Based on various researches at Oak Spring University , Astra Agro Lestari TBK is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, central banks are concerned over increasing inflation, geopolitical disruptions, technology disruption, wage bills are increasing,
increasing household debt because of falling income levels, increasing commodity prices, 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 -
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.
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.
Effective Research and Development (R&D)
– Astra Agro Lestari TBK has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Astra Agro Lestari TBK staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Ability to recruit top talent
– Astra Agro Lestari TBK is one of the leading players in the industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Successful track record of launching new products
– Astra Agro Lestari TBK has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Astra Agro Lestari TBK 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.
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.
Training and development
– Astra Agro Lestari TBK has one of the best training and development program in 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.
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 -
Interest costs
– Compare to the competition, Astra Agro Lestari TBK 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 operating costs
– Compare to the competitors, Astra Agro Lestari TBK has high operating costs in the industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Astra Agro Lestari TBK lucrative customers.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Astra Agro Lestari TBK is dominated by functional specialists. It is not different from other players in the industry, but Astra Agro Lestari TBK needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Astra Agro Lestari TBK to focus more on services in the industry rather than just following the product oriented approach.
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.
Low market penetration in new markets
– Outside its home market of United States, Astra Agro Lestari TBK needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Astra Agro Lestari TBK 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.
Compensation and incentives
– The revenue per employee of Astra Agro Lestari TBK is just above the 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.
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.
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 -
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.
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 Astra Agro Lestari TBK 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 Astra Agro Lestari TBK has opened avenues for new revenue streams for the organization in industry. This can help Astra Agro Lestari TBK to build a more holistic ecosystem for Astra Agro Lestari TBK products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Astra Agro Lestari TBK 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 Astra Agro Lestari TBK to hire the very best people irrespective of their geographical location.
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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Astra Agro Lestari TBK in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the industry, and it will provide faster access to the consumers.
Manufacturing automation
– Astra Agro Lestari TBK can use the latest technology developments to improve its manufacturing and designing process in 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.
Leveraging digital technologies
– Astra Agro Lestari TBK 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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Astra Agro Lestari TBK 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 Astra Agro Lestari TBK to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 -
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Astra Agro Lestari TBK in industry. The 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 Astra Agro Lestari TBK.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Astra Agro Lestari TBK may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of 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 Astra Agro Lestari TBK in the sector and impact the bottomline of the organization.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Astra Agro Lestari TBK has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Astra Agro Lestari TBK needs to keep up with the evolution of technology in the 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.
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.
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.
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.