Lekoil (LEK) SWOT Analysis / TOWS Matrix / MBA Resources
Conglomerates
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Lekoil (United Kingdom)
Based on various researches at Oak Spring University , Lekoil is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, increasing energy prices,
talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Lekoil can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lekoil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lekoil 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 Lekoil can be done for the following purposes –
1. Strategic planning of Lekoil
2. Improving business portfolio management of Lekoil
3. Assessing feasibility of the new initiative in United Kingdom
4. Making a Conglomerates sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lekoil
Strengths of Lekoil | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lekoil are -
Successful track record of launching new products
– Lekoil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lekoil 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.
Highly skilled collaborators
– Lekoil has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Conglomerates industry. Secondly the value chain collaborators of Lekoil have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Lekoil has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lekoil to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Lekoil has one of the best training and development program in Conglomerates 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.
Ability to lead change in Conglomerates
– Lekoil is one of the leading players in the Conglomerates industry in United Kingdom. Over the years it has not only transformed the business landscape in the Conglomerates industry in United Kingdom but also across the existing markets. The ability to lead change has enabled Lekoil in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Lekoil 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.
Digital Transformation in Conglomerates industry
- digital transformation varies from industry to industry. For Lekoil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lekoil 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)
– Lekoil has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Lekoil staying ahead in the Conglomerates industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Lekoil comprises – understanding the underlying the factors in the Conglomerates 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.
Sustainable margins compare to other players in Conglomerates industry
– Lekoil has clearly differentiated products in the market place. This has enabled Lekoil to fetch slight price premium compare to the competitors in the Conglomerates industry. The sustainable margins have also helped Lekoil to invest into research and development (R&D) and innovation.
Organizational Resilience of Lekoil
– The covid-19 pandemic has put organizational resilience at the centre of everthing Lekoil does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Lekoil is present in almost all the verticals within the Conglomerates industry. This has provided Lekoil 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.
Weaknesses of Lekoil | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lekoil are -
Need for greater diversity
– Lekoil 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lekoil is slow explore the new channels of communication. These new channels of communication can help Lekoil to provide better information regarding Conglomerates products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that Lekoil needs to have more collaboration between its sales team and marketing team. Sales professionals in the Conglomerates industry have deep experience in developing customer relationships. Marketing department at Lekoil can leverage the sales team experience to cultivate customer relationships as Lekoil is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Lekoil is dominated by functional specialists. It is not different from other players in the Conglomerates industry, but Lekoil needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lekoil to focus more on services in the Conglomerates industry rather than just following the product oriented approach.
High bargaining power of channel partners in Conglomerates industry
– because of the regulatory requirements in United Kingdom, Lekoil 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 Conglomerates industry.
Compensation and incentives
– The revenue per employee of Lekoil is just above the Conglomerates 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 Lekoil ‘s star products
– The top 2 products and services of Lekoil still accounts for major business revenue. This dependence on star products in Conglomerates industry has resulted into insufficient focus on developing new products, even though Lekoil has relatively successful track record of launching new products.
Lack of clear differentiation of Lekoil products
– To increase the profitability and margins on the products, Lekoil needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Lekoil is one of the leading players in the Conglomerates industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Conglomerates industry in last five years.
Low market penetration in new markets
– Outside its home market of United Kingdom, Lekoil needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, Lekoil has high operating costs in the Conglomerates industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lekoil lucrative customers.
Lekoil Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Lekoil are -
Learning at scale
– Online learning technologies has now opened space for Lekoil 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lekoil 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 Lekoil to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Lekoil 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 Conglomerates industry.
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 Lekoil 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lekoil in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Conglomerates industry, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Lekoil has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Conglomerates sector. This continuous investment in analytics has enabled Lekoil to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lekoil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Lekoil can improve the customer journey of consumers in the Conglomerates 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.
Loyalty marketing
– Lekoil 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Conglomerates industry, but it has also influenced the consumer preferences. Lekoil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Lekoil 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.
Developing new processes and practices
– Lekoil can develop new processes and procedures in Conglomerates 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.
Creating value in data economy
– The success of analytics program of Lekoil has opened avenues for new revenue streams for the organization in Conglomerates industry. This can help Lekoil to build a more holistic ecosystem for Lekoil products in the Conglomerates industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Lekoil to increase its market reach. Lekoil 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 Lekoil External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Lekoil are -
Technology acceleration in Forth Industrial Revolution
– Lekoil has witnessed rapid integration of technology during Covid-19 in the Conglomerates industry. As one of the leading players in the industry, Lekoil needs to keep up with the evolution of technology in the Conglomerates 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.
Shortening product life cycle
– it is one of the major threat that Lekoil is facing in Conglomerates sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lekoil 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 Lekoil prominent markets.
Increasing wage structure of Lekoil
– 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 Lekoil.
Environmental challenges
– Lekoil 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. Lekoil can take advantage of this fund but it will also bring new competitors in the Conglomerates industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Lekoil may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Conglomerates sector.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Conglomerates industry are lowering. It can presents Lekoil with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Conglomerates sector.
Easy access to finance
– Easy access to finance in Conglomerates industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lekoil can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Lekoil 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lekoil in Conglomerates industry. The Conglomerates 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.
Consumer confidence and its impact on Lekoil 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 Conglomerates industry and other sectors.
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.
Weighted SWOT Analysis of Lekoil Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Lekoil 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 Lekoil 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 Lekoil 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 Lekoil 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 Lekoil needs to make to build a sustainable competitive advantage.