DIRECIONAL ON (DIRR3) SWOT Analysis / TOWS Matrix / MBA Resources
Construction Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for DIRECIONAL ON (Brazil)
Based on various researches at Oak Spring University , DIRECIONAL ON is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, there is backlash against globalization, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that DIRECIONAL ON can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the DIRECIONAL ON, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which DIRECIONAL ON 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 DIRECIONAL ON can be done for the following purposes –
1. Strategic planning of DIRECIONAL ON
2. Improving business portfolio management of DIRECIONAL ON
3. Assessing feasibility of the new initiative in Brazil
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of DIRECIONAL ON
Strengths of DIRECIONAL ON | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of DIRECIONAL ON are -
Low bargaining power of suppliers
– Suppliers of DIRECIONAL ON in the Capital Goods sector have low bargaining power. DIRECIONAL ON has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps DIRECIONAL ON to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of DIRECIONAL ON
– The covid-19 pandemic has put organizational resilience at the centre of everthing DIRECIONAL ON does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- DIRECIONAL ON 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 DIRECIONAL ON is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at DIRECIONAL ON emphasize – knowledge, initiative, and innovation.
Training and development
– DIRECIONAL ON 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.
Strong track record of project management in the Construction Services industry
– DIRECIONAL ON is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the DIRECIONAL ON 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.
High brand equity
– DIRECIONAL ON has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled DIRECIONAL ON to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– DIRECIONAL ON has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Construction Services industry. Secondly the value chain collaborators of DIRECIONAL ON have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– DIRECIONAL ON is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Construction Services industry. The technology infrastructure of Brazil is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Construction Services industry
- digital transformation varies from industry to industry. For DIRECIONAL ON digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. DIRECIONAL ON 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.
Diverse revenue streams
– DIRECIONAL ON is present in almost all the verticals within the Construction Services industry. This has provided DIRECIONAL ON 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.
Effective Research and Development (R&D)
– DIRECIONAL ON has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – DIRECIONAL ON staying ahead in the Construction Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses of DIRECIONAL ON | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of DIRECIONAL ON are -
Slow to strategic competitive environment developments
– As DIRECIONAL ON 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.
Lack of clear differentiation of DIRECIONAL ON products
– To increase the profitability and margins on the products, DIRECIONAL ON needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at DIRECIONAL ON, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. DIRECIONAL ON has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, DIRECIONAL ON 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 Construction Services industry using digital technology.
Employees’ less understanding of DIRECIONAL ON strategy
– From the outside it seems that the employees of DIRECIONAL ON 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.
Compensation and incentives
– The revenue per employee of DIRECIONAL ON 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.
High cash cycle compare to competitors
DIRECIONAL ON has a high cash cycle compare to other players in the Construction 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.
Increasing silos among functional specialists
– The organizational structure of DIRECIONAL ON is dominated by functional specialists. It is not different from other players in the Construction Services industry, but DIRECIONAL ON needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help DIRECIONAL ON to focus more on services in the Construction Services industry rather than just following the product oriented approach.
High dependence on DIRECIONAL ON ‘s star products
– The top 2 products and services of DIRECIONAL ON 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 DIRECIONAL ON has relatively successful track record of launching new products.
No frontier risks strategy
– From the 10K / annual statement of DIRECIONAL ON, it seems that company is thinking out the frontier risks that can impact Construction 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.
High operating costs
– Compare to the competitors, DIRECIONAL ON has high operating costs in the Construction Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract DIRECIONAL ON lucrative customers.
DIRECIONAL ON Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of DIRECIONAL ON are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, DIRECIONAL ON can use these opportunities to build new business models that can help the communities that DIRECIONAL ON operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Manufacturing automation
– DIRECIONAL ON 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.
Learning at scale
– Online learning technologies has now opened space for DIRECIONAL ON 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.
Use of Bitcoin and other crypto currencies for transactions in Construction Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for DIRECIONAL ON in the Construction Services industry. Now DIRECIONAL ON can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for DIRECIONAL ON 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 DIRECIONAL ON 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, DIRECIONAL ON 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.
Better consumer reach
– The expansion of the 5G network will help DIRECIONAL ON to increase its market reach. DIRECIONAL ON 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, DIRECIONAL ON 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 DIRECIONAL ON to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– DIRECIONAL ON 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.
Developing new processes and practices
– DIRECIONAL ON can develop new processes and procedures in Construction 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.
Using analytics as competitive advantage
– DIRECIONAL ON has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Construction Services sector. This continuous investment in analytics has enabled DIRECIONAL ON to build a competitive advantage using analytics. The analytics driven competitive advantage can help DIRECIONAL ON 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. DIRECIONAL ON can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– DIRECIONAL ON can improve the customer journey of consumers in the Construction Services 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.
Threats DIRECIONAL ON External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of DIRECIONAL ON are -
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.
Consumer confidence and its impact on DIRECIONAL ON 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.
High dependence on third party suppliers
– DIRECIONAL ON 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.
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 DIRECIONAL ON.
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.
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. DIRECIONAL ON can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of DIRECIONAL ON
– 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 DIRECIONAL ON.
Technology acceleration in Forth Industrial Revolution
– DIRECIONAL ON has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, DIRECIONAL ON 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.
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 DIRECIONAL ON business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that DIRECIONAL ON is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– DIRECIONAL ON 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. DIRECIONAL ON can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction Services industry are lowering. It can presents DIRECIONAL ON with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction Services sector.
Regulatory challenges
– DIRECIONAL ON 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.
Weighted SWOT Analysis of DIRECIONAL ON Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at DIRECIONAL ON 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 DIRECIONAL ON 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 DIRECIONAL ON 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 DIRECIONAL ON 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 DIRECIONAL ON needs to make to build a sustainable competitive advantage.
