GAFISA ON (GFSA3) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for GAFISA ON (Brazil)

Based on various researches at Oak Spring University , GAFISA ON is operating in a macro-environment that has been destablized by – increasing energy prices, increasing commodity prices, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, there is backlash against globalization, etc

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Introduction to SWOT Analysis of GAFISA ON

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that GAFISA ON can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the GAFISA ON, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which GAFISA 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of GAFISA ON can be done for the following purposes –
1. Strategic planning of GAFISA ON
2. Improving business portfolio management of GAFISA 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 GAFISA ON

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Strengths of GAFISA ON | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of GAFISA ON are -

Analytics focus

– GAFISA 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.

Effective Research and Development (R&D)

– GAFISA ON has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – GAFISA 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.

Training and development

– GAFISA 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.

Cross disciplinary teams

– Horizontal connected teams at the GAFISA 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.

Operational resilience

– The operational resilience strategy of GAFISA ON comprises – understanding the underlying the factors in the Construction 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.

Digital Transformation in Construction Services industry

- digital transformation varies from industry to industry. For GAFISA ON digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. GAFISA 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.

Strong track record of project management in the Construction Services industry

– GAFISA 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.

Organizational Resilience of GAFISA ON

– The covid-19 pandemic has put organizational resilience at the centre of everthing GAFISA ON does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Sustainable margins compare to other players in Construction Services industry

– GAFISA ON has clearly differentiated products in the market place. This has enabled GAFISA ON to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped GAFISA ON to invest into research and development (R&D) and innovation.

Ability to lead change in Construction Services

– GAFISA ON is one of the leading players in the Construction Services industry in Brazil. Over the years it has not only transformed the business landscape in the Construction Services industry in Brazil but also across the existing markets. The ability to lead change has enabled GAFISA ON in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Low bargaining power of suppliers

– Suppliers of GAFISA ON in the Capital Goods sector have low bargaining power. GAFISA ON has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps GAFISA ON to manage not only supply disruptions but also source products at highly competitive prices.

Superior customer experience

– The customer experience strategy of GAFISA ON in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of GAFISA ON | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of GAFISA ON are -

Workers concerns about automation

– As automation is fast increasing in the Construction Services industry, GAFISA ON needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

High cash cycle compare to competitors

GAFISA 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.

Lack of clear differentiation of GAFISA ON products

– To increase the profitability and margins on the products, GAFISA ON needs to provide more differentiated products than what it is currently offering in the marketplace.

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 GAFISA ON supply chain. Even after few cautionary changes, GAFISA ON is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left GAFISA ON vulnerable to further global disruptions in South East Asia.

High bargaining power of channel partners in Construction Services industry

– because of the regulatory requirements in Brazil, GAFISA ON 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 Construction Services industry.

Capital Spending Reduction

– Even during the low interest decade, GAFISA 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, GAFISA ON is slow explore the new channels of communication. These new channels of communication can help GAFISA ON to provide better information regarding Construction Services products and services. It can also build an online community to further reach out to potential customers.

Products dominated business model

– Even though GAFISA ON has some of the most successful models in the Construction Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. GAFISA ON 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 Brazil, GAFISA ON needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Increasing silos among functional specialists

– The organizational structure of GAFISA ON is dominated by functional specialists. It is not different from other players in the Construction Services industry, but GAFISA ON needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help GAFISA ON to focus more on services in the Construction Services industry rather than just following the product oriented approach.

Ability to respond to the competition

– As the decision making is very deliberative at GAFISA ON, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. GAFISA ON has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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GAFISA ON Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of GAFISA ON are -

Manufacturing automation

– GAFISA 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.

Better consumer reach

– The expansion of the 5G network will help GAFISA ON to increase its market reach. GAFISA 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Construction Services industry, but it has also influenced the consumer preferences. GAFISA ON can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Using analytics as competitive advantage

– GAFISA 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 GAFISA ON to build a competitive advantage using analytics. The analytics driven competitive advantage can help GAFISA 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. GAFISA ON can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects GAFISA ON can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

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 GAFISA ON 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.

Creating value in data economy

– The success of analytics program of GAFISA ON has opened avenues for new revenue streams for the organization in Construction Services industry. This can help GAFISA ON to build a more holistic ecosystem for GAFISA ON products in the Construction Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Low interest rates

– Even though inflation is raising its head in most developed economies, GAFISA 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.

Building a culture of innovation

– managers at GAFISA ON 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 Construction Services industry.

Leveraging digital technologies

– GAFISA ON 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.

Loyalty marketing

– GAFISA 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, GAFISA 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 GAFISA 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.

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Threats GAFISA ON External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of GAFISA ON are -

Consumer confidence and its impact on GAFISA 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.

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 GAFISA ON in the Construction Services sector and impact the bottomline of the organization.

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 GAFISA ON.

Regulatory challenges

– GAFISA 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.

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.

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. GAFISA ON 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.

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. GAFISA ON can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Construction Services industry are lowering. It can presents GAFISA 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.

Technology acceleration in Forth Industrial Revolution

– GAFISA ON has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, GAFISA 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.

Environmental challenges

– GAFISA 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. GAFISA ON can take advantage of this fund but it will also bring new competitors in the Construction Services industry.

Shortening product life cycle

– it is one of the major threat that GAFISA ON is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, GAFISA ON 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 GAFISA ON prominent markets.

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Weighted SWOT Analysis of GAFISA ON Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at GAFISA 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 GAFISA 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 GAFISA 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 GAFISA 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 GAFISA ON needs to make to build a sustainable competitive advantage.

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