SWOT Analysis / TOWS Matrix for Dis-Chem Pharmacies (South Africa)
Based on various researches at Oak Spring University , Dis-Chem Pharmacies is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, geopolitical disruptions, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, there is backlash against globalization,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Dis-Chem Pharmacies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Dis-Chem Pharmacies can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dis-Chem Pharmacies, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dis-Chem Pharmacies 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 Dis-Chem Pharmacies can be done for the following purposes –
1. Strategic planning of Dis-Chem Pharmacies
2. Improving business portfolio management of Dis-Chem Pharmacies
3. Assessing feasibility of the new initiative in South Africa
4. Making a Retail (Drugs) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dis-Chem Pharmacies
Strengths of Dis-Chem Pharmacies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dis-Chem Pharmacies are -
Innovation driven organization
– Dis-Chem Pharmacies is one of the most innovative firm in Retail (Drugs) sector.
Low bargaining power of suppliers
– Suppliers of Dis-Chem Pharmacies in the Services sector have low bargaining power. Dis-Chem Pharmacies has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dis-Chem Pharmacies to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management in the Retail (Drugs) industry
– Dis-Chem Pharmacies is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Dis-Chem Pharmacies comprises – understanding the underlying the factors in the Retail (Drugs) 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.
Training and development
– Dis-Chem Pharmacies has one of the best training and development program in Services 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.
Digital Transformation in Retail (Drugs) industry
- digital transformation varies from industry to industry. For Dis-Chem Pharmacies digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dis-Chem Pharmacies 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.
Cross disciplinary teams
– Horizontal connected teams at the Dis-Chem Pharmacies 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.
Analytics focus
– Dis-Chem Pharmacies 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 Retail (Drugs) industry. The technology infrastructure of South Africa 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.
Successful track record of launching new products
– Dis-Chem Pharmacies has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dis-Chem Pharmacies 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.
Ability to lead change in Retail (Drugs)
– Dis-Chem Pharmacies is one of the leading players in the Retail (Drugs) industry in South Africa. Over the years it has not only transformed the business landscape in the Retail (Drugs) industry in South Africa but also across the existing markets. The ability to lead change has enabled Dis-Chem Pharmacies 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 Dis-Chem Pharmacies 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 Retail (Drugs) industry
– Dis-Chem Pharmacies has clearly differentiated products in the market place. This has enabled Dis-Chem Pharmacies to fetch slight price premium compare to the competitors in the Retail (Drugs) industry. The sustainable margins have also helped Dis-Chem Pharmacies to invest into research and development (R&D) and innovation.
Weaknesses of Dis-Chem Pharmacies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Dis-Chem Pharmacies are -
High operating costs
– Compare to the competitors, Dis-Chem Pharmacies has high operating costs in the Retail (Drugs) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Dis-Chem Pharmacies lucrative customers.
Slow to strategic competitive environment developments
– As Dis-Chem Pharmacies is one of the leading players in the Retail (Drugs) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Drugs) industry in last five years.
Products dominated business model
– Even though Dis-Chem Pharmacies has some of the most successful models in the Retail (Drugs) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Dis-Chem Pharmacies should strive to include more intangible value offerings along with its core products and services.
Skills based hiring in Retail (Drugs) industry
– The stress on hiring functional specialists at Dis-Chem Pharmacies 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.
High dependence on Dis-Chem Pharmacies ‘s star products
– The top 2 products and services of Dis-Chem Pharmacies still accounts for major business revenue. This dependence on star products in Retail (Drugs) industry has resulted into insufficient focus on developing new products, even though Dis-Chem Pharmacies has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of South Africa, Dis-Chem Pharmacies needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the Retail (Drugs) industry, Dis-Chem Pharmacies 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 Dis-Chem Pharmacies is dominated by functional specialists. It is not different from other players in the Retail (Drugs) industry, but Dis-Chem Pharmacies needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dis-Chem Pharmacies to focus more on services in the Retail (Drugs) industry rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dis-Chem Pharmacies is slow explore the new channels of communication. These new channels of communication can help Dis-Chem Pharmacies to provide better information regarding Retail (Drugs) products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Dis-Chem Pharmacies has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Drugs) industry over the last five years. Dis-Chem Pharmacies even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Dis-Chem Pharmacies has a high cash cycle compare to other players in the Retail (Drugs) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Dis-Chem Pharmacies Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Dis-Chem Pharmacies are -
Leveraging digital technologies
– Dis-Chem Pharmacies 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dis-Chem Pharmacies 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.
Buying journey improvements
– Dis-Chem Pharmacies can improve the customer journey of consumers in the Retail (Drugs) 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Retail (Drugs) industry, but it has also influenced the consumer preferences. Dis-Chem Pharmacies can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Dis-Chem Pharmacies to increase its market reach. Dis-Chem Pharmacies 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.
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 Dis-Chem Pharmacies 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, Dis-Chem Pharmacies 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 Dis-Chem Pharmacies 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 Dis-Chem Pharmacies can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions in Retail (Drugs) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Dis-Chem Pharmacies in the Retail (Drugs) industry. Now Dis-Chem Pharmacies can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Dis-Chem Pharmacies has opened avenues for new revenue streams for the organization in Retail (Drugs) industry. This can help Dis-Chem Pharmacies to build a more holistic ecosystem for Dis-Chem Pharmacies products in the Retail (Drugs) industry by providing – data insight services, data privacy related products, data based consulting services, 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, Dis-Chem Pharmacies can use these opportunities to build new business models that can help the communities that Dis-Chem Pharmacies operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
Building a culture of innovation
– managers at Dis-Chem Pharmacies 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 Retail (Drugs) industry.
Using analytics as competitive advantage
– Dis-Chem Pharmacies has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Drugs) sector. This continuous investment in analytics has enabled Dis-Chem Pharmacies to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dis-Chem Pharmacies to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Dis-Chem Pharmacies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Dis-Chem Pharmacies are -
Stagnating economy with rate increase
– Dis-Chem Pharmacies 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 Retail (Drugs) industry.
Easy access to finance
– Easy access to finance in Retail (Drugs) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dis-Chem Pharmacies can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Dis-Chem Pharmacies with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Drugs) sector.
Shortening product life cycle
– it is one of the major threat that Dis-Chem Pharmacies is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Dis-Chem Pharmacies in the Retail (Drugs) sector and impact the bottomline of the organization.
Consumer confidence and its impact on Dis-Chem Pharmacies 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 Retail (Drugs) industry and other sectors.
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 Dis-Chem Pharmacies.
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. Dis-Chem Pharmacies 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.
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.
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 Dis-Chem Pharmacies business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Dis-Chem Pharmacies 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Dis-Chem Pharmacies may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Drugs) sector.
Increasing wage structure of Dis-Chem Pharmacies
– 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 Dis-Chem Pharmacies.
Weighted SWOT Analysis of Dis-Chem Pharmacies Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Dis-Chem Pharmacies 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 Dis-Chem Pharmacies 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 Dis-Chem Pharmacies 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 Dis-Chem Pharmacies 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 Dis-Chem Pharmacies needs to make to build a sustainable competitive advantage.
