AfreecaTV (67160) SWOT Analysis / TOWS Matrix / MBA Resources
Computer Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for AfreecaTV (South Korea)
Based on various researches at Oak Spring University , AfreecaTV is operating in a macro-environment that has been destablized by – wage bills are increasing, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that AfreecaTV can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the AfreecaTV, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which AfreecaTV 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 AfreecaTV can be done for the following purposes –
1. Strategic planning of AfreecaTV
2. Improving business portfolio management of AfreecaTV
3. Assessing feasibility of the new initiative in South Korea
4. Making a Computer Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of AfreecaTV
Strengths of AfreecaTV | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of AfreecaTV are -
Learning organization
- AfreecaTV 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 AfreecaTV is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at AfreecaTV emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– AfreecaTV has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – AfreecaTV staying ahead in the Computer Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of AfreecaTV in Computer Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that AfreecaTV 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.
Diverse revenue streams
– AfreecaTV is present in almost all the verticals within the Computer Services industry. This has provided AfreecaTV 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.
Low bargaining power of suppliers
– Suppliers of AfreecaTV in the Technology sector have low bargaining power. AfreecaTV has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps AfreecaTV to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management in the Computer Services industry
– AfreecaTV is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– AfreecaTV has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled AfreecaTV to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of AfreecaTV comprises – understanding the underlying the factors in the Computer 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.
Cross disciplinary teams
– Horizontal connected teams at the AfreecaTV 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.
Successful track record of launching new products
– AfreecaTV has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. AfreecaTV 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.
Sustainable margins compare to other players in Computer Services industry
– AfreecaTV has clearly differentiated products in the market place. This has enabled AfreecaTV to fetch slight price premium compare to the competitors in the Computer Services industry. The sustainable margins have also helped AfreecaTV to invest into research and development (R&D) and innovation.
Weaknesses of AfreecaTV | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AfreecaTV are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, AfreecaTV is slow explore the new channels of communication. These new channels of communication can help AfreecaTV to provide better information regarding Computer Services products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
AfreecaTV has a high cash cycle compare to other players in the Computer 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.
High bargaining power of channel partners in Computer Services industry
– because of the regulatory requirements in South Korea, AfreecaTV 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 Computer Services industry.
No frontier risks strategy
– From the 10K / annual statement of AfreecaTV, it seems that company is thinking out the frontier risks that can impact Computer Services 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.
Increasing silos among functional specialists
– The organizational structure of AfreecaTV is dominated by functional specialists. It is not different from other players in the Computer Services industry, but AfreecaTV needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help AfreecaTV to focus more on services in the Computer Services industry rather than just following the product oriented approach.
Skills based hiring in Computer Services industry
– The stress on hiring functional specialists at AfreecaTV 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 AfreecaTV strategy
– From the outside it seems that the employees of AfreecaTV 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.
Need for greater diversity
– AfreecaTV 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, AfreecaTV needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 AfreecaTV supply chain. Even after few cautionary changes, AfreecaTV is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left AfreecaTV vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that AfreecaTV needs to have more collaboration between its sales team and marketing team. Sales professionals in the Computer Services industry have deep experience in developing customer relationships. Marketing department at AfreecaTV can leverage the sales team experience to cultivate customer relationships as AfreecaTV is planning to shift buying processes online.
AfreecaTV Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of AfreecaTV are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Computer Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. AfreecaTV 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. AfreecaTV 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.
Leveraging digital technologies
– AfreecaTV 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects AfreecaTV can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of AfreecaTV has opened avenues for new revenue streams for the organization in Computer Services industry. This can help AfreecaTV to build a more holistic ecosystem for AfreecaTV products in the Computer Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help AfreecaTV to increase its market reach. AfreecaTV 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.
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 AfreecaTV 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for AfreecaTV 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 AfreecaTV to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, AfreecaTV 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, AfreecaTV 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 AfreecaTV to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, AfreecaTV is facing challenges because of the dominance of functional experts in the organization. AfreecaTV can utilize new technology in the field of Computer Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– AfreecaTV can develop new processes and procedures in Computer 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, AfreecaTV can use these opportunities to build new business models that can help the communities that AfreecaTV operates in. Secondly it can use opportunities from government spending in Computer Services sector.
Using analytics as competitive advantage
– AfreecaTV has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Computer Services sector. This continuous investment in analytics has enabled AfreecaTV to build a competitive advantage using analytics. The analytics driven competitive advantage can help AfreecaTV to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats AfreecaTV External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of AfreecaTV are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, AfreecaTV 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 AfreecaTV prominent markets.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for AfreecaTV in Computer Services industry. The Computer 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.
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.
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 AfreecaTV is facing in Computer Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of AfreecaTV
– 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 AfreecaTV.
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 AfreecaTV.
Stagnating economy with rate increase
– AfreecaTV 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 Computer Services industry.
Environmental challenges
– AfreecaTV 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. AfreecaTV can take advantage of this fund but it will also bring new competitors in the Computer Services industry.
Easy access to finance
– Easy access to finance in Computer Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. AfreecaTV 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
– AfreecaTV 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.
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. AfreecaTV needs to understand the core reasons impacting the Computer Services industry. This will help it in building a better workplace.
Regulatory challenges
– AfreecaTV 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 Computer Services industry regulations.
Weighted SWOT Analysis of AfreecaTV Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at AfreecaTV 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 AfreecaTV 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 AfreecaTV 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 AfreecaTV 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 AfreecaTV needs to make to build a sustainable competitive advantage.