Based on various researches at Oak Spring University , Indofood Agri Resources Ltd is operating in a macro-environment that has been destablized by – wage bills are increasing, challanges to central banks by blockchain based private currencies, geopolitical disruptions, central banks are concerned over increasing inflation, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings,
increasing energy prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Indofood Agri Resources Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Indofood Agri Resources Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Indofood Agri Resources Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd can be done for the following purposes –
1. Strategic planning of Indofood Agri Resources Ltd
2. Improving business portfolio management of Indofood Agri Resources Ltd
3. Assessing feasibility of the new initiative in Singapore
4. Making a Crops sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Indofood Agri Resources Ltd
Strengths of Indofood Agri Resources Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Indofood Agri Resources Ltd are -
Learning organization
- Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Indofood Agri Resources Ltd emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Indofood Agri Resources Ltd is one of the leading players in the Crops industry in Singapore. It is in a position to attract the best talent available in Singapore. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Crops
– Indofood Agri Resources Ltd is one of the leading players in the Crops industry in Singapore. Over the years it has not only transformed the business landscape in the Crops industry in Singapore but also across the existing markets. The ability to lead change has enabled Indofood Agri Resources Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Indofood Agri Resources Ltd is present in almost all the verticals within the Crops industry. This has provided Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd in Crops industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Indofood Agri Resources Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Indofood Agri Resources Ltd staying ahead in the Crops industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Indofood Agri Resources Ltd comprises – understanding the underlying the factors in the Crops 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
– Indofood Agri Resources Ltd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Indofood Agri Resources Ltd 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.
Training and development
– Indofood Agri Resources Ltd has one of the best training and development program in Consumer/Non-Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Crops industry
– Indofood Agri Resources Ltd has clearly differentiated products in the market place. This has enabled Indofood Agri Resources Ltd to fetch slight price premium compare to the competitors in the Crops industry. The sustainable margins have also helped Indofood Agri Resources Ltd to invest into research and development (R&D) and innovation.
Strong track record of project management in the Crops industry
– Indofood Agri Resources Ltd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Indofood Agri Resources Ltd 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.
Weaknesses of Indofood Agri Resources Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indofood Agri Resources Ltd are -
High dependence on Indofood Agri Resources Ltd ‘s star products
– The top 2 products and services of Indofood Agri Resources Ltd still accounts for major business revenue. This dependence on star products in Crops industry has resulted into insufficient focus on developing new products, even though Indofood Agri Resources Ltd has relatively successful track record of launching new products.
No frontier risks strategy
– From the 10K / annual statement of Indofood Agri Resources Ltd, it seems that company is thinking out the frontier risks that can impact Crops 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.
Low market penetration in new markets
– Outside its home market of Singapore, Indofood Agri Resources Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Indofood Agri Resources Ltd has some of the most successful models in the Crops industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Indofood Agri Resources Ltd should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Crops industry, Indofood Agri Resources Ltd 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.
Increasing silos among functional specialists
– The organizational structure of Indofood Agri Resources Ltd is dominated by functional specialists. It is not different from other players in the Crops industry, but Indofood Agri Resources Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Indofood Agri Resources Ltd to focus more on services in the Crops industry rather than just following the product oriented approach.
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 Indofood Agri Resources Ltd supply chain. Even after few cautionary changes, Indofood Agri Resources Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Indofood Agri Resources Ltd vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Indofood Agri Resources Ltd 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.
High bargaining power of channel partners in Crops industry
– because of the regulatory requirements in Singapore, Indofood Agri Resources Ltd is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Crops industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Indofood Agri Resources Ltd is slow explore the new channels of communication. These new channels of communication can help Indofood Agri Resources Ltd to provide better information regarding Crops products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, Indofood Agri Resources Ltd has high operating costs in the Crops industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Indofood Agri Resources Ltd lucrative customers.
Indofood Agri Resources Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Indofood Agri Resources Ltd are -
Use of Bitcoin and other crypto currencies for transactions in Crops industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Indofood Agri Resources Ltd in the Crops industry. Now Indofood Agri Resources Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Indofood Agri Resources Ltd can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Indofood Agri Resources Ltd to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Crops industry, but it has also influenced the consumer preferences. Indofood Agri Resources Ltd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Indofood Agri Resources Ltd can develop new processes and procedures in Crops 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.
Building a culture of innovation
– managers at Indofood Agri Resources Ltd 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 Crops industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Indofood Agri Resources Ltd is facing challenges because of the dominance of functional experts in the organization. Indofood Agri Resources Ltd can utilize new technology in the field of Crops industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Using analytics as competitive advantage
– Indofood Agri Resources Ltd has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Crops sector. This continuous investment in analytics has enabled Indofood Agri Resources Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help Indofood Agri Resources Ltd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Indofood Agri Resources Ltd can use the latest technology developments to improve its manufacturing and designing process in Crops 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 Indofood Agri Resources Ltd in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Crops industry, and it will provide faster access to the consumers.
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 Indofood Agri Resources Ltd 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Indofood Agri Resources Ltd 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.
Threats Indofood Agri Resources Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Indofood Agri Resources Ltd are -
High dependence on third party suppliers
– Indofood Agri Resources Ltd 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.
Stagnating economy with rate increase
– Indofood Agri Resources Ltd 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 Crops industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Crops industry are lowering. It can presents Indofood Agri Resources Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Crops sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Indofood Agri Resources Ltd may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Crops sector.
Regulatory challenges
– Indofood Agri Resources Ltd 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 Crops industry regulations.
Technology acceleration in Forth Industrial Revolution
– Indofood Agri Resources Ltd has witnessed rapid integration of technology during Covid-19 in the Crops industry. As one of the leading players in the industry, Indofood Agri Resources Ltd needs to keep up with the evolution of technology in the Crops 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.
Environmental challenges
– Indofood Agri Resources Ltd 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. Indofood Agri Resources Ltd can take advantage of this fund but it will also bring new competitors in the Crops industry.
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 Indofood Agri Resources Ltd is facing in Crops sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd prominent markets.
Easy access to finance
– Easy access to finance in Crops industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Indofood Agri Resources Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Indofood Agri Resources Ltd.
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. Indofood Agri Resources Ltd 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.
Weighted SWOT Analysis of Indofood Agri Resources Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd 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 Indofood Agri Resources Ltd needs to make to build a sustainable competitive advantage.
