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 – increasing commodity prices, there is increasing trade war between United States & China, geopolitical disruptions, technology disruption, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs,
increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, 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 -
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.
Diverse revenue streams
– Carlsberg Brewery is present in almost all the verticals within the Beverages (Alcoholic) industry. This has provided Carlsberg Brewery 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
– 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.
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.
High switching costs
– The high switching costs that Carlsberg Brewery 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.
Successful track record of launching new products
– Carlsberg Brewery has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Carlsberg Brewery 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.
Low bargaining power of suppliers
– Suppliers of Carlsberg Brewery in the Consumer/Non-Cyclical sector have low bargaining power. Carlsberg Brewery has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Carlsberg Brewery to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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.
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.
Weaknesses of Carlsberg Brewery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Carlsberg Brewery are -
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.
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.
Skills based hiring in Beverages (Alcoholic) industry
– The stress on hiring functional specialists at Carlsberg Brewery 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.
Slow to strategic competitive environment developments
– As Carlsberg Brewery is one of the leading players in the Beverages (Alcoholic) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Beverages (Alcoholic) industry in last five years.
Interest costs
– Compare to the competition, Carlsberg Brewery 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.
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.
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.
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.
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.
Low market penetration in new markets
– Outside its home market of Malaysia, Carlsberg Brewery needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Carlsberg Brewery has a high cash cycle compare to other players in the Beverages (Alcoholic) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Carlsberg Brewery Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Carlsberg Brewery are -
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.
Better consumer reach
– The expansion of the 5G network will help Carlsberg Brewery to increase its market reach. Carlsberg Brewery 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.
Use of Bitcoin and other crypto currencies for transactions in Beverages (Alcoholic) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Carlsberg Brewery in the Beverages (Alcoholic) industry. Now Carlsberg Brewery can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Carlsberg Brewery has opened avenues for new revenue streams for the organization in Beverages (Alcoholic) industry. This can help Carlsberg Brewery to build a more holistic ecosystem for Carlsberg Brewery products in the Beverages (Alcoholic) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Carlsberg Brewery can use the latest technology developments to improve its manufacturing and designing process in Beverages (Alcoholic) 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Carlsberg Brewery 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 Carlsberg Brewery to hire the very best people irrespective of their geographical location.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Carlsberg Brewery 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.
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 Carlsberg Brewery 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 Carlsberg Brewery in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Beverages (Alcoholic) industry, and it will provide faster access to the consumers.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Carlsberg Brewery has witnessed rapid integration of technology during Covid-19 in the Beverages (Alcoholic) industry. As one of the leading players in the industry, Carlsberg Brewery needs to keep up with the evolution of technology in the Beverages (Alcoholic) 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.
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.
Easy access to finance
– Easy access to finance in Beverages (Alcoholic) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Carlsberg Brewery 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 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.
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
– 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.
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.
