SWOT Analysis / TOWS Matrix for Namyang Dairy (South Korea)
Based on various researches at Oak Spring University , Namyang Dairy is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, there is backlash against globalization, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing,
supply chains are disrupted by pandemic , geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Namyang Dairy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Namyang Dairy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Namyang Dairy 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 Namyang Dairy can be done for the following purposes –
1. Strategic planning of Namyang Dairy
2. Improving business portfolio management of Namyang Dairy
3. Assessing feasibility of the new initiative in South Korea
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Namyang Dairy
Strengths of Namyang Dairy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Namyang Dairy are -
Sustainable margins compare to other players in Food Processing industry
– Namyang Dairy has clearly differentiated products in the market place. This has enabled Namyang Dairy to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped Namyang Dairy to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Namyang Dairy in the Consumer/Non-Cyclical sector have low bargaining power. Namyang Dairy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Namyang Dairy to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Namyang Dairy has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Food Processing industry. Secondly the value chain collaborators of Namyang Dairy have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Food Processing industry
- digital transformation varies from industry to industry. For Namyang Dairy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Namyang Dairy 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
– Namyang Dairy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Namyang Dairy 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.
High switching costs
– The high switching costs that Namyang Dairy 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
– Namyang Dairy is one of the most innovative firm in Food Processing sector.
Effective Research and Development (R&D)
– Namyang Dairy has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Namyang Dairy staying ahead in the Food Processing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Namyang Dairy 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 Namyang Dairy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Namyang Dairy emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Namyang Dairy is one of the leading players in the Food Processing 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.
Training and development
– Namyang Dairy has one of the best training and development program in Consumer/Non-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.
Operational resilience
– The operational resilience strategy of Namyang Dairy comprises – understanding the underlying the factors in the Food Processing 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.
Weaknesses of Namyang Dairy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Namyang Dairy are -
Ability to respond to the competition
– As the decision making is very deliberative at Namyang Dairy, in the dynamic environment of Food Processing industry it has struggled to respond to the nimble upstart competition. Namyang Dairy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Namyang Dairy is one of the leading players in the Food Processing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Food Processing industry in last five years.
No frontier risks strategy
– From the 10K / annual statement of Namyang Dairy, it seems that company is thinking out the frontier risks that can impact Food Processing 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 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 Namyang Dairy supply chain. Even after few cautionary changes, Namyang Dairy is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Namyang Dairy vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of South Korea, Namyang Dairy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring in Food Processing industry
– The stress on hiring functional specialists at Namyang Dairy 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Namyang Dairy is slow explore the new channels of communication. These new channels of communication can help Namyang Dairy to provide better information regarding Food Processing products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners in Food Processing industry
– because of the regulatory requirements in South Korea, Namyang Dairy 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 Food Processing industry.
Employees’ less understanding of Namyang Dairy strategy
– From the outside it seems that the employees of Namyang Dairy 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.
Lack of clear differentiation of Namyang Dairy products
– To increase the profitability and margins on the products, Namyang Dairy needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Namyang Dairy 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.
Namyang Dairy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Namyang Dairy are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Food Processing industry, but it has also influenced the consumer preferences. Namyang Dairy 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 Namyang Dairy to increase its market reach. Namyang Dairy 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.
Use of Bitcoin and other crypto currencies for transactions in Food Processing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Namyang Dairy in the Food Processing industry. Now Namyang Dairy can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Namyang Dairy 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 Food Processing industry.
Using analytics as competitive advantage
– Namyang Dairy has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled Namyang Dairy to build a competitive advantage using analytics. The analytics driven competitive advantage can help Namyang Dairy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Namyang Dairy can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Namyang Dairy has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, 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 Namyang Dairy 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.
Manufacturing automation
– Namyang Dairy can use the latest technology developments to improve its manufacturing and designing process in Food Processing 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
– Namyang Dairy can develop new processes and procedures in Food Processing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Namyang Dairy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Food Processing industry, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Namyang Dairy is facing challenges because of the dominance of functional experts in the organization. Namyang Dairy can utilize new technology in the field of Food Processing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Namyang Dairy has opened avenues for new revenue streams for the organization in Food Processing industry. This can help Namyang Dairy to build a more holistic ecosystem for Namyang Dairy products in the Food Processing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Namyang Dairy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Namyang Dairy are -
Environmental challenges
– Namyang Dairy 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. Namyang Dairy can take advantage of this fund but it will also bring new competitors in the Food Processing industry.
Shortening product life cycle
– it is one of the major threat that Namyang Dairy is facing in Food Processing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Namyang Dairy 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 Food Processing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Namyang Dairy 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 Namyang Dairy prominent markets.
Easy access to finance
– Easy access to finance in Food Processing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Namyang Dairy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Namyang Dairy 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents Namyang Dairy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Namyang Dairy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Food Processing 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 Namyang Dairy business can come under increasing regulations regarding data privacy, data security, etc.
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.
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. Namyang Dairy 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.
Regulatory challenges
– Namyang Dairy 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 Food Processing industry regulations.
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 Namyang Dairy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy 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 Namyang Dairy needs to make to build a sustainable competitive advantage.