Euro (ERHB) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Euro (Malaysia)

Based on various researches at Oak Spring University , Euro is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, increasing household debt because of falling income levels, increasing commodity prices, etc

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Introduction to SWOT Analysis of Euro

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

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Strengths of Euro | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Euro are -

Strong track record of project management in the Furniture & Fixtures industry

– Euro is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Digital Transformation in Furniture & Fixtures industry

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

Low bargaining power of suppliers

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

Learning organization

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

Ability to lead change in Furniture & Fixtures

– Euro is one of the leading players in the Furniture & Fixtures industry in Malaysia. Over the years it has not only transformed the business landscape in the Furniture & Fixtures industry in Malaysia but also across the existing markets. The ability to lead change has enabled Euro in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

High brand equity

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

Analytics focus

– Euro is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Furniture & Fixtures industry. The technology infrastructure of Malaysia is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Diverse revenue streams

– Euro is present in almost all the verticals within the Furniture & Fixtures industry. This has provided Euro 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.

Sustainable margins compare to other players in Furniture & Fixtures industry

– Euro has clearly differentiated products in the market place. This has enabled Euro to fetch slight price premium compare to the competitors in the Furniture & Fixtures industry. The sustainable margins have also helped Euro to invest into research and development (R&D) and innovation.

High switching costs

– The high switching costs that Euro 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.

Operational resilience

– The operational resilience strategy of Euro comprises – understanding the underlying the factors in the Furniture & Fixtures 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.

Ability to recruit top talent

– Euro is one of the leading players in the Furniture & Fixtures 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.

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Weaknesses of Euro | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Euro are -

Skills based hiring in Furniture & Fixtures industry

– The stress on hiring functional specialists at Euro 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.

Low market penetration in new markets

– Outside its home market of Malaysia, Euro needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High operating costs

– Compare to the competitors, Euro has high operating costs in the Furniture & Fixtures industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Euro lucrative customers.

Interest costs

– Compare to the competition, Euro 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.

Slow to strategic competitive environment developments

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

Capital Spending Reduction

– Even during the low interest decade, Euro 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 Furniture & Fixtures industry using digital technology.

Ability to respond to the competition

– As the decision making is very deliberative at Euro, in the dynamic environment of Furniture & Fixtures industry it has struggled to respond to the nimble upstart competition. Euro has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Lack of clear differentiation of Euro products

– To increase the profitability and margins on the products, Euro needs to provide more differentiated products than what it is currently offering in the marketplace.

Workers concerns about automation

– As automation is fast increasing in the Furniture & Fixtures industry, Euro needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

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

Aligning sales with marketing

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

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Euro Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Euro are -

Creating value in data economy

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

Manufacturing automation

– Euro can use the latest technology developments to improve its manufacturing and designing process in Furniture & Fixtures 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.

Leveraging digital technologies

– Euro 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 Euro to increase its market reach. Euro 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Euro in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Furniture & Fixtures industry, and it will provide faster access to the consumers.

Use of Bitcoin and other crypto currencies for transactions in Furniture & Fixtures industry

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

Buying journey improvements

– Euro can improve the customer journey of consumers in the Furniture & Fixtures 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.

Redefining models of collaboration and team work

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

Using analytics as competitive advantage

– Euro has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Furniture & Fixtures sector. This continuous investment in analytics has enabled Euro to build a competitive advantage using analytics. The analytics driven competitive advantage can help Euro 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, Euro can use these opportunities to build new business models that can help the communities that Euro operates in. Secondly it can use opportunities from government spending in Furniture & Fixtures sector.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Euro 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 Euro to hire the very best people irrespective of their geographical location.

Loyalty marketing

– Euro 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.

Harnessing reconfiguration of the global supply chains

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

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Threats Euro External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Euro are -

High dependence on third party suppliers

– Euro 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 Euro 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 Furniture & Fixtures industry and other sectors.

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 Euro in the Furniture & Fixtures sector and impact the bottomline of the organization.

Environmental challenges

– Euro 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. Euro can take advantage of this fund but it will also bring new competitors in the Furniture & Fixtures industry.

Increasing wage structure of Euro

– 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 Euro.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Euro 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 Euro prominent markets.

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. Euro needs to understand the core reasons impacting the Furniture & Fixtures industry. This will help it in building a better workplace.

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.

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 Euro business can come under increasing regulations regarding data privacy, data security, etc.

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.

Shortening product life cycle

– it is one of the major threat that Euro is facing in Furniture & Fixtures sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Furniture & Fixtures industry are lowering. It can presents Euro with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Furniture & Fixtures sector.

Technology acceleration in Forth Industrial Revolution

– Euro has witnessed rapid integration of technology during Covid-19 in the Furniture & Fixtures industry. As one of the leading players in the industry, Euro needs to keep up with the evolution of technology in the Furniture & Fixtures 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.

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Weighted SWOT Analysis of Euro Template, Example

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

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