SWOT Analysis / TOWS Matrix for EKA Noodles (Malaysia)
Based on various researches at Oak Spring University , EKA Noodles is operating in a macro-environment that has been destablized by – increasing commodity prices, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, supply chains are disrupted by pandemic , increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that EKA Noodles can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the EKA Noodles, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which EKA Noodles 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 EKA Noodles can be done for the following purposes –
1. Strategic planning of EKA Noodles
2. Improving business portfolio management of EKA Noodles
3. Assessing feasibility of the new initiative in Malaysia
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of EKA Noodles
Strengths of EKA Noodles | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of EKA Noodles are -
Innovation driven organization
– EKA Noodles is one of the most innovative firm in Food Processing sector.
Diverse revenue streams
– EKA Noodles is present in almost all the verticals within the Food Processing industry. This has provided EKA Noodles 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.
Superior customer experience
– The customer experience strategy of EKA Noodles in Food Processing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the EKA Noodles 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.
Operational resilience
– The operational resilience strategy of EKA Noodles comprises – understanding the underlying the factors in the Food Processing 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.
Successful track record of launching new products
– EKA Noodles has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. EKA Noodles 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.
Learning organization
- EKA Noodles 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 EKA Noodles is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at EKA Noodles emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of EKA Noodles in the Consumer/Non-Cyclical sector have low bargaining power. EKA Noodles has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps EKA Noodles to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– EKA Noodles has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – EKA Noodles 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.
Sustainable margins compare to other players in Food Processing industry
– EKA Noodles has clearly differentiated products in the market place. This has enabled EKA Noodles to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped EKA Noodles to invest into research and development (R&D) and innovation.
Organizational Resilience of EKA Noodles
– The covid-19 pandemic has put organizational resilience at the centre of everthing EKA Noodles does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that EKA Noodles 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 EKA Noodles | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of EKA Noodles are -
No frontier risks strategy
– From the 10K / annual statement of EKA Noodles, 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.
Lack of clear differentiation of EKA Noodles products
– To increase the profitability and margins on the products, EKA Noodles needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of EKA Noodles is dominated by functional specialists. It is not different from other players in the Food Processing industry, but EKA Noodles needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help EKA Noodles to focus more on services in the Food Processing industry rather than just following the product oriented approach.
Employees’ less understanding of EKA Noodles strategy
– From the outside it seems that the employees of EKA Noodles 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.
Interest costs
– Compare to the competition, EKA Noodles 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.
Capital Spending Reduction
– Even during the low interest decade, EKA Noodles 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 Food Processing industry using digital technology.
Low market penetration in new markets
– Outside its home market of Malaysia, EKA Noodles needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 EKA Noodles supply chain. Even after few cautionary changes, EKA Noodles is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left EKA Noodles vulnerable to further global disruptions in South East Asia.
Skills based hiring in Food Processing industry
– The stress on hiring functional specialists at EKA Noodles 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 EKA Noodles 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.
Compensation and incentives
– The revenue per employee of EKA Noodles is just above the Food Processing industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
EKA Noodles Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of EKA Noodles are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects EKA Noodles can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– EKA Noodles 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.
Building a culture of innovation
– managers at EKA Noodles 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 Food Processing industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, EKA Noodles is facing challenges because of the dominance of functional experts in the organization. EKA Noodles can utilize new technology in the field of Food Processing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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, EKA Noodles can use these opportunities to build new business models that can help the communities that EKA Noodles operates in. Secondly it can use opportunities from government spending in Food Processing sector.
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 EKA Noodles in the Food Processing industry. Now EKA Noodles can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Food Processing industry, but it has also influenced the consumer preferences. EKA Noodles can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 EKA Noodles 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, EKA Noodles 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 EKA Noodles to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for EKA Noodles 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.
Using analytics as competitive advantage
– EKA Noodles 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 EKA Noodles to build a competitive advantage using analytics. The analytics driven competitive advantage can help EKA Noodles to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– EKA Noodles 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.
Creating value in data economy
– The success of analytics program of EKA Noodles has opened avenues for new revenue streams for the organization in Food Processing industry. This can help EKA Noodles to build a more holistic ecosystem for EKA Noodles products in the Food Processing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats EKA Noodles External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of EKA Noodles are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for EKA Noodles 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
– EKA Noodles 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. EKA Noodles can take advantage of this fund but it will also bring new competitors in the Food Processing industry.
Consumer confidence and its impact on EKA Noodles 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 Food Processing industry and other sectors.
High dependence on third party suppliers
– EKA Noodles 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, EKA Noodles 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 EKA Noodles prominent markets.
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. EKA Noodles can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– EKA Noodles 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 Food Processing industry.
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. EKA Noodles needs to understand the core reasons impacting the Food Processing industry. This will help it in building a better workplace.
Increasing wage structure of EKA Noodles
– 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 EKA Noodles.
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. EKA Noodles 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents EKA Noodles with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing 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.
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 EKA Noodles.
Weighted SWOT Analysis of EKA Noodles Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at EKA Noodles 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 EKA Noodles 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 EKA Noodles 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 EKA Noodles 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 EKA Noodles needs to make to build a sustainable competitive advantage.
