SWOT Analysis / TOWS Matrix for Carlsberg Brewery (Malaysia)
Based on various researches at Oak Spring University , Carlsberg Brewery is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, increasing energy prices, increasing government debt because of Covid-19 spendings, technology disruption, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices,
central banks are concerned over increasing inflation, geopolitical disruptions, etc
Introduction to SWOT Analysis of Carlsberg Brewery
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Carlsberg Brewery can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Carlsberg Brewery, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Carlsberg Brewery 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 Carlsberg Brewery can be done for the following purposes –
1. Strategic planning of Carlsberg Brewery
2. Improving business portfolio management of Carlsberg Brewery
3. Assessing feasibility of the new initiative in Malaysia
4. Making a Beverages (Alcoholic) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Carlsberg Brewery
Strengths of Carlsberg Brewery | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Carlsberg Brewery are -
High brand equity
– Carlsberg Brewery has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Carlsberg Brewery to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Carlsberg Brewery is one of the leading players in the Beverages (Alcoholic) industry in Malaysia. It is in a position to attract the best talent available in Malaysia. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Carlsberg Brewery has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Beverages (Alcoholic) industry. Secondly the value chain collaborators of Carlsberg Brewery have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Carlsberg Brewery has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Carlsberg Brewery staying ahead in the Beverages (Alcoholic) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Carlsberg Brewery 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 Carlsberg Brewery is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Carlsberg Brewery emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Beverages (Alcoholic) industry
– Carlsberg Brewery has clearly differentiated products in the market place. This has enabled Carlsberg Brewery to fetch slight price premium compare to the competitors in the Beverages (Alcoholic) industry. The sustainable margins have also helped Carlsberg Brewery to invest into research and development (R&D) and innovation.
Training and development
– Carlsberg Brewery 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.
Digital Transformation in Beverages (Alcoholic) industry
- digital transformation varies from industry to industry. For Carlsberg Brewery digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Carlsberg Brewery 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.
Organizational Resilience of Carlsberg Brewery
– The covid-19 pandemic has put organizational resilience at the centre of everthing Carlsberg Brewery does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Beverages (Alcoholic)
– Carlsberg Brewery is one of the leading players in the Beverages (Alcoholic) industry in Malaysia. Over the years it has not only transformed the business landscape in the Beverages (Alcoholic) industry in Malaysia but also across the existing markets. The ability to lead change has enabled Carlsberg Brewery in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Carlsberg Brewery is one of the most innovative firm in Beverages (Alcoholic) sector.
Superior customer experience
– The customer experience strategy of Carlsberg Brewery in Beverages (Alcoholic) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Carlsberg Brewery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Carlsberg Brewery are -
High operating costs
– Compare to the competitors, Carlsberg Brewery has high operating costs in the Beverages (Alcoholic) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Carlsberg Brewery lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Carlsberg Brewery has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Beverages (Alcoholic) industry over the last five years. Carlsberg Brewery even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 Carlsberg Brewery supply chain. Even after few cautionary changes, Carlsberg Brewery is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Carlsberg Brewery vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Carlsberg Brewery is slow explore the new channels of communication. These new channels of communication can help Carlsberg Brewery to provide better information regarding Beverages (Alcoholic) products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Carlsberg Brewery is dominated by functional specialists. It is not different from other players in the Beverages (Alcoholic) industry, but Carlsberg Brewery needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Carlsberg Brewery to focus more on services in the Beverages (Alcoholic) industry rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at Carlsberg Brewery, in the dynamic environment of Beverages (Alcoholic) industry it has struggled to respond to the nimble upstart competition. Carlsberg Brewery has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Carlsberg Brewery ‘s star products
– The top 2 products and services of Carlsberg Brewery still accounts for major business revenue. This dependence on star products in Beverages (Alcoholic) industry has resulted into insufficient focus on developing new products, even though Carlsberg Brewery has relatively successful track record of launching new products.
Products dominated business model
– Even though Carlsberg Brewery has some of the most successful models in the Beverages (Alcoholic) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Carlsberg Brewery should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Carlsberg Brewery 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 Beverages (Alcoholic) industry using digital technology.
Lack of clear differentiation of Carlsberg Brewery products
– To increase the profitability and margins on the products, Carlsberg Brewery needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that Carlsberg Brewery needs to have more collaboration between its sales team and marketing team. Sales professionals in the Beverages (Alcoholic) industry have deep experience in developing customer relationships. Marketing department at Carlsberg Brewery can leverage the sales team experience to cultivate customer relationships as Carlsberg Brewery is planning to shift buying processes online.
Carlsberg Brewery Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Carlsberg Brewery are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Carlsberg Brewery 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Beverages (Alcoholic) industry, but it has also influenced the consumer preferences. Carlsberg Brewery can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Carlsberg Brewery 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 Beverages (Alcoholic) industry.
Loyalty marketing
– Carlsberg Brewery 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Carlsberg Brewery can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Carlsberg Brewery 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 Carlsberg Brewery 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. Carlsberg Brewery can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Beverages (Alcoholic) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Carlsberg Brewery can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Carlsberg Brewery can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Carlsberg Brewery is facing challenges because of the dominance of functional experts in the organization. Carlsberg Brewery can utilize new technology in the field of Beverages (Alcoholic) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Carlsberg Brewery has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Beverages (Alcoholic) sector. This continuous investment in analytics has enabled Carlsberg Brewery to build a competitive advantage using analytics. The analytics driven competitive advantage can help Carlsberg Brewery to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Carlsberg Brewery can improve the customer journey of consumers in the Beverages (Alcoholic) 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.
Developing new processes and practices
– Carlsberg Brewery can develop new processes and procedures in Beverages (Alcoholic) 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Carlsberg Brewery can use these opportunities to build new business models that can help the communities that Carlsberg Brewery operates in. Secondly it can use opportunities from government spending in Beverages (Alcoholic) sector.
Threats Carlsberg Brewery External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Carlsberg Brewery are -
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. Carlsberg Brewery needs to understand the core reasons impacting the Beverages (Alcoholic) 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 Carlsberg Brewery business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Carlsberg Brewery 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 Beverages (Alcoholic) industry regulations.
Stagnating economy with rate increase
– Carlsberg Brewery 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 Beverages (Alcoholic) industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Carlsberg Brewery 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 Carlsberg Brewery prominent markets.
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 Carlsberg Brewery.
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 Carlsberg Brewery in the Beverages (Alcoholic) sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Carlsberg Brewery 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Beverages (Alcoholic) industry are lowering. It can presents Carlsberg Brewery with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Beverages (Alcoholic) sector.
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. Carlsberg Brewery 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 Carlsberg Brewery in Beverages (Alcoholic) industry. The Beverages (Alcoholic) 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.
Environmental challenges
– Carlsberg Brewery 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. Carlsberg Brewery can take advantage of this fund but it will also bring new competitors in the Beverages (Alcoholic) industry.
Consumer confidence and its impact on Carlsberg Brewery 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 Beverages (Alcoholic) industry and other sectors.
Weighted SWOT Analysis of Carlsberg Brewery Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Carlsberg Brewery 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 Carlsberg Brewery 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 Carlsberg Brewery 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 Carlsberg Brewery 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 Carlsberg Brewery needs to make to build a sustainable competitive advantage.