SWOT Analysis / TOWS Matrix for Kolon Globalco (South Korea)
Based on various researches at Oak Spring University , Kolon Globalco is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, increasing transportation and logistics costs, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%,
talent flight as more people leaving formal jobs, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kolon Globalco can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kolon Globalco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kolon Globalco 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 Kolon Globalco can be done for the following purposes –
1. Strategic planning of Kolon Globalco
2. Improving business portfolio management of Kolon Globalco
3. Assessing feasibility of the new initiative in South Korea
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kolon Globalco
Strengths of Kolon Globalco | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kolon Globalco are -
Ability to recruit top talent
– Kolon Globalco is one of the leading players in the Construction 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.
Effective Research and Development (R&D)
– Kolon Globalco has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kolon Globalco 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.
High brand equity
– Kolon Globalco has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kolon Globalco to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Construction Services
– Kolon Globalco is one of the leading players in the Construction Services industry in South Korea. Over the years it has not only transformed the business landscape in the Construction Services industry in South Korea but also across the existing markets. The ability to lead change has enabled Kolon Globalco in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Kolon Globalco is one of the most innovative firm in Construction Services sector.
High switching costs
– The high switching costs that Kolon Globalco 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.
Superior customer experience
– The customer experience strategy of Kolon Globalco in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Kolon Globalco 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.
Diverse revenue streams
– Kolon Globalco is present in almost all the verticals within the Construction Services industry. This has provided Kolon Globalco 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.
Learning organization
- Kolon Globalco 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 Kolon Globalco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Kolon Globalco emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Construction Services industry
– Kolon Globalco has clearly differentiated products in the market place. This has enabled Kolon Globalco to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped Kolon Globalco to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Kolon Globalco has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kolon Globalco 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 Kolon Globalco | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kolon Globalco are -
Workers concerns about automation
– As automation is fast increasing in the Construction Services industry, Kolon Globalco 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.
Aligning sales with marketing
– From the outside it seems that Kolon Globalco needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at Kolon Globalco can leverage the sales team experience to cultivate customer relationships as Kolon Globalco is planning to shift buying processes online.
Employees’ less understanding of Kolon Globalco strategy
– From the outside it seems that the employees of Kolon Globalco 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.
High operating costs
– Compare to the competitors, Kolon Globalco 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 Kolon Globalco lucrative customers.
Compensation and incentives
– The revenue per employee of Kolon Globalco 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.
Need for greater diversity
– Kolon Globalco 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.
Increasing silos among functional specialists
– The organizational structure of Kolon Globalco is dominated by functional specialists. It is not different from other players in the Construction Services industry, but Kolon Globalco needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kolon Globalco to focus more on services in the Construction Services industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Kolon Globalco 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.
High dependence on Kolon Globalco ‘s star products
– The top 2 products and services of Kolon Globalco 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 Kolon Globalco has relatively successful track record of launching new products.
Products dominated business model
– Even though Kolon Globalco 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. Kolon Globalco should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative at Kolon Globalco, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. Kolon Globalco has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Kolon Globalco Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kolon Globalco are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kolon Globalco 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 Kolon Globalco 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
– Kolon Globalco 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 Kolon Globalco in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Construction Services industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Kolon Globalco 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kolon Globalco can use these opportunities to build new business models that can help the communities that Kolon Globalco operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Developing new processes and practices
– Kolon Globalco 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.
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. Kolon Globalco can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Kolon Globalco 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 Kolon Globalco to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kolon Globalco 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 Kolon Globalco to increase its market reach. Kolon Globalco 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kolon Globalco can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kolon Globalco 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kolon Globalco is facing challenges because of the dominance of functional experts in the organization. Kolon Globalco can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Kolon Globalco 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.
Threats Kolon Globalco External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kolon Globalco 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.
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. Kolon Globalco can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Kolon Globalco 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.
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 Kolon Globalco business can come under increasing regulations regarding data privacy, data security, etc.
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. Kolon Globalco needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kolon Globalco 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 Kolon Globalco prominent markets.
Consumer confidence and its impact on Kolon Globalco 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.
Environmental challenges
– Kolon Globalco 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. Kolon Globalco can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
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 Kolon Globalco.
Stagnating economy with rate increase
– Kolon Globalco 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 Construction Services industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kolon Globalco may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Construction Services sector.
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.
Increasing wage structure of Kolon Globalco
– 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 Kolon Globalco.
Weighted SWOT Analysis of Kolon Globalco Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kolon Globalco 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 Kolon Globalco 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 Kolon Globalco 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 Kolon Globalco 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 Kolon Globalco needs to make to build a sustainable competitive advantage.