PC Direct (51380) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for PC Direct (South Korea)

Based on various researches at Oak Spring University , PC Direct is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, cloud computing is disrupting traditional business models, wage bills are increasing, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc

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Introduction to SWOT Analysis of PC Direct

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that PC Direct can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the PC Direct, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which PC Direct 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 PC Direct can be done for the following purposes –
1. Strategic planning of PC Direct
2. Improving business portfolio management of PC Direct
3. Assessing feasibility of the new initiative in South Korea
4. Making a Computer Hardware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of PC Direct

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Strengths of PC Direct | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of PC Direct are -

Innovation driven organization

– PC Direct is one of the most innovative firm in Computer Hardware sector.

Learning organization

- PC Direct 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 PC Direct is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at PC Direct emphasize – knowledge, initiative, and innovation.

Superior customer experience

– The customer experience strategy of PC Direct in Computer Hardware industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to recruit top talent

– PC Direct is one of the leading players in the Computer Hardware 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.

Cross disciplinary teams

– Horizontal connected teams at the PC Direct 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

– PC Direct is present in almost all the verticals within the Computer Hardware industry. This has provided PC Direct 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.

Analytics focus

– PC Direct 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 Computer Hardware industry. The technology infrastructure of South Korea 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.

Strong track record of project management in the Computer Hardware industry

– PC Direct is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

High brand equity

– PC Direct has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled PC Direct to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Organizational Resilience of PC Direct

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

Highly skilled collaborators

– PC Direct has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Computer Hardware industry. Secondly the value chain collaborators of PC Direct have helped the firm to develop new products and bring them quickly to the marketplace.

Operational resilience

– The operational resilience strategy of PC Direct comprises – understanding the underlying the factors in the Computer Hardware 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.

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Weaknesses of PC Direct | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of PC Direct are -

Products dominated business model

– Even though PC Direct has some of the most successful models in the Computer Hardware industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. PC Direct should strive to include more intangible value offerings along with its core products and services.

High bargaining power of channel partners in Computer Hardware industry

– because of the regulatory requirements in South Korea, PC Direct is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Computer Hardware industry.

Increasing silos among functional specialists

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

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

Aligning sales with marketing

– From the outside it seems that PC Direct needs to have more collaboration between its sales team and marketing team. Sales professionals in the Computer Hardware industry have deep experience in developing customer relationships. Marketing department at PC Direct can leverage the sales team experience to cultivate customer relationships as PC Direct is planning to shift buying processes online.

Skills based hiring in Computer Hardware industry

– The stress on hiring functional specialists at PC Direct 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.

Interest costs

– Compare to the competition, PC Direct 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.

High cash cycle compare to competitors

PC Direct has a high cash cycle compare to other players in the Computer Hardware industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Ability to respond to the competition

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

No frontier risks strategy

– From the 10K / annual statement of PC Direct, it seems that company is thinking out the frontier risks that can impact Computer Hardware 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.

Compensation and incentives

– The revenue per employee of PC Direct is just above the Computer Hardware 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.

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PC Direct Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of PC Direct are -

Building a culture of innovation

– managers at PC Direct 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 Computer Hardware industry.

Buying journey improvements

– PC Direct can improve the customer journey of consumers in the Computer Hardware 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.

Developing new processes and practices

– PC Direct can develop new processes and procedures in Computer Hardware 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.

Reforming the budgeting process

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

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for PC Direct 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 PC Direct to hire the very best people irrespective of their geographical location.

Finding new ways to collaborate

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

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Computer Hardware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. PC Direct can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. PC Direct can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.

Manufacturing automation

– PC Direct can use the latest technology developments to improve its manufacturing and designing process in Computer Hardware 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.

Low interest rates

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

Creating value in data economy

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

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, PC Direct 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 PC Direct to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Lowering marketing communication costs

– 5G expansion will open new opportunities for PC Direct in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Computer Hardware 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. PC Direct can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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Threats PC Direct External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of PC Direct are -

Stagnating economy with rate increase

– PC Direct can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Computer Hardware industry.

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 PC Direct business can come under increasing regulations regarding data privacy, data security, etc.

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 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. PC Direct needs to understand the core reasons impacting the Computer Hardware industry. This will help it in building a better workplace.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for PC Direct in Computer Hardware industry. The Computer Hardware 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.

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 PC Direct.

Technology acceleration in Forth Industrial Revolution

– PC Direct has witnessed rapid integration of technology during Covid-19 in the Computer Hardware industry. As one of the leading players in the industry, PC Direct needs to keep up with the evolution of technology in the Computer Hardware 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

– PC Direct 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. PC Direct can take advantage of this fund but it will also bring new competitors in the Computer Hardware industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, PC Direct 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 PC Direct prominent markets.

Shortening product life cycle

– it is one of the major threat that PC Direct is facing in Computer Hardware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, PC Direct may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Computer Hardware sector.

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. PC Direct 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.

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 PC Direct in the Computer Hardware sector and impact the bottomline of the organization.

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Weighted SWOT Analysis of PC Direct Template, Example

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

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