Arthur J Gallagher (AJG) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Arthur J Gallagher (United States)

Based on various researches at Oak Spring University , Arthur J Gallagher is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing energy prices, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, etc

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Introduction to SWOT Analysis of Arthur J Gallagher

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

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Strengths of Arthur J Gallagher | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Arthur J Gallagher are -

Digital Transformation in Insurance (Miscellaneous) industry

- digital transformation varies from industry to industry. For Arthur J Gallagher digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Arthur J Gallagher 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.

Highly skilled collaborators

– Arthur J Gallagher has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Insurance (Miscellaneous) industry. Secondly the value chain collaborators of Arthur J Gallagher have helped the firm to develop new products and bring them quickly to the marketplace.

Low bargaining power of suppliers

– Suppliers of Arthur J Gallagher in the Financial sector have low bargaining power. Arthur J Gallagher has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Arthur J Gallagher to manage not only supply disruptions but also source products at highly competitive prices.

Ability to recruit top talent

– Arthur J Gallagher is one of the leading players in the Insurance (Miscellaneous) 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.

Effective Research and Development (R&D)

– Arthur J Gallagher has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Arthur J Gallagher staying ahead in the Insurance (Miscellaneous) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Innovation driven organization

– Arthur J Gallagher is one of the most innovative firm in Insurance (Miscellaneous) sector.

Cross disciplinary teams

– Horizontal connected teams at the Arthur J Gallagher 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.

Operational resilience

– The operational resilience strategy of Arthur J Gallagher comprises – understanding the underlying the factors in the Insurance (Miscellaneous) 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.

Successful track record of launching new products

– Arthur J Gallagher has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Arthur J Gallagher 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.

Ability to lead change in Insurance (Miscellaneous)

– Arthur J Gallagher is one of the leading players in the Insurance (Miscellaneous) industry in United States. Over the years it has not only transformed the business landscape in the Insurance (Miscellaneous) industry in United States but also across the existing markets. The ability to lead change has enabled Arthur J Gallagher in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Training and development

– Arthur J Gallagher has one of the best training and development program in Financial 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.

Superior customer experience

– The customer experience strategy of Arthur J Gallagher in Insurance (Miscellaneous) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Arthur J Gallagher | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Arthur J Gallagher are -

Skills based hiring in Insurance (Miscellaneous) industry

– The stress on hiring functional specialists at Arthur J Gallagher 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.

Need for greater diversity

– Arthur J Gallagher 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.

Slow to strategic competitive environment developments

– As Arthur J Gallagher is one of the leading players in the Insurance (Miscellaneous) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Insurance (Miscellaneous) industry in last five years.

Interest costs

– Compare to the competition, Arthur J Gallagher 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 bargaining power of channel partners in Insurance (Miscellaneous) industry

– because of the regulatory requirements in United States, Arthur J Gallagher 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 Insurance (Miscellaneous) industry.

High operating costs

– Compare to the competitors, Arthur J Gallagher has high operating costs in the Insurance (Miscellaneous) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Arthur J Gallagher lucrative customers.

Aligning sales with marketing

– From the outside it seems that Arthur J Gallagher needs to have more collaboration between its sales team and marketing team. Sales professionals in the Insurance (Miscellaneous) industry have deep experience in developing customer relationships. Marketing department at Arthur J Gallagher can leverage the sales team experience to cultivate customer relationships as Arthur J Gallagher is planning to shift buying processes online.

Workers concerns about automation

– As automation is fast increasing in the Insurance (Miscellaneous) industry, Arthur J Gallagher 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Arthur J Gallagher is slow explore the new channels of communication. These new channels of communication can help Arthur J Gallagher to provide better information regarding Insurance (Miscellaneous) products and services. It can also build an online community to further reach out to potential customers.

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

Ability to respond to the competition

– As the decision making is very deliberative at Arthur J Gallagher, in the dynamic environment of Insurance (Miscellaneous) industry it has struggled to respond to the nimble upstart competition. Arthur J Gallagher has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Arthur J Gallagher Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Arthur J Gallagher are -

Redefining models of collaboration and team work

– As explained in the weaknesses section, Arthur J Gallagher is facing challenges because of the dominance of functional experts in the organization. Arthur J Gallagher can utilize new technology in the field of Insurance (Miscellaneous) 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, Arthur J Gallagher 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.

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 Arthur J Gallagher 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.

Remote work and new talent hiring opportunities

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

Using analytics as competitive advantage

– Arthur J Gallagher has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Insurance (Miscellaneous) sector. This continuous investment in analytics has enabled Arthur J Gallagher to build a competitive advantage using analytics. The analytics driven competitive advantage can help Arthur J Gallagher 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, Arthur J Gallagher 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 Arthur J Gallagher to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Developing new processes and practices

– Arthur J Gallagher can develop new processes and procedures in Insurance (Miscellaneous) 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 Arthur J Gallagher can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Arthur J Gallagher in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Insurance (Miscellaneous) industry, and it will provide faster access to the consumers.

Manufacturing automation

– Arthur J Gallagher can use the latest technology developments to improve its manufacturing and designing process in Insurance (Miscellaneous) 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

– Arthur J Gallagher 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.

Use of Bitcoin and other crypto currencies for transactions in Insurance (Miscellaneous) industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Arthur J Gallagher in the Insurance (Miscellaneous) industry. Now Arthur J Gallagher can target international markets with far fewer capital restrictions requirements than the existing system.

Learning at scale

– Online learning technologies has now opened space for Arthur J Gallagher 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.

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Threats Arthur J Gallagher External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Arthur J Gallagher are -

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 Arthur J Gallagher business can come under increasing regulations regarding data privacy, data security, etc.

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.

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 Arthur J Gallagher.

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. Arthur J Gallagher needs to understand the core reasons impacting the Insurance (Miscellaneous) industry. This will help it in building a better workplace.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Arthur J Gallagher may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Insurance (Miscellaneous) sector.

Increasing wage structure of Arthur J Gallagher

– 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 Arthur J Gallagher.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Insurance (Miscellaneous) industry are lowering. It can presents Arthur J Gallagher with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Insurance (Miscellaneous) 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.

Stagnating economy with rate increase

– Arthur J Gallagher 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 Insurance (Miscellaneous) industry.

Easy access to finance

– Easy access to finance in Insurance (Miscellaneous) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Arthur J Gallagher can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Arthur J Gallagher 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 Insurance (Miscellaneous) industry and other sectors.

Technology acceleration in Forth Industrial Revolution

– Arthur J Gallagher has witnessed rapid integration of technology during Covid-19 in the Insurance (Miscellaneous) industry. As one of the leading players in the industry, Arthur J Gallagher needs to keep up with the evolution of technology in the Insurance (Miscellaneous) 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.

High dependence on third party suppliers

– Arthur J Gallagher 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.

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Weighted SWOT Analysis of Arthur J Gallagher Template, Example

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

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