Babcock International (BAB) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Babcock International (United Kingdom)

Based on various researches at Oak Spring University , Babcock International is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Babcock International

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Babcock International can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Babcock International, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Babcock International 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Babcock International can be done for the following purposes –
1. Strategic planning of Babcock International
2. Improving business portfolio management of Babcock International
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Water Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Babcock International

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Strengths of Babcock International | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Babcock International are -

Analytics focus

– Babcock International 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 Transportation 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.

Innovation driven organization

– Babcock International is one of the most innovative firm in Water Transportation sector.

Digital Transformation in Water Transportation industry

- digital transformation varies from industry to industry. For Babcock International digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Babcock International 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.

Effective Research and Development (R&D)

– Babcock International has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Babcock International staying ahead in the Water Transportation industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Organizational Resilience of Babcock International

– The covid-19 pandemic has put organizational resilience at the centre of everthing Babcock International does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Ability to recruit top talent

– Babcock International is one of the leading players in the Water Transportation 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.

Low bargaining power of suppliers

– Suppliers of Babcock International in the Transportation sector have low bargaining power. Babcock International has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Babcock International to manage not only supply disruptions but also source products at highly competitive prices.

Diverse revenue streams

– Babcock International is present in almost all the verticals within the Water Transportation industry. This has provided Babcock International 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.

High switching costs

– The high switching costs that Babcock International has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Learning organization

- Babcock International 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 Babcock International is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Babcock International emphasize – knowledge, initiative, and innovation.

Superior customer experience

– The customer experience strategy of Babcock International in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to lead change in Water Transportation

– Babcock International is one of the leading players in the Water Transportation industry in United Kingdom. Over the years it has not only transformed the business landscape in the Water Transportation industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Babcock International in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

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Weaknesses of Babcock International | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Babcock International are -

Employees’ less understanding of Babcock International strategy

– From the outside it seems that the employees of Babcock International 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.

Workers concerns about automation

– As automation is fast increasing in the Water Transportation industry, Babcock International 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.

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 Babcock International supply chain. Even after few cautionary changes, Babcock International is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Babcock International vulnerable to further global disruptions in South East Asia.

Slow to strategic competitive environment developments

– As Babcock International is one of the leading players in the Water Transportation industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Water Transportation industry in last five years.

Ability to respond to the competition

– As the decision making is very deliberative at Babcock International, in the dynamic environment of Water Transportation industry it has struggled to respond to the nimble upstart competition. Babcock International has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Compensation and incentives

– The revenue per employee of Babcock International is just above the Water Transportation 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 Babcock International ‘s star products

– The top 2 products and services of Babcock International still accounts for major business revenue. This dependence on star products in Water Transportation industry has resulted into insufficient focus on developing new products, even though Babcock International has relatively successful track record of launching new products.

Capital Spending Reduction

– Even during the low interest decade, Babcock International 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 Transportation industry using digital technology.

Aligning sales with marketing

– From the outside it seems that Babcock International needs to have more collaboration between its sales team and marketing team. Sales professionals in the Water Transportation industry have deep experience in developing customer relationships. Marketing department at Babcock International can leverage the sales team experience to cultivate customer relationships as Babcock International is planning to shift buying processes online.

Interest costs

– Compare to the competition, Babcock International 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.

Lack of clear differentiation of Babcock International products

– To increase the profitability and margins on the products, Babcock International needs to provide more differentiated products than what it is currently offering in the marketplace.

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Babcock International Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Babcock International are -

Learning at scale

– Online learning technologies has now opened space for Babcock International 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 Babcock International has opened avenues for new revenue streams for the organization in Water Transportation industry. This can help Babcock International to build a more holistic ecosystem for Babcock International products in the Water Transportation industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Babcock International 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 Babcock International to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Use of Bitcoin and other crypto currencies for transactions in Water Transportation industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Babcock International in the Water Transportation industry. Now Babcock International can target international markets with far fewer capital restrictions requirements than the existing system.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Babcock International can use these opportunities to build new business models that can help the communities that Babcock International operates in. Secondly it can use opportunities from government spending in Water Transportation sector.

Building a culture of innovation

– managers at Babcock International 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 Transportation industry.

Leveraging digital technologies

– Babcock International 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.

Manufacturing automation

– Babcock International can use the latest technology developments to improve its manufacturing and designing process in Water Transportation 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Babcock International 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 Babcock International to hire the very best people irrespective of their geographical location.

Low interest rates

– Even though inflation is raising its head in most developed economies, Babcock International 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Babcock International is facing challenges because of the dominance of functional experts in the organization. Babcock International can utilize new technology in the field of Water Transportation industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Babcock International can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Babcock International to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.

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Threats Babcock International External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Babcock International are -

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.

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. Babcock International 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.

Environmental challenges

– Babcock International 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. Babcock International can take advantage of this fund but it will also bring new competitors in the Water Transportation industry.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Babcock International 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 Transportation sector.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Water Transportation industry are lowering. It can presents Babcock International with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Transportation sector.

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 Babcock International.

Regulatory challenges

– Babcock International 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 Transportation industry regulations.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Babcock International 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 Babcock International prominent markets.

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 Babcock International in the Water Transportation sector and impact the bottomline of the organization.

High dependence on third party suppliers

– Babcock International 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 wage structure of Babcock International

– 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 Babcock International.

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. Babcock International needs to understand the core reasons impacting the Water Transportation industry. This will help it in building a better workplace.

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 Babcock International business can come under increasing regulations regarding data privacy, data security, etc.

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Weighted SWOT Analysis of Babcock International Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Babcock International 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 Babcock International 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 Babcock International 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 Babcock International 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 Babcock International needs to make to build a sustainable competitive advantage.

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