic Mining industry, but it has also influenced the consumer preferences. K+S AG can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– K+S AG can develop new processes and procedures in Non-Metallic Mining 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, K+S AG is facing challenges because of the dominance of functional experts in the organization. K+S AG can utilize new technology in the field of Non-Metallic Mining 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 K+S AG 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
– K+S AG 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.
Using analytics as competitive advantage
– K+S AG has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Non-Metallic Mining sector. This continuous investment in analytics has enabled K+S AG to build a competitive advantage using analytics. The analytics driven competitive advantage can help K+S AG to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for K+S AG in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Non-Metallic Mining industry, and it will provide faster access to the consumers.
Buying journey improvements
– K+S AG can improve the customer journey of consumers in the Non-Metallic Mining 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 Non-Metallic Mining industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. K+S AG 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. K+S AG 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.
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. K+S AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, K+S AG 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects K+S AG can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, K+S AG 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 K+S AG to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats K+S AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of K+S AG are -
Shortening product life cycle
– it is one of the major threat that K+S AG is facing in Non-Metallic Mining sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– K+S AG has witnessed rapid integration of technology during Covid-19 in the Non-Metallic Mining industry. As one of the leading players in the industry, K+S AG needs to keep up with the evolution of technology in the Non-Metallic Mining 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.
Stagnating economy with rate increase
– K+S AG 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 Non-Metallic Mining industry.
Consumer confidence and its impact on K+S AG 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 Non-Metallic Mining industry and other sectors.
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 K+S AG in the Non-Metallic Mining sector and impact the bottomline of the organization.
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.
High dependence on third party suppliers
– K+S AG 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.
Regulatory challenges
– K+S AG 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 Non-Metallic Mining industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, K+S AG 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 K+S AG prominent markets.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, K+S AG may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Non-Metallic Mining sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for K+S AG in Non-Metallic Mining industry. The Non-Metallic Mining 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 Non-Metallic Mining industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. K+S AG can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of K+S AG Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at K+S AG 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 K+S AG 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 K+S AG 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 K+S AG 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 K+S AG needs to make to build a sustainable competitive advantage.