AREZZO CO ON (ARZZ3) SWOT Analysis / TOWS Matrix / MBA Resources
Footwear
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for AREZZO CO ON (Brazil)
Based on various researches at Oak Spring University , AREZZO CO ON is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing energy prices, wage bills are increasing, there is backlash against globalization, central banks are concerned over increasing inflation, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
cloud computing is disrupting traditional business models, 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 AREZZO CO ON can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the AREZZO CO ON, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which AREZZO CO 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 AREZZO CO ON can be done for the following purposes –
1. Strategic planning of AREZZO CO ON
2. Improving business portfolio management of AREZZO CO ON
3. Assessing feasibility of the new initiative in Brazil
4. Making a Footwear sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of AREZZO CO ON
Strengths of AREZZO CO ON | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of AREZZO CO ON are -
Sustainable margins compare to other players in Footwear industry
– AREZZO CO ON has clearly differentiated products in the market place. This has enabled AREZZO CO ON to fetch slight price premium compare to the competitors in the Footwear industry. The sustainable margins have also helped AREZZO CO ON to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– AREZZO CO ON has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. AREZZO CO ON 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.
Digital Transformation in Footwear industry
- digital transformation varies from industry to industry. For AREZZO CO ON digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. AREZZO CO ON 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.
High brand equity
– AREZZO CO ON has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled AREZZO CO ON to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– AREZZO CO ON is present in almost all the verticals within the Footwear industry. This has provided AREZZO CO 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.
Learning organization
- AREZZO CO 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 AREZZO CO ON is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at AREZZO CO ON emphasize – knowledge, initiative, and innovation.
Training and development
– AREZZO CO ON has one of the best training and development program in Consumer 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.
High switching costs
– The high switching costs that AREZZO CO 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.
Organizational Resilience of AREZZO CO ON
– The covid-19 pandemic has put organizational resilience at the centre of everthing AREZZO CO ON does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– AREZZO CO ON 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 Footwear industry. The technology infrastructure of Brazil 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.
Strong track record of project management in the Footwear industry
– AREZZO CO ON is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in Footwear
– AREZZO CO ON is one of the leading players in the Footwear industry in Brazil. Over the years it has not only transformed the business landscape in the Footwear industry in Brazil but also across the existing markets. The ability to lead change has enabled AREZZO CO ON in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of AREZZO CO ON | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AREZZO CO ON are -
Interest costs
– Compare to the competition, AREZZO CO 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.
Need for greater diversity
– AREZZO CO ON 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.
High bargaining power of channel partners in Footwear industry
– because of the regulatory requirements in Brazil, AREZZO CO ON 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 Footwear industry.
Increasing silos among functional specialists
– The organizational structure of AREZZO CO ON is dominated by functional specialists. It is not different from other players in the Footwear industry, but AREZZO CO ON needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help AREZZO CO ON to focus more on services in the Footwear industry rather than just following the product oriented approach.
No frontier risks strategy
– From the 10K / annual statement of AREZZO CO ON, it seems that company is thinking out the frontier risks that can impact Footwear 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.
Compensation and incentives
– The revenue per employee of AREZZO CO ON is just above the Footwear 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.
Skills based hiring in Footwear industry
– The stress on hiring functional specialists at AREZZO CO 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.
Products dominated business model
– Even though AREZZO CO ON has some of the most successful models in the Footwear industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. AREZZO CO ON should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of AREZZO CO ON products
– To increase the profitability and margins on the products, AREZZO CO ON needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of AREZZO CO ON strategy
– From the outside it seems that the employees of AREZZO CO 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.
Low market penetration in new markets
– Outside its home market of Brazil, AREZZO CO ON needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
AREZZO CO ON Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of AREZZO CO ON are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, AREZZO CO 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 AREZZO CO 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects AREZZO CO ON 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
– AREZZO CO ON can improve the customer journey of consumers in the Footwear 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.
Better consumer reach
– The expansion of the 5G network will help AREZZO CO ON to increase its market reach. AREZZO CO 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, AREZZO CO 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.
Using analytics as competitive advantage
– AREZZO CO ON has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Footwear sector. This continuous investment in analytics has enabled AREZZO CO ON to build a competitive advantage using analytics. The analytics driven competitive advantage can help AREZZO CO ON to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Footwear industry, but it has also influenced the consumer preferences. AREZZO CO ON 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
– AREZZO CO ON can develop new processes and procedures in Footwear 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Footwear industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. AREZZO CO 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. AREZZO CO 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, AREZZO CO ON can use these opportunities to build new business models that can help the communities that AREZZO CO ON operates in. Secondly it can use opportunities from government spending in Footwear sector.
Learning at scale
– Online learning technologies has now opened space for AREZZO CO ON 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for AREZZO CO 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 Footwear 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 AREZZO CO 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.
Threats AREZZO CO ON External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of AREZZO CO ON are -
High dependence on third party suppliers
– AREZZO CO 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.
Technology acceleration in Forth Industrial Revolution
– AREZZO CO ON has witnessed rapid integration of technology during Covid-19 in the Footwear industry. As one of the leading players in the industry, AREZZO CO ON needs to keep up with the evolution of technology in the Footwear 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.
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. AREZZO CO ON 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, AREZZO CO 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 AREZZO CO ON prominent markets.
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.
Regulatory challenges
– AREZZO CO 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 Footwear industry regulations.
Consumer confidence and its impact on AREZZO CO ON 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 Footwear industry and other sectors.
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 AREZZO CO ON business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of AREZZO CO 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 AREZZO CO ON.
Environmental challenges
– AREZZO CO 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. AREZZO CO ON can take advantage of this fund but it will also bring new competitors in the Footwear industry.
Shortening product life cycle
– it is one of the major threat that AREZZO CO ON is facing in Footwear sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for AREZZO CO ON in Footwear industry. The Footwear 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.
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. AREZZO CO ON needs to understand the core reasons impacting the Footwear industry. This will help it in building a better workplace.
Weighted SWOT Analysis of AREZZO CO ON Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at AREZZO CO 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 AREZZO CO 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 AREZZO CO 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 AREZZO CO 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 AREZZO CO ON needs to make to build a sustainable competitive advantage.
