Based on various researches at Oak Spring University , Astra Agro Lestari TBK is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, increasing commodity prices, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Astra Agro Lestari TBK
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Astra Agro Lestari TBK can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Astra Agro Lestari TBK, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Astra Agro Lestari TBK 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 Astra Agro Lestari TBK can be done for the following purposes –
1. Strategic planning of Astra Agro Lestari TBK
2. Improving business portfolio management of Astra Agro Lestari TBK
3. Assessing feasibility of the new initiative in United States
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Astra Agro Lestari TBK
Strengths of Astra Agro Lestari TBK | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Astra Agro Lestari TBK are -
Sustainable margins compare to other players in industry
– Astra Agro Lestari TBK has clearly differentiated products in the market place. This has enabled Astra Agro Lestari TBK to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Astra Agro Lestari TBK to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Astra Agro Lestari TBK 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
– Astra Agro Lestari TBK is present in almost all the verticals within the industry. This has provided Astra Agro Lestari TBK 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.
Innovation driven organization
– Astra Agro Lestari TBK is one of the most innovative firm in sector.
Operational resilience
– The operational resilience strategy of Astra Agro Lestari TBK comprises – understanding the underlying the factors in the 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.
Ability to lead change in
– Astra Agro Lestari TBK is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled Astra Agro Lestari TBK in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Astra Agro Lestari TBK has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive industry. Secondly the value chain collaborators of Astra Agro Lestari TBK have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Astra Agro Lestari TBK in the sector have low bargaining power. Astra Agro Lestari TBK has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Astra Agro Lestari TBK to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Astra Agro Lestari TBK has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Astra Agro Lestari TBK to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Astra Agro Lestari TBK 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 Astra Agro Lestari TBK is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Astra Agro Lestari TBK emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Astra Agro Lestari TBK in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management in the industry
– Astra Agro Lestari TBK is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Astra Agro Lestari TBK | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Astra Agro Lestari TBK are -
High dependence on Astra Agro Lestari TBK ‘s star products
– The top 2 products and services of Astra Agro Lestari TBK still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Astra Agro Lestari TBK has relatively successful track record of launching new products.
High cash cycle compare to competitors
Astra Agro Lestari TBK has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Astra Agro Lestari TBK is slow explore the new channels of communication. These new channels of communication can help Astra Agro Lestari TBK to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Astra Agro Lestari TBK has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Astra Agro Lestari TBK even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Astra Agro Lestari TBK products
– To increase the profitability and margins on the products, Astra Agro Lestari TBK needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Astra Agro Lestari TBK has some of the most successful models in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Astra Agro Lestari TBK 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 Astra Agro Lestari TBK, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. Astra Agro Lestari TBK 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 Astra Agro Lestari TBK supply chain. Even after few cautionary changes, Astra Agro Lestari TBK is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Astra Agro Lestari TBK vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Astra Agro Lestari TBK is one of the leading players in the industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High bargaining power of channel partners in industry
– because of the regulatory requirements in United States, Astra Agro Lestari TBK 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 industry.
Workers concerns about automation
– As automation is fast increasing in the industry, Astra Agro Lestari TBK 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.
Astra Agro Lestari TBK Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Astra Agro Lestari TBK are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in industry, but it has also influenced the consumer preferences. Astra Agro Lestari TBK can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Astra Agro Lestari TBK 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 industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Astra Agro Lestari TBK can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Astra Agro Lestari TBK 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.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Astra Agro Lestari TBK in the industry. Now Astra Agro Lestari TBK can target international markets with far fewer capital restrictions requirements than the existing system.
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. Astra Agro Lestari TBK can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Astra Agro Lestari TBK can develop new processes and procedures in 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Astra Agro Lestari TBK is facing challenges because of the dominance of functional experts in the organization. Astra Agro Lestari TBK can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Astra Agro Lestari TBK 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.
Using analytics as competitive advantage
– Astra Agro Lestari TBK has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled Astra Agro Lestari TBK to build a competitive advantage using analytics. The analytics driven competitive advantage can help Astra Agro Lestari TBK to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Astra Agro Lestari TBK can use these opportunities to build new business models that can help the communities that Astra Agro Lestari TBK operates in. Secondly it can use opportunities from government spending in sector.
Learning at scale
– Online learning technologies has now opened space for Astra Agro Lestari TBK 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Astra Agro Lestari TBK 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. Astra Agro Lestari TBK 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.
Threats Astra Agro Lestari TBK External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Astra Agro Lestari TBK are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Astra Agro Lestari TBK with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Astra Agro Lestari TBK can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Astra Agro Lestari TBK is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Astra Agro Lestari TBK needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Astra Agro Lestari TBK 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 industry.
Increasing wage structure of Astra Agro Lestari TBK
– 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 Astra Agro Lestari TBK.
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 Astra Agro Lestari TBK in the sector and impact the bottomline of the organization.
Environmental challenges
– Astra Agro Lestari TBK 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. Astra Agro Lestari TBK can take advantage of this fund but it will also bring new competitors in the industry.
Regulatory challenges
– Astra Agro Lestari TBK 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 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.
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 Astra Agro Lestari TBK business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Astra Agro Lestari TBK 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.
Weighted SWOT Analysis of Astra Agro Lestari TBK Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Astra Agro Lestari TBK 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 Astra Agro Lestari TBK 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 Astra Agro Lestari TBK 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 Astra Agro Lestari TBK 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 Astra Agro Lestari TBK needs to make to build a sustainable competitive advantage.