Kuala Lumpur Kepong (KLKK) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Kuala Lumpur Kepong (Malaysia)

Based on various researches at Oak Spring University , Kuala Lumpur Kepong is operating in a macro-environment that has been destablized by – there is backlash against globalization, increasing household debt because of falling income levels, geopolitical disruptions, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, increasing energy prices, etc

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Introduction to SWOT Analysis of Kuala Lumpur Kepong

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

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Strengths of Kuala Lumpur Kepong | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Kuala Lumpur Kepong are -

Innovation driven organization

– Kuala Lumpur Kepong is one of the most innovative firm in Crops sector.

Operational resilience

– The operational resilience strategy of Kuala Lumpur Kepong comprises – understanding the underlying the factors in the Crops 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.

Training and development

– Kuala Lumpur Kepong has one of the best training and development program in Consumer/Non-Cyclical 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.

High brand equity

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

Digital Transformation in Crops industry

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

High switching costs

– The high switching costs that Kuala Lumpur Kepong 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.

Low bargaining power of suppliers

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

Learning organization

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

Effective Research and Development (R&D)

– Kuala Lumpur Kepong has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kuala Lumpur Kepong staying ahead in the Crops 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

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

Diverse revenue streams

– Kuala Lumpur Kepong is present in almost all the verticals within the Crops industry. This has provided Kuala Lumpur Kepong 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.

Cross disciplinary teams

– Horizontal connected teams at the Kuala Lumpur Kepong 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.

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Weaknesses of Kuala Lumpur Kepong | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Kuala Lumpur Kepong are -

High cash cycle compare to competitors

Kuala Lumpur Kepong has a high cash cycle compare to other players in the Crops industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Skills based hiring in Crops industry

– The stress on hiring functional specialists at Kuala Lumpur Kepong 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.

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

Slow to strategic competitive environment developments

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

Capital Spending Reduction

– Even during the low interest decade, Kuala Lumpur Kepong 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 Crops industry using digital technology.

No frontier risks strategy

– From the 10K / annual statement of Kuala Lumpur Kepong, it seems that company is thinking out the frontier risks that can impact Crops industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.

Interest costs

– Compare to the competition, Kuala Lumpur Kepong 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.

Aligning sales with marketing

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

Employees’ less understanding of Kuala Lumpur Kepong strategy

– From the outside it seems that the employees of Kuala Lumpur Kepong 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.

Compensation and incentives

– The revenue per employee of Kuala Lumpur Kepong is just above the Crops 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.

Need for greater diversity

– Kuala Lumpur Kepong 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.

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Kuala Lumpur Kepong Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Kuala Lumpur Kepong are -

Building a culture of innovation

– managers at Kuala Lumpur Kepong 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 Crops industry.

Harnessing reconfiguration of the global supply chains

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

Using analytics as competitive advantage

– Kuala Lumpur Kepong has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Crops sector. This continuous investment in analytics has enabled Kuala Lumpur Kepong to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kuala Lumpur Kepong to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Buying journey improvements

– Kuala Lumpur Kepong can improve the customer journey of consumers in the Crops 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

– Kuala Lumpur Kepong 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.

Redefining models of collaboration and team work

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

Manufacturing automation

– Kuala Lumpur Kepong can use the latest technology developments to improve its manufacturing and designing process in Crops 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.

Creating value in data economy

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

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 Kuala Lumpur Kepong 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.

Use of Bitcoin and other crypto currencies for transactions in Crops industry

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

Leveraging digital technologies

– Kuala Lumpur Kepong 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.

Better consumer reach

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

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. Kuala Lumpur Kepong can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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Threats Kuala Lumpur Kepong External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Kuala Lumpur Kepong are -

Increasing wage structure of Kuala Lumpur Kepong

– 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 Kuala Lumpur Kepong.

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 Kuala Lumpur Kepong business can come under increasing regulations regarding data privacy, data security, etc.

Easy access to finance

– Easy access to finance in Crops industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kuala Lumpur Kepong 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 Crops industry are lowering. It can presents Kuala Lumpur Kepong with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Crops 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 Kuala Lumpur Kepong.

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. Kuala Lumpur Kepong 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Kuala Lumpur Kepong in Crops industry. The Crops 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.

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 international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Kuala Lumpur Kepong 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 Kuala Lumpur Kepong prominent markets.

Shortening product life cycle

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

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. Kuala Lumpur Kepong needs to understand the core reasons impacting the Crops industry. This will help it in building a better workplace.

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 Kuala Lumpur Kepong in the Crops sector and impact the bottomline of the organization.

Stagnating economy with rate increase

– Kuala Lumpur Kepong 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 Crops industry.

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Weighted SWOT Analysis of Kuala Lumpur Kepong Template, Example

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

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