SWOT Analysis / TOWS Matrix for Brinquedos Estrela (Brazil)
Based on various researches at Oak Spring University , Brinquedos Estrela is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, central banks are concerned over increasing inflation, geopolitical disruptions, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, 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%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Brinquedos Estrela
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Brinquedos Estrela can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Brinquedos Estrela, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Brinquedos Estrela 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 Brinquedos Estrela can be done for the following purposes –
1. Strategic planning of Brinquedos Estrela
2. Improving business portfolio management of Brinquedos Estrela
3. Assessing feasibility of the new initiative in Brazil
4. Making a Recreational Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Brinquedos Estrela
Strengths of Brinquedos Estrela | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Brinquedos Estrela are -
Operational resilience
– The operational resilience strategy of Brinquedos Estrela comprises – understanding the underlying the factors in the Recreational Products 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.
Learning organization
- Brinquedos Estrela 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 Brinquedos Estrela is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Brinquedos Estrela emphasize – knowledge, initiative, and innovation.
Digital Transformation in Recreational Products industry
- digital transformation varies from industry to industry. For Brinquedos Estrela digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Brinquedos Estrela 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 Recreational Products industry
– Brinquedos Estrela has clearly differentiated products in the market place. This has enabled Brinquedos Estrela to fetch slight price premium compare to the competitors in the Recreational Products industry. The sustainable margins have also helped Brinquedos Estrela to invest into research and development (R&D) and innovation.
Analytics focus
– Brinquedos Estrela 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 Recreational Products 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.
Low bargaining power of suppliers
– Suppliers of Brinquedos Estrela in the Consumer Cyclical sector have low bargaining power. Brinquedos Estrela has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Brinquedos Estrela to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Brinquedos Estrela has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Brinquedos Estrela staying ahead in the Recreational Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Recreational Products
– Brinquedos Estrela is one of the leading players in the Recreational Products industry in Brazil. Over the years it has not only transformed the business landscape in the Recreational Products industry in Brazil but also across the existing markets. The ability to lead change has enabled Brinquedos Estrela in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Brinquedos Estrela 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
– Brinquedos Estrela has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Brinquedos Estrela 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.
Organizational Resilience of Brinquedos Estrela
– The covid-19 pandemic has put organizational resilience at the centre of everthing Brinquedos Estrela does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Brinquedos Estrela has one of the best training and development program in Consumer Cyclical 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.
Weaknesses of Brinquedos Estrela | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Brinquedos Estrela are -
Ability to respond to the competition
– As the decision making is very deliberative at Brinquedos Estrela, in the dynamic environment of Recreational Products industry it has struggled to respond to the nimble upstart competition. Brinquedos Estrela has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Brinquedos Estrela supply chain. Even after few cautionary changes, Brinquedos Estrela is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Brinquedos Estrela vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Brinquedos Estrela products
– To increase the profitability and margins on the products, Brinquedos Estrela needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Brinquedos Estrela has some of the most successful models in the Recreational Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Brinquedos Estrela should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Brinquedos Estrela 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.
Increasing silos among functional specialists
– The organizational structure of Brinquedos Estrela is dominated by functional specialists. It is not different from other players in the Recreational Products industry, but Brinquedos Estrela needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Brinquedos Estrela to focus more on services in the Recreational Products industry rather than just following the product oriented approach.
Skills based hiring in Recreational Products industry
– The stress on hiring functional specialists at Brinquedos Estrela 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.
No frontier risks strategy
– From the 10K / annual statement of Brinquedos Estrela, it seems that company is thinking out the frontier risks that can impact Recreational Products 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 bargaining power of channel partners in Recreational Products industry
– because of the regulatory requirements in Brazil, Brinquedos Estrela 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 Recreational Products industry.
Low market penetration in new markets
– Outside its home market of Brazil, Brinquedos Estrela needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Brinquedos Estrela ‘s star products
– The top 2 products and services of Brinquedos Estrela still accounts for major business revenue. This dependence on star products in Recreational Products industry has resulted into insufficient focus on developing new products, even though Brinquedos Estrela has relatively successful track record of launching new products.
Brinquedos Estrela Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Brinquedos Estrela are -
Use of Bitcoin and other crypto currencies for transactions in Recreational Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Brinquedos Estrela in the Recreational Products industry. Now Brinquedos Estrela can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Brinquedos Estrela can improve the customer journey of consumers in the Recreational Products 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.
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 Brinquedos Estrela 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.
Loyalty marketing
– Brinquedos Estrela 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 Brinquedos Estrela in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Recreational Products industry, and it will provide faster access to the consumers.
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. Brinquedos Estrela can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Brinquedos Estrela is facing challenges because of the dominance of functional experts in the organization. Brinquedos Estrela can utilize new technology in the field of Recreational Products industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Brinquedos Estrela to increase its market reach. Brinquedos Estrela 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, Brinquedos Estrela 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 Brinquedos Estrela to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Brinquedos Estrela 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 Recreational Products industry.
Manufacturing automation
– Brinquedos Estrela can use the latest technology developments to improve its manufacturing and designing process in Recreational Products 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.
Using analytics as competitive advantage
– Brinquedos Estrela has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Recreational Products sector. This continuous investment in analytics has enabled Brinquedos Estrela to build a competitive advantage using analytics. The analytics driven competitive advantage can help Brinquedos Estrela to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Brinquedos Estrela 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.
Threats Brinquedos Estrela External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Brinquedos Estrela are -
Consumer confidence and its impact on Brinquedos Estrela 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 Recreational Products industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Recreational Products industry are lowering. It can presents Brinquedos Estrela with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Recreational Products sector.
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
– Brinquedos Estrela 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Brinquedos Estrela may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Recreational Products sector.
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 Brinquedos Estrela in the Recreational Products sector and impact the bottomline 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 Brinquedos Estrela in Recreational Products industry. The Recreational Products 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.
Regulatory challenges
– Brinquedos Estrela 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 Recreational Products industry regulations.
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. Brinquedos Estrela needs to understand the core reasons impacting the Recreational Products industry. This will help it in building a better workplace.
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. Brinquedos Estrela 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.
Stagnating economy with rate increase
– Brinquedos Estrela 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 Recreational Products 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 Brinquedos Estrela.
Shortening product life cycle
– it is one of the major threat that Brinquedos Estrela is facing in Recreational Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Brinquedos Estrela Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Brinquedos Estrela 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 Brinquedos Estrela 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 Brinquedos Estrela 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 Brinquedos Estrela 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 Brinquedos Estrela needs to make to build a sustainable competitive advantage.