SWOT Analysis / TOWS Matrix for Modetour Network (South Korea)
Based on various researches at Oak Spring University , Modetour Network is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, cloud computing is disrupting traditional business models, increasing commodity prices, technology disruption, challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Modetour Network can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Modetour Network, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Modetour Network 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 Modetour Network can be done for the following purposes –
1. Strategic planning of Modetour Network
2. Improving business portfolio management of Modetour Network
3. Assessing feasibility of the new initiative in South Korea
4. Making a Personal Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Modetour Network
Strengths of Modetour Network | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Modetour Network are -
Low bargaining power of suppliers
– Suppliers of Modetour Network in the Services sector have low bargaining power. Modetour Network has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Modetour Network to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Personal Services industry
- digital transformation varies from industry to industry. For Modetour Network digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Modetour Network 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.
Sustainable margins compare to other players in Personal Services industry
– Modetour Network has clearly differentiated products in the market place. This has enabled Modetour Network to fetch slight price premium compare to the competitors in the Personal Services industry. The sustainable margins have also helped Modetour Network to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Modetour Network has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Personal Services industry. Secondly the value chain collaborators of Modetour Network have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Personal Services
– Modetour Network is one of the leading players in the Personal Services industry in South Korea. Over the years it has not only transformed the business landscape in the Personal Services industry in South Korea but also across the existing markets. The ability to lead change has enabled Modetour Network in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Modetour Network 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 Modetour Network is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Modetour Network emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Modetour Network 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.
Operational resilience
– The operational resilience strategy of Modetour Network comprises – understanding the underlying the factors in the Personal 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.
Ability to recruit top talent
– Modetour Network is one of the leading players in the Personal Services 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.
High brand equity
– Modetour Network has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Modetour Network to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Modetour Network
– The covid-19 pandemic has put organizational resilience at the centre of everthing Modetour Network does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Modetour Network has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Modetour Network 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.
Weaknesses of Modetour Network | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Modetour Network are -
High bargaining power of channel partners in Personal Services industry
– because of the regulatory requirements in South Korea, Modetour Network 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 Personal Services industry.
Interest costs
– Compare to the competition, Modetour Network 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.
Ability to respond to the competition
– As the decision making is very deliberative at Modetour Network, in the dynamic environment of Personal Services industry it has struggled to respond to the nimble upstart competition. Modetour Network has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring in Personal Services industry
– The stress on hiring functional specialists at Modetour Network 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.
Need for greater diversity
– Modetour Network 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.
Low market penetration in new markets
– Outside its home market of South Korea, Modetour Network needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Modetour Network has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Personal Services industry over the last five years. Modetour Network 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
Modetour Network has a high cash cycle compare to other players in the Personal Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As Modetour Network is one of the leading players in the Personal Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Personal Services industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Modetour Network is dominated by functional specialists. It is not different from other players in the Personal Services industry, but Modetour Network needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Modetour Network to focus more on services in the Personal Services industry rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Modetour Network 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 Personal Services industry using digital technology.
Modetour Network Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Modetour Network are -
Loyalty marketing
– Modetour Network 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Modetour Network in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Personal Services industry, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Modetour Network has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Personal Services sector. This continuous investment in analytics has enabled Modetour Network to build a competitive advantage using analytics. The analytics driven competitive advantage can help Modetour Network to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Modetour Network to increase its market reach. Modetour Network 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.
Developing new processes and practices
– Modetour Network can develop new processes and procedures in Personal Services 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.
Creating value in data economy
– The success of analytics program of Modetour Network has opened avenues for new revenue streams for the organization in Personal Services industry. This can help Modetour Network to build a more holistic ecosystem for Modetour Network products in the Personal Services industry by providing – data insight services, data privacy related products, data based consulting services, 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 Modetour Network 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.
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. Modetour Network can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Modetour Network 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 Modetour Network 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 Personal Services industry.
Learning at scale
– Online learning technologies has now opened space for Modetour Network 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Modetour Network is facing challenges because of the dominance of functional experts in the organization. Modetour Network can utilize new technology in the field of Personal Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Modetour Network 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.
Threats Modetour Network External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Modetour Network are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Modetour Network 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 Modetour Network prominent markets.
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 Modetour Network.
Regulatory challenges
– Modetour Network 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 Personal Services industry regulations.
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 Modetour Network in the Personal Services sector and impact the bottomline of the organization.
Environmental challenges
– Modetour Network 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. Modetour Network can take advantage of this fund but it will also bring new competitors in the Personal Services industry.
Increasing wage structure of Modetour Network
– 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 Modetour Network.
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 Modetour Network business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Modetour Network is facing in Personal Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Modetour Network in Personal Services industry. The Personal 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.
Technology acceleration in Forth Industrial Revolution
– Modetour Network has witnessed rapid integration of technology during Covid-19 in the Personal Services industry. As one of the leading players in the industry, Modetour Network needs to keep up with the evolution of technology in the Personal 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.
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.
High dependence on third party suppliers
– Modetour Network 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.
Weighted SWOT Analysis of Modetour Network Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Modetour Network 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 Modetour Network 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 Modetour Network 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 Modetour Network 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 Modetour Network needs to make to build a sustainable competitive advantage.