SWOT Analysis / TOWS Matrix for M&R Hld (South Africa)
Based on various researches at Oak Spring University , M&R Hld is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, increasing energy prices, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that M&R Hld can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the M&R Hld, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which M&R Hld 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 M&R Hld can be done for the following purposes –
1. Strategic planning of M&R Hld
2. Improving business portfolio management of M&R Hld
3. Assessing feasibility of the new initiative in South Africa
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of M&R Hld
Strengths of M&R Hld | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of M&R Hld are -
Strong track record of project management in the Construction Services industry
– M&R Hld is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– M&R Hld is present in almost all the verticals within the Construction Services industry. This has provided M&R Hld 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.
Digital Transformation in Construction Services industry
- digital transformation varies from industry to industry. For M&R Hld digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. M&R Hld 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.
Innovation driven organization
– M&R Hld is one of the most innovative firm in Construction Services sector.
Training and development
– M&R Hld has one of the best training and development program in Capital Goods 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.
Successful track record of launching new products
– M&R Hld has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. M&R Hld 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.
Low bargaining power of suppliers
– Suppliers of M&R Hld in the Capital Goods sector have low bargaining power. M&R Hld has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps M&R Hld to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that M&R Hld 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 M&R Hld
– The covid-19 pandemic has put organizational resilience at the centre of everthing M&R Hld does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- M&R Hld 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 M&R Hld is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at M&R Hld emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of M&R Hld comprises – understanding the underlying the factors in the Construction Services 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.
High brand equity
– M&R Hld has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled M&R Hld to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of M&R Hld | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of M&R Hld are -
Slow decision making process
– As mentioned earlier in the report, M&R Hld has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction Services industry over the last five years. M&R Hld 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, M&R Hld is slow explore the new channels of communication. These new channels of communication can help M&R Hld to provide better information regarding Construction Services products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of M&R Hld is dominated by functional specialists. It is not different from other players in the Construction Services industry, but M&R Hld needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help M&R Hld to focus more on services in the Construction Services industry rather than just following the product oriented approach.
Aligning sales with marketing
– From the outside it seems that M&R Hld needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at M&R Hld can leverage the sales team experience to cultivate customer relationships as M&R Hld is planning to shift buying processes online.
Interest costs
– Compare to the competition, M&R Hld 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.
Lack of clear differentiation of M&R Hld products
– To increase the profitability and margins on the products, M&R Hld needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring in Construction Services industry
– The stress on hiring functional specialists at M&R Hld 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.
Compensation and incentives
– The revenue per employee of M&R Hld is just above the Construction Services 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 M&R Hld is one of the leading players in the Construction Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Construction Services industry in last five years.
High dependence on M&R Hld ‘s star products
– The top 2 products and services of M&R Hld still accounts for major business revenue. This dependence on star products in Construction Services industry has resulted into insufficient focus on developing new products, even though M&R Hld has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative at M&R Hld, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. M&R Hld has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
M&R Hld Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of M&R Hld are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for M&R Hld in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Construction Services industry, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, M&R Hld 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.
Learning at scale
– Online learning technologies has now opened space for M&R Hld 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.
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. M&R Hld can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– M&R Hld can use the latest technology developments to improve its manufacturing and designing process in Construction Services 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects M&R Hld can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help M&R Hld to increase its market reach. M&R Hld 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. M&R Hld 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. M&R Hld 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, M&R Hld is facing challenges because of the dominance of functional experts in the organization. M&R Hld can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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 M&R Hld 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, M&R Hld 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 M&R Hld to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– M&R Hld 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.
Building a culture of innovation
– managers at M&R Hld 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 Construction Services industry.
Threats M&R Hld External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of M&R Hld are -
Easy access to finance
– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. M&R Hld can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– M&R Hld has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, M&R Hld needs to keep up with the evolution of technology in the Construction Services 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.
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. M&R Hld needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for M&R Hld in Construction Services industry. The Construction Services 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.
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 M&R Hld business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, M&R Hld 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 M&R Hld prominent markets.
High dependence on third party suppliers
– M&R Hld 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.
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.
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 M&R Hld in the Construction Services sector and impact the bottomline of the organization.
Regulatory challenges
– M&R Hld 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 Construction Services industry regulations.
Consumer confidence and its impact on M&R Hld 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 Construction Services industry and other sectors.
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 M&R Hld is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of M&R Hld Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at M&R Hld 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 M&R Hld 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 M&R Hld 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 M&R Hld 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 M&R Hld needs to make to build a sustainable competitive advantage.