BRF SA ON (BRFS3) SWOT Analysis / TOWS Matrix / MBA Resources
Food Processing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for BRF SA ON (Brazil)
Based on various researches at Oak Spring University , BRF SA ON is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%,
increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that BRF SA ON can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the BRF SA ON, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which BRF SA ON 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 BRF SA ON can be done for the following purposes –
1. Strategic planning of BRF SA ON
2. Improving business portfolio management of BRF SA ON
3. Assessing feasibility of the new initiative in Brazil
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of BRF SA ON
Strengths of BRF SA ON | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of BRF SA ON are -
Organizational Resilience of BRF SA ON
– The covid-19 pandemic has put organizational resilience at the centre of everthing BRF SA ON does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– BRF SA ON is one of the most innovative firm in Food Processing sector.
Ability to recruit top talent
– BRF SA ON is one of the leading players in the Food Processing industry in Brazil. It is in a position to attract the best talent available in Brazil. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Food Processing industry
– BRF SA ON has clearly differentiated products in the market place. This has enabled BRF SA ON to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped BRF SA ON to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of BRF SA ON in the Consumer/Non-Cyclical sector have low bargaining power. BRF SA ON has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps BRF SA ON to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– BRF SA ON has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – BRF SA ON staying ahead in the Food Processing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– BRF SA ON is present in almost all the verticals within the Food Processing industry. This has provided BRF SA ON 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 BRF SA ON 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.
Highly skilled collaborators
– BRF SA ON has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Food Processing industry. Secondly the value chain collaborators of BRF SA ON have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that BRF SA ON 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.
High brand equity
– BRF SA ON has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled BRF SA ON to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- BRF SA ON 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 BRF SA ON is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at BRF SA ON emphasize – knowledge, initiative, and innovation.
Weaknesses of BRF SA ON | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BRF SA ON are -
High dependence on BRF SA ON ‘s star products
– The top 2 products and services of BRF SA ON still accounts for major business revenue. This dependence on star products in Food Processing industry has resulted into insufficient focus on developing new products, even though BRF SA ON has relatively successful track record of launching new products.
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 BRF SA ON supply chain. Even after few cautionary changes, BRF SA ON is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left BRF SA ON vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As BRF SA ON is one of the leading players in the Food Processing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Food Processing industry in last five years.
Skills based hiring in Food Processing industry
– The stress on hiring functional specialists at BRF SA ON 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 operating costs
– Compare to the competitors, BRF SA ON has high operating costs in the Food Processing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract BRF SA ON lucrative customers.
Employees’ less understanding of BRF SA ON strategy
– From the outside it seems that the employees of BRF SA ON 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.
Aligning sales with marketing
– From the outside it seems that BRF SA ON needs to have more collaboration between its sales team and marketing team. Sales professionals in the Food Processing industry have deep experience in developing customer relationships. Marketing department at BRF SA ON can leverage the sales team experience to cultivate customer relationships as BRF SA ON is planning to shift buying processes online.
Lack of clear differentiation of BRF SA ON products
– To increase the profitability and margins on the products, BRF SA ON needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
BRF SA ON has a high cash cycle compare to other players in the Food Processing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– From the 10K / annual statement of BRF SA ON, it seems that company is thinking out the frontier risks that can impact Food Processing 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, BRF SA ON 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.
BRF SA ON Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of BRF SA ON are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, BRF SA ON can use these opportunities to build new business models that can help the communities that BRF SA ON operates in. Secondly it can use opportunities from government spending in Food Processing sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects BRF SA ON can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Food Processing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. BRF SA ON 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. BRF SA ON 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.
Buying journey improvements
– BRF SA ON can improve the customer journey of consumers in the Food Processing 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
– BRF SA ON has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled BRF SA ON to build a competitive advantage using analytics. The analytics driven competitive advantage can help BRF SA ON to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– BRF SA ON 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, BRF SA ON 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.
Manufacturing automation
– BRF SA ON can use the latest technology developments to improve its manufacturing and designing process in Food Processing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for BRF SA ON in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Food Processing industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help BRF SA ON to increase its market reach. BRF SA ON 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 Food Processing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for BRF SA ON in the Food Processing industry. Now BRF SA ON can target international markets with far fewer capital restrictions requirements than the existing system.
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 BRF SA ON 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, BRF SA ON 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 BRF SA ON to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats BRF SA ON External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of BRF SA ON are -
High dependence on third party suppliers
– BRF SA ON 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, BRF SA ON may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Food Processing sector.
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 BRF SA ON in the Food Processing sector and impact the bottomline of the organization.
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 BRF SA ON business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that BRF SA ON is facing in Food Processing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of BRF SA ON
– 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 BRF SA ON.
Easy access to finance
– Easy access to finance in Food Processing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. BRF SA ON can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for BRF SA ON in Food Processing industry. The Food Processing 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
– BRF SA ON 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. BRF SA ON can take advantage of this fund but it will also bring new competitors in the Food Processing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, BRF SA ON 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 BRF SA ON prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents BRF SA ON with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing sector.
Regulatory challenges
– BRF SA ON 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 Food Processing industry regulations.
Weighted SWOT Analysis of BRF SA ON Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at BRF SA ON 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 BRF SA ON 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 BRF SA ON 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 BRF SA ON 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 BRF SA ON needs to make to build a sustainable competitive advantage.