Based on various researches at Oak Spring University , DFS Furniture 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, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, central banks are concerned over increasing inflation,
geopolitical disruptions, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of DFS Furniture PLC
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that DFS Furniture PLC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the DFS Furniture PLC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which DFS Furniture 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 DFS Furniture PLC can be done for the following purposes –
1. Strategic planning of DFS Furniture PLC
2. Improving business portfolio management of DFS Furniture PLC
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Furniture & Fixtures sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of DFS Furniture PLC
Strengths of DFS Furniture PLC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of DFS Furniture PLC are -
Analytics focus
– DFS Furniture 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 Furniture & Fixtures 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.
Ability to lead change in Furniture & Fixtures
– DFS Furniture PLC is one of the leading players in the Furniture & Fixtures industry in United Kingdom. Over the years it has not only transformed the business landscape in the Furniture & Fixtures industry in United Kingdom but also across the existing markets. The ability to lead change has enabled DFS Furniture PLC in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– DFS Furniture PLC is one of the most innovative firm in Furniture & Fixtures sector.
Sustainable margins compare to other players in Furniture & Fixtures industry
– DFS Furniture PLC has clearly differentiated products in the market place. This has enabled DFS Furniture PLC to fetch slight price premium compare to the competitors in the Furniture & Fixtures industry. The sustainable margins have also helped DFS Furniture PLC to invest into research and development (R&D) and innovation.
Diverse revenue streams
– DFS Furniture PLC is present in almost all the verticals within the Furniture & Fixtures industry. This has provided DFS Furniture 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.
High brand equity
– DFS Furniture PLC has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled DFS Furniture PLC to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Furniture & Fixtures industry
- digital transformation varies from industry to industry. For DFS Furniture PLC digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. DFS Furniture 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.
Low bargaining power of suppliers
– Suppliers of DFS Furniture PLC in the Consumer Cyclical sector have low bargaining power. DFS Furniture PLC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps DFS Furniture PLC to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management in the Furniture & Fixtures industry
– DFS Furniture 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.
Organizational Resilience of DFS Furniture PLC
– The covid-19 pandemic has put organizational resilience at the centre of everthing DFS Furniture PLC does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- DFS Furniture PLC 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 DFS Furniture PLC is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at DFS Furniture PLC emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– DFS Furniture PLC has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. DFS Furniture 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 DFS Furniture PLC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of DFS Furniture PLC are -
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 DFS Furniture PLC supply chain. Even after few cautionary changes, DFS Furniture PLC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left DFS Furniture PLC vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of DFS Furniture PLC is dominated by functional specialists. It is not different from other players in the Furniture & Fixtures industry, but DFS Furniture PLC needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help DFS Furniture PLC to focus more on services in the Furniture & Fixtures industry rather than just following the product oriented approach.
Interest costs
– Compare to the competition, DFS Furniture 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.
Compensation and incentives
– The revenue per employee of DFS Furniture PLC is just above the Furniture & Fixtures 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, DFS Furniture PLC is slow explore the new channels of communication. These new channels of communication can help DFS Furniture PLC to provide better information regarding Furniture & Fixtures products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
DFS Furniture PLC has a high cash cycle compare to other players in the Furniture & Fixtures industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of DFS Furniture PLC strategy
– From the outside it seems that the employees of DFS Furniture 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.
Ability to respond to the competition
– As the decision making is very deliberative at DFS Furniture PLC, in the dynamic environment of Furniture & Fixtures industry it has struggled to respond to the nimble upstart competition. DFS Furniture PLC has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring in Furniture & Fixtures industry
– The stress on hiring functional specialists at DFS Furniture 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.
Workers concerns about automation
– As automation is fast increasing in the Furniture & Fixtures industry, DFS Furniture 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.
High bargaining power of channel partners in Furniture & Fixtures industry
– because of the regulatory requirements in United Kingdom, DFS Furniture PLC 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 Furniture & Fixtures industry.
DFS Furniture PLC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of DFS Furniture PLC are -
Better consumer reach
– The expansion of the 5G network will help DFS Furniture PLC to increase its market reach. DFS Furniture 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.
Creating value in data economy
– The success of analytics program of DFS Furniture PLC has opened avenues for new revenue streams for the organization in Furniture & Fixtures industry. This can help DFS Furniture PLC to build a more holistic ecosystem for DFS Furniture PLC products in the Furniture & Fixtures industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– DFS Furniture PLC can develop new processes and procedures in Furniture & Fixtures 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.
Building a culture of innovation
– managers at DFS Furniture 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 Furniture & Fixtures industry.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, DFS Furniture 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 DFS Furniture 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.
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. DFS Furniture PLC 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, DFS Furniture 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.
Use of Bitcoin and other crypto currencies for transactions in Furniture & Fixtures industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for DFS Furniture PLC in the Furniture & Fixtures industry. Now DFS Furniture PLC 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, DFS Furniture PLC can use these opportunities to build new business models that can help the communities that DFS Furniture PLC operates in. Secondly it can use opportunities from government spending in Furniture & Fixtures sector.
Using analytics as competitive advantage
– DFS Furniture PLC has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Furniture & Fixtures sector. This continuous investment in analytics has enabled DFS Furniture PLC to build a competitive advantage using analytics. The analytics driven competitive advantage can help DFS Furniture PLC to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects DFS Furniture PLC can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Furniture & Fixtures industry, but it has also influenced the consumer preferences. DFS Furniture 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 DFS Furniture 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.
Threats DFS Furniture PLC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of DFS Furniture PLC are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, DFS Furniture 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 DFS Furniture PLC prominent markets.
Increasing wage structure of DFS Furniture 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 DFS Furniture PLC.
Technology acceleration in Forth Industrial Revolution
– DFS Furniture PLC has witnessed rapid integration of technology during Covid-19 in the Furniture & Fixtures industry. As one of the leading players in the industry, DFS Furniture PLC needs to keep up with the evolution of technology in the Furniture & Fixtures 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.
Consumer confidence and its impact on DFS Furniture 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 Furniture & Fixtures industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for DFS Furniture PLC in Furniture & Fixtures industry. The Furniture & Fixtures 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.
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. DFS Furniture PLC needs to understand the core reasons impacting the Furniture & Fixtures industry. This will help it in building a better workplace.
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.
High dependence on third party suppliers
– DFS Furniture 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.
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 DFS Furniture PLC.
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. DFS Furniture 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 DFS Furniture PLC in the Furniture & Fixtures sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Furniture & Fixtures industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. DFS Furniture PLC can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Furniture & Fixtures industry are lowering. It can presents DFS Furniture PLC with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Furniture & Fixtures sector.
Weighted SWOT Analysis of DFS Furniture PLC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at DFS Furniture 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 DFS Furniture 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 DFS Furniture 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 DFS Furniture 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 DFS Furniture PLC needs to make to build a sustainable competitive advantage.