SWOT Analysis / TOWS Matrix for Daewoo Shipbuilding (South Korea)
Based on various researches at Oak Spring University , Daewoo Shipbuilding is operating in a macro-environment that has been destablized by – wage bills are increasing, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Daewoo Shipbuilding
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Daewoo Shipbuilding can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Daewoo Shipbuilding, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Daewoo Shipbuilding 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 Daewoo Shipbuilding can be done for the following purposes –
1. Strategic planning of Daewoo Shipbuilding
2. Improving business portfolio management of Daewoo Shipbuilding
3. Assessing feasibility of the new initiative in South Korea
4. Making a Water Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Daewoo Shipbuilding
Strengths of Daewoo Shipbuilding | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Daewoo Shipbuilding are -
Learning organization
- Daewoo Shipbuilding 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 Daewoo Shipbuilding is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Daewoo Shipbuilding emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Daewoo Shipbuilding is present in almost all the verticals within the Water Transportation industry. This has provided Daewoo Shipbuilding 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 Daewoo Shipbuilding in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Daewoo Shipbuilding is one of the most innovative firm in Water Transportation sector.
Highly skilled collaborators
– Daewoo Shipbuilding has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Transportation industry. Secondly the value chain collaborators of Daewoo Shipbuilding have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Water Transportation industry
– Daewoo Shipbuilding has clearly differentiated products in the market place. This has enabled Daewoo Shipbuilding to fetch slight price premium compare to the competitors in the Water Transportation industry. The sustainable margins have also helped Daewoo Shipbuilding to invest into research and development (R&D) and innovation.
Ability to lead change in Water Transportation
– Daewoo Shipbuilding is one of the leading players in the Water Transportation industry in South Korea. Over the years it has not only transformed the business landscape in the Water Transportation industry in South Korea but also across the existing markets. The ability to lead change has enabled Daewoo Shipbuilding in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Water Transportation industry
- digital transformation varies from industry to industry. For Daewoo Shipbuilding digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Daewoo Shipbuilding 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.
Successful track record of launching new products
– Daewoo Shipbuilding has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Daewoo Shipbuilding 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.
Operational resilience
– The operational resilience strategy of Daewoo Shipbuilding comprises – understanding the underlying the factors in the Water Transportation 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
– Daewoo Shipbuilding has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Daewoo Shipbuilding to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Daewoo Shipbuilding is one of the leading players in the Water Transportation industry in South Korea. It is in a position to attract the best talent available in South Korea. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses of Daewoo Shipbuilding | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Daewoo Shipbuilding are -
Compensation and incentives
– The revenue per employee of Daewoo Shipbuilding is just above the Water Transportation 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.
Need for greater diversity
– Daewoo Shipbuilding 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 Water Transportation industry
– because of the regulatory requirements in South Korea, Daewoo Shipbuilding 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 Water Transportation industry.
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 Daewoo Shipbuilding supply chain. Even after few cautionary changes, Daewoo Shipbuilding is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Daewoo Shipbuilding vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Daewoo Shipbuilding has some of the most successful models in the Water Transportation industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Daewoo Shipbuilding should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of South Korea, Daewoo Shipbuilding needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Daewoo Shipbuilding is one of the leading players in the Water Transportation industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Water Transportation industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Daewoo Shipbuilding has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Water Transportation industry using digital technology.
High operating costs
– Compare to the competitors, Daewoo Shipbuilding has high operating costs in the Water Transportation industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Daewoo Shipbuilding lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Daewoo Shipbuilding is slow explore the new channels of communication. These new channels of communication can help Daewoo Shipbuilding to provide better information regarding Water Transportation products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– From the 10K / annual statement of Daewoo Shipbuilding, it seems that company is thinking out the frontier risks that can impact Water Transportation 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.
Daewoo Shipbuilding Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Daewoo Shipbuilding are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Daewoo Shipbuilding in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Water Transportation industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Daewoo Shipbuilding has opened avenues for new revenue streams for the organization in Water Transportation industry. This can help Daewoo Shipbuilding to build a more holistic ecosystem for Daewoo Shipbuilding products in the Water Transportation industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Daewoo Shipbuilding can improve the customer journey of consumers in the Water Transportation 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.
Learning at scale
– Online learning technologies has now opened space for Daewoo Shipbuilding 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Daewoo Shipbuilding can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Daewoo Shipbuilding can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Water Transportation industry, but it has also influenced the consumer preferences. Daewoo Shipbuilding can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Daewoo Shipbuilding can use the latest technology developments to improve its manufacturing and designing process in Water Transportation 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.
Developing new processes and practices
– Daewoo Shipbuilding can develop new processes and procedures in Water Transportation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Daewoo Shipbuilding to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Daewoo Shipbuilding to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Daewoo Shipbuilding is facing challenges because of the dominance of functional experts in the organization. Daewoo Shipbuilding can utilize new technology in the field of Water Transportation industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Water Transportation industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Daewoo Shipbuilding 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. Daewoo Shipbuilding 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Daewoo Shipbuilding 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 Daewoo Shipbuilding to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Daewoo Shipbuilding External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Daewoo Shipbuilding are -
High dependence on third party suppliers
– Daewoo Shipbuilding 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, Daewoo Shipbuilding may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Water Transportation sector.
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 Daewoo Shipbuilding.
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. Daewoo Shipbuilding 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.
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 Daewoo Shipbuilding in the Water Transportation sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Daewoo Shipbuilding 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 Water Transportation industry.
Environmental challenges
– Daewoo Shipbuilding 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. Daewoo Shipbuilding can take advantage of this fund but it will also bring new competitors in the Water Transportation industry.
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. Daewoo Shipbuilding needs to understand the core reasons impacting the Water Transportation industry. This will help it in building a better workplace.
Increasing wage structure of Daewoo Shipbuilding
– 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 Daewoo Shipbuilding.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Daewoo Shipbuilding in Water Transportation industry. The Water Transportation 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Daewoo Shipbuilding 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 Daewoo Shipbuilding prominent markets.
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.
Weighted SWOT Analysis of Daewoo Shipbuilding Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Daewoo Shipbuilding 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 Daewoo Shipbuilding 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 Daewoo Shipbuilding 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 Daewoo Shipbuilding 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 Daewoo Shipbuilding needs to make to build a sustainable competitive advantage.