SWOT Analysis / TOWS Matrix for CPFL ENERGIAON NM (Brazil)
Based on various researches at Oak Spring University , CPFL ENERGIAON NM is operating in a macro-environment that has been destablized by – there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is increasing trade war between United States & China,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of CPFL ENERGIAON NM
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that CPFL ENERGIAON NM can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the CPFL ENERGIAON NM, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which CPFL ENERGIAON NM 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 CPFL ENERGIAON NM can be done for the following purposes –
1. Strategic planning of CPFL ENERGIAON NM
2. Improving business portfolio management of CPFL ENERGIAON NM
3. Assessing feasibility of the new initiative in Brazil
4. Making a Electric Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of CPFL ENERGIAON NM
Strengths of CPFL ENERGIAON NM | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of CPFL ENERGIAON NM are -
Strong track record of project management in the Electric Utilities industry
– CPFL ENERGIAON NM is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of CPFL ENERGIAON NM in Electric Utilities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– CPFL ENERGIAON NM has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – CPFL ENERGIAON NM staying ahead in the Electric Utilities industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of CPFL ENERGIAON NM
– The covid-19 pandemic has put organizational resilience at the centre of everthing CPFL ENERGIAON NM does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Electric Utilities
– CPFL ENERGIAON NM is one of the leading players in the Electric Utilities industry in Brazil. Over the years it has not only transformed the business landscape in the Electric Utilities industry in Brazil but also across the existing markets. The ability to lead change has enabled CPFL ENERGIAON NM in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– CPFL ENERGIAON NM is one of the most innovative firm in Electric Utilities sector.
Operational resilience
– The operational resilience strategy of CPFL ENERGIAON NM comprises – understanding the underlying the factors in the Electric Utilities 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 Electric Utilities industry
– CPFL ENERGIAON NM has clearly differentiated products in the market place. This has enabled CPFL ENERGIAON NM to fetch slight price premium compare to the competitors in the Electric Utilities industry. The sustainable margins have also helped CPFL ENERGIAON NM to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the CPFL ENERGIAON NM 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.
Diverse revenue streams
– CPFL ENERGIAON NM is present in almost all the verticals within the Electric Utilities industry. This has provided CPFL ENERGIAON NM 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.
Low bargaining power of suppliers
– Suppliers of CPFL ENERGIAON NM in the Utilities sector have low bargaining power. CPFL ENERGIAON NM has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps CPFL ENERGIAON NM to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that CPFL ENERGIAON NM 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.
Weaknesses of CPFL ENERGIAON NM | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CPFL ENERGIAON NM are -
High cash cycle compare to competitors
CPFL ENERGIAON NM has a high cash cycle compare to other players in the Electric Utilities 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 Electric Utilities industry
– The stress on hiring functional specialists at CPFL ENERGIAON NM 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.
Interest costs
– Compare to the competition, CPFL ENERGIAON NM 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 CPFL ENERGIAON NM needs to have more collaboration between its sales team and marketing team. Sales professionals in the Electric Utilities industry have deep experience in developing customer relationships. Marketing department at CPFL ENERGIAON NM can leverage the sales team experience to cultivate customer relationships as CPFL ENERGIAON NM is planning to shift buying processes online.
Products dominated business model
– Even though CPFL ENERGIAON NM has some of the most successful models in the Electric Utilities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. CPFL ENERGIAON NM should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of CPFL ENERGIAON NM products
– To increase the profitability and margins on the products, CPFL ENERGIAON NM needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of CPFL ENERGIAON NM strategy
– From the outside it seems that the employees of CPFL ENERGIAON NM 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.
Increasing silos among functional specialists
– The organizational structure of CPFL ENERGIAON NM is dominated by functional specialists. It is not different from other players in the Electric Utilities industry, but CPFL ENERGIAON NM needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help CPFL ENERGIAON NM to focus more on services in the Electric Utilities industry rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at CPFL ENERGIAON NM, in the dynamic environment of Electric Utilities industry it has struggled to respond to the nimble upstart competition. CPFL ENERGIAON NM has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, CPFL ENERGIAON NM is slow explore the new channels of communication. These new channels of communication can help CPFL ENERGIAON NM to provide better information regarding Electric Utilities products and services. It can also build an online community to further reach out to potential customers.
High dependence on CPFL ENERGIAON NM ‘s star products
– The top 2 products and services of CPFL ENERGIAON NM still accounts for major business revenue. This dependence on star products in Electric Utilities industry has resulted into insufficient focus on developing new products, even though CPFL ENERGIAON NM has relatively successful track record of launching new products.
CPFL ENERGIAON NM Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of CPFL ENERGIAON NM are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, CPFL ENERGIAON NM is facing challenges because of the dominance of functional experts in the organization. CPFL ENERGIAON NM can utilize new technology in the field of Electric Utilities industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Electric Utilities industry, but it has also influenced the consumer preferences. CPFL ENERGIAON NM can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– CPFL ENERGIAON NM 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.
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 CPFL ENERGIAON NM 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
– CPFL ENERGIAON NM can improve the customer journey of consumers in the Electric Utilities 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.
Using analytics as competitive advantage
– CPFL ENERGIAON NM has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Electric Utilities sector. This continuous investment in analytics has enabled CPFL ENERGIAON NM to build a competitive advantage using analytics. The analytics driven competitive advantage can help CPFL ENERGIAON NM to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. CPFL ENERGIAON NM can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of CPFL ENERGIAON NM has opened avenues for new revenue streams for the organization in Electric Utilities industry. This can help CPFL ENERGIAON NM to build a more holistic ecosystem for CPFL ENERGIAON NM products in the Electric Utilities industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– CPFL ENERGIAON NM can use the latest technology developments to improve its manufacturing and designing process in Electric Utilities 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Electric Utilities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. CPFL ENERGIAON NM 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. CPFL ENERGIAON NM 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.
Developing new processes and practices
– CPFL ENERGIAON NM can develop new processes and procedures in Electric Utilities 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, CPFL ENERGIAON NM 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for CPFL ENERGIAON NM in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Electric Utilities industry, and it will provide faster access to the consumers.
Threats CPFL ENERGIAON NM External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of CPFL ENERGIAON NM are -
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 CPFL ENERGIAON NM.
Technology acceleration in Forth Industrial Revolution
– CPFL ENERGIAON NM has witnessed rapid integration of technology during Covid-19 in the Electric Utilities industry. As one of the leading players in the industry, CPFL ENERGIAON NM needs to keep up with the evolution of technology in the Electric Utilities 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 CPFL ENERGIAON NM in Electric Utilities industry. The Electric Utilities 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
– CPFL ENERGIAON NM 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. CPFL ENERGIAON NM can take advantage of this fund but it will also bring new competitors in the Electric Utilities industry.
Stagnating economy with rate increase
– CPFL ENERGIAON NM 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 Electric Utilities industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, CPFL ENERGIAON NM may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Electric Utilities sector.
High dependence on third party suppliers
– CPFL ENERGIAON NM 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.
Consumer confidence and its impact on CPFL ENERGIAON NM 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 Electric Utilities industry and other sectors.
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. CPFL ENERGIAON NM 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.
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 CPFL ENERGIAON NM in the Electric Utilities sector and impact the bottomline of the organization.
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 CPFL ENERGIAON NM
– 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 CPFL ENERGIAON NM.
Shortening product life cycle
– it is one of the major threat that CPFL ENERGIAON NM is facing in Electric Utilities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of CPFL ENERGIAON NM Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at CPFL ENERGIAON NM 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 CPFL ENERGIAON NM 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 CPFL ENERGIAON NM 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 CPFL ENERGIAON NM 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 CPFL ENERGIAON NM needs to make to build a sustainable competitive advantage.