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 – increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models,
banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, 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 -
Organizational Resilience of Dis-Chem Pharmacies
– The covid-19 pandemic has put organizational resilience at the centre of everthing Dis-Chem Pharmacies does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Dis-Chem Pharmacies has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Dis-Chem Pharmacies staying ahead in the Retail (Drugs) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Dis-Chem Pharmacies is one of the leading players in the Retail (Drugs) industry in South Africa. It is in a position to attract the best talent available in South Africa. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Dis-Chem Pharmacies has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dis-Chem Pharmacies to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Highly skilled collaborators
– Dis-Chem Pharmacies has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Drugs) industry. Secondly the value chain collaborators of Dis-Chem Pharmacies have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Innovation driven organization
– Dis-Chem Pharmacies is one of the most innovative firm in Retail (Drugs) sector.
Diverse revenue streams
– Dis-Chem Pharmacies is present in almost all the verticals within the Retail (Drugs) industry. This has provided Dis-Chem Pharmacies 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.
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.
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 -
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.
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.
No frontier risks strategy
– From the 10K / annual statement of Dis-Chem Pharmacies, it seems that company is thinking out the frontier risks that can impact Retail (Drugs) 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.
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.
Aligning sales with marketing
– From the outside it seems that Dis-Chem Pharmacies needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Drugs) industry have deep experience in developing customer relationships. Marketing department at Dis-Chem Pharmacies can leverage the sales team experience to cultivate customer relationships as Dis-Chem Pharmacies is planning to shift buying processes online.
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.
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 Dis-Chem Pharmacies supply chain. Even after few cautionary changes, Dis-Chem Pharmacies is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dis-Chem Pharmacies vulnerable to further global disruptions in South East Asia.
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.
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.
Employees’ less understanding of Dis-Chem Pharmacies strategy
– From the outside it seems that the employees of Dis-Chem Pharmacies 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.
High bargaining power of channel partners in Retail (Drugs) industry
– because of the regulatory requirements in South Africa, Dis-Chem Pharmacies 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 Retail (Drugs) industry.
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 -
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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Dis-Chem Pharmacies 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.
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.
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.
Developing new processes and practices
– Dis-Chem Pharmacies can develop new processes and procedures in Retail (Drugs) 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.
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.
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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Drugs) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dis-Chem Pharmacies 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. Dis-Chem Pharmacies 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.
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.
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 -
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.
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.
Environmental challenges
– Dis-Chem Pharmacies 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. Dis-Chem Pharmacies can take advantage of this fund but it will also bring new competitors in the Retail (Drugs) 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.
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.
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. Dis-Chem Pharmacies needs to understand the core reasons impacting the Retail (Drugs) industry. This will help it in building a better workplace.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dis-Chem Pharmacies in Retail (Drugs) industry. The Retail (Drugs) 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 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.
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.
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.
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.
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.
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.