SWOT Analysis / TOWS Matrix for USIMINAS PNB (Brazil)
Based on various researches at Oak Spring University , USIMINAS PNB is operating in a macro-environment that has been destablized by – increasing energy prices, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, increasing transportation and logistics costs, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models,
wage bills are increasing, increasing government debt because of Covid-19 spendings, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that USIMINAS PNB can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the USIMINAS PNB, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which USIMINAS PNB 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 USIMINAS PNB can be done for the following purposes –
1. Strategic planning of USIMINAS PNB
2. Improving business portfolio management of USIMINAS PNB
3. Assessing feasibility of the new initiative in Brazil
4. Making a Iron & Steel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of USIMINAS PNB
Strengths of USIMINAS PNB | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of USIMINAS PNB are -
Diverse revenue streams
– USIMINAS PNB is present in almost all the verticals within the Iron & Steel industry. This has provided USIMINAS PNB 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.
Ability to recruit top talent
– USIMINAS PNB is one of the leading players in the Iron & Steel 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.
Ability to lead change in Iron & Steel
– USIMINAS PNB is one of the leading players in the Iron & Steel industry in Brazil. Over the years it has not only transformed the business landscape in the Iron & Steel industry in Brazil but also across the existing markets. The ability to lead change has enabled USIMINAS PNB in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that USIMINAS PNB 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.
Sustainable margins compare to other players in Iron & Steel industry
– USIMINAS PNB has clearly differentiated products in the market place. This has enabled USIMINAS PNB to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped USIMINAS PNB to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the USIMINAS PNB 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 USIMINAS PNB comprises – understanding the underlying the factors in the Iron & Steel 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.
Organizational Resilience of USIMINAS PNB
– The covid-19 pandemic has put organizational resilience at the centre of everthing USIMINAS PNB does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- USIMINAS PNB 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 USIMINAS PNB is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at USIMINAS PNB emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Iron & Steel industry
– USIMINAS PNB is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of USIMINAS PNB in the Basic Materials sector have low bargaining power. USIMINAS PNB has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps USIMINAS PNB to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– USIMINAS PNB has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. USIMINAS PNB 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.
Weaknesses of USIMINAS PNB | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of USIMINAS PNB are -
High dependence on USIMINAS PNB ‘s star products
– The top 2 products and services of USIMINAS PNB still accounts for major business revenue. This dependence on star products in Iron & Steel industry has resulted into insufficient focus on developing new products, even though USIMINAS PNB has relatively successful track record of launching new products.
Need for greater diversity
– USIMINAS PNB has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Low market penetration in new markets
– Outside its home market of Brazil, USIMINAS PNB needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though USIMINAS PNB has some of the most successful models in the Iron & Steel industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. USIMINAS PNB should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
USIMINAS PNB has a high cash cycle compare to other players in the Iron & Steel industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 USIMINAS PNB supply chain. Even after few cautionary changes, USIMINAS PNB is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left USIMINAS PNB vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of USIMINAS PNB products
– To increase the profitability and margins on the products, USIMINAS PNB needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at USIMINAS PNB, in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. USIMINAS PNB has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Iron & Steel industry, USIMINAS PNB 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.
Compensation and incentives
– The revenue per employee of USIMINAS PNB is just above the Iron & Steel 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.
Slow to strategic competitive environment developments
– As USIMINAS PNB is one of the leading players in the Iron & Steel industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Iron & Steel industry in last five years.
USIMINAS PNB Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of USIMINAS PNB are -
Buying journey improvements
– USIMINAS PNB can improve the customer journey of consumers in the Iron & Steel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, USIMINAS PNB can use these opportunities to build new business models that can help the communities that USIMINAS PNB operates in. Secondly it can use opportunities from government spending in Iron & Steel sector.
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. USIMINAS PNB can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– USIMINAS PNB can use the latest technology developments to improve its manufacturing and designing process in Iron & Steel 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Iron & Steel industry, but it has also influenced the consumer preferences. USIMINAS PNB can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects USIMINAS PNB can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, USIMINAS PNB 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 USIMINAS PNB to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– USIMINAS PNB can develop new processes and procedures in Iron & Steel 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for USIMINAS PNB 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 USIMINAS PNB to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, USIMINAS PNB 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.
Leveraging digital technologies
– USIMINAS PNB 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.
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 USIMINAS PNB 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.
Building a culture of innovation
– managers at USIMINAS PNB 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 Iron & Steel industry.
Threats USIMINAS PNB External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of USIMINAS PNB are -
High dependence on third party suppliers
– USIMINAS PNB 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for USIMINAS PNB in Iron & Steel industry. The Iron & Steel 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.
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. USIMINAS PNB 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 USIMINAS PNB in the Iron & Steel sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Iron & Steel industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. USIMINAS PNB can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, USIMINAS PNB may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Iron & Steel sector.
Stagnating economy with rate increase
– USIMINAS PNB 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 Iron & Steel industry.
Consumer confidence and its impact on USIMINAS PNB 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 Iron & Steel industry and other sectors.
Increasing wage structure of USIMINAS PNB
– 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 USIMINAS PNB.
Environmental challenges
– USIMINAS PNB 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. USIMINAS PNB can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, USIMINAS PNB 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 USIMINAS PNB prominent markets.
Regulatory challenges
– USIMINAS PNB 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 Iron & Steel industry regulations.
Weighted SWOT Analysis of USIMINAS PNB Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at USIMINAS PNB 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 USIMINAS PNB 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 USIMINAS PNB 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 USIMINAS PNB 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 USIMINAS PNB needs to make to build a sustainable competitive advantage.
