Esprinet (0NFS) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Esprinet (United Kingdom)

Based on various researches at Oak Spring University , Esprinet is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc

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Introduction to SWOT Analysis of Esprinet

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Esprinet can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Esprinet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Esprinet 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 Esprinet can be done for the following purposes –
1. Strategic planning of Esprinet
2. Improving business portfolio management of Esprinet
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Computer Hardware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Esprinet

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

The strengths of Esprinet are -

Learning organization

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

Superior customer experience

– The customer experience strategy of Esprinet in Computer Hardware industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to lead change in Computer Hardware

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

Effective Research and Development (R&D)

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

Successful track record of launching new products

– Esprinet has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Esprinet 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.

Ability to recruit top talent

– Esprinet is one of the leading players in the Computer Hardware 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.

Diverse revenue streams

– Esprinet is present in almost all the verticals within the Computer Hardware industry. This has provided Esprinet 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.

Sustainable margins compare to other players in Computer Hardware industry

– Esprinet has clearly differentiated products in the market place. This has enabled Esprinet to fetch slight price premium compare to the competitors in the Computer Hardware industry. The sustainable margins have also helped Esprinet to invest into research and development (R&D) and innovation.

Low bargaining power of suppliers

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

High brand equity

– Esprinet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Esprinet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

High switching costs

– The high switching costs that Esprinet 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.

Operational resilience

– The operational resilience strategy of Esprinet comprises – understanding the underlying the factors in the Computer Hardware 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.

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

The weaknesses of Esprinet are -

Slow to strategic competitive environment developments

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

High dependence on Esprinet ‘s star products

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

Ability to respond to the competition

– As the decision making is very deliberative at Esprinet, in the dynamic environment of Computer Hardware industry it has struggled to respond to the nimble upstart competition. Esprinet 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 Esprinet is just above the Computer Hardware 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, Esprinet is slow explore the new channels of communication. These new channels of communication can help Esprinet to provide better information regarding Computer Hardware products and services. It can also build an online community to further reach out to potential customers.

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

Lack of clear differentiation of Esprinet products

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

Capital Spending Reduction

– Even during the low interest decade, Esprinet 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 Computer Hardware industry using digital technology.

Need for greater diversity

– Esprinet 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.

Interest costs

– Compare to the competition, Esprinet 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.

High operating costs

– Compare to the competitors, Esprinet has high operating costs in the Computer Hardware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Esprinet lucrative customers.

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

The opportunities of Esprinet are -

Creating value in data economy

– The success of analytics program of Esprinet has opened avenues for new revenue streams for the organization in Computer Hardware industry. This can help Esprinet to build a more holistic ecosystem for Esprinet products in the Computer Hardware industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Esprinet in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Computer Hardware industry, and it will provide faster access to the consumers.

Low interest rates

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

Manufacturing automation

– Esprinet can use the latest technology developments to improve its manufacturing and designing process in Computer Hardware 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.

Increase in government spending

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

Harnessing reconfiguration of the global supply chains

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

Leveraging digital technologies

– Esprinet 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.

Remote work and new talent hiring opportunities

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

Better consumer reach

– The expansion of the 5G network will help Esprinet to increase its market reach. Esprinet 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.

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 Esprinet 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.

Buying journey improvements

– Esprinet can improve the customer journey of consumers in the Computer Hardware 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.

Learning at scale

– Online learning technologies has now opened space for Esprinet 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.

Loyalty marketing

– Esprinet 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.

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

The threats of Esprinet are -

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 Esprinet in the Computer Hardware 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.

Easy access to finance

– Easy access to finance in Computer Hardware industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Esprinet can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Esprinet 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 Computer Hardware industry and other sectors.

Shortening product life cycle

– it is one of the major threat that Esprinet is facing in Computer Hardware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

High dependence on third party suppliers

– Esprinet 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.

Environmental challenges

– Esprinet 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. Esprinet can take advantage of this fund but it will also bring new competitors in the Computer Hardware industry.

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Esprinet 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.

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 Esprinet 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, Esprinet may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Computer Hardware sector.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

Increasing wage structure of Esprinet

– 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 Esprinet.

Barriers of entry lowering

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

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Weighted SWOT Analysis of Esprinet Template, Example

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

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