Ametek (AME) SWOT Analysis / TOWS Matrix / MBA Resources
Scientific & Technical Instr.
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Ametek (United States)
Based on various researches at Oak Spring University , Ametek is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
increasing energy prices, increasing commodity prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Ametek can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ametek, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ametek 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 Ametek can be done for the following purposes –
1. Strategic planning of Ametek
2. Improving business portfolio management of Ametek
3. Assessing feasibility of the new initiative in United States
4. Making a Scientific & Technical Instr. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ametek
Strengths of Ametek | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ametek are -
Successful track record of launching new products
– Ametek has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ametek 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.
Diverse revenue streams
– Ametek is present in almost all the verticals within the Scientific & Technical Instr. industry. This has provided Ametek 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.
Ability to recruit top talent
– Ametek is one of the leading players in the Scientific & Technical Instr. 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.
Learning organization
- Ametek 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 Ametek is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Ametek emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Scientific & Technical Instr. industry
– Ametek is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Ametek comprises – understanding the underlying the factors in the Scientific & Technical Instr. 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.
Sustainable margins compare to other players in Scientific & Technical Instr. industry
– Ametek has clearly differentiated products in the market place. This has enabled Ametek to fetch slight price premium compare to the competitors in the Scientific & Technical Instr. industry. The sustainable margins have also helped Ametek to invest into research and development (R&D) and innovation.
Training and development
– Ametek has one of the best training and development program in Technology 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.
Effective Research and Development (R&D)
– Ametek has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Ametek staying ahead in the Scientific & Technical Instr. industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Ametek 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.
Organizational Resilience of Ametek
– The covid-19 pandemic has put organizational resilience at the centre of everthing Ametek does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Ametek is one of the most innovative firm in Scientific & Technical Instr. sector.
Weaknesses of Ametek | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ametek are -
Employees’ less understanding of Ametek strategy
– From the outside it seems that the employees of Ametek don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners in Scientific & Technical Instr. industry
– because of the regulatory requirements in United States, Ametek 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 Scientific & Technical Instr. industry.
Lack of clear differentiation of Ametek products
– To increase the profitability and margins on the products, Ametek needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the Scientific & Technical Instr. industry, Ametek 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.
Compensation and incentives
– The revenue per employee of Ametek is just above the Scientific & Technical Instr. 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.
Aligning sales with marketing
– From the outside it seems that Ametek needs to have more collaboration between its sales team and marketing team. Sales professionals in the Scientific & Technical Instr. industry have deep experience in developing customer relationships. Marketing department at Ametek can leverage the sales team experience to cultivate customer relationships as Ametek is planning to shift buying processes online.
Interest costs
– Compare to the competition, Ametek 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.
Low market penetration in new markets
– Outside its home market of United States, Ametek needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, Ametek has high operating costs in the Scientific & Technical Instr. industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ametek lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ametek is slow explore the new channels of communication. These new channels of communication can help Ametek to provide better information regarding Scientific & Technical Instr. 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 Ametek supply chain. Even after few cautionary changes, Ametek is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ametek vulnerable to further global disruptions in South East Asia.
Ametek Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Ametek are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ametek can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Ametek to increase its market reach. Ametek 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ametek 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 Ametek to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Ametek can improve the customer journey of consumers in the Scientific & Technical Instr. 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.
Leveraging digital technologies
– Ametek 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ametek 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 Ametek to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ametek can use these opportunities to build new business models that can help the communities that Ametek operates in. Secondly it can use opportunities from government spending in Scientific & Technical Instr. sector.
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. Ametek can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Scientific & Technical Instr. industry, but it has also influenced the consumer preferences. Ametek can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ametek in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Scientific & Technical Instr. industry, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ametek 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.
Learning at scale
– Online learning technologies has now opened space for Ametek 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 Scientific & Technical Instr. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ametek 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. Ametek 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 Ametek External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Ametek are -
Regulatory challenges
– Ametek 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 Scientific & Technical Instr. industry regulations.
Stagnating economy with rate increase
– Ametek 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 Scientific & Technical Instr. industry.
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.
Shortening product life cycle
– it is one of the major threat that Ametek is facing in Scientific & Technical Instr. sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Ametek 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.
Consumer confidence and its impact on Ametek 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 Scientific & Technical Instr. industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ametek 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 Ametek prominent markets.
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 Ametek in the Scientific & Technical Instr. sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Ametek 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.
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 Ametek business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Scientific & Technical Instr. industry are lowering. It can presents Ametek with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Scientific & Technical Instr. sector.
Environmental challenges
– Ametek 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. Ametek can take advantage of this fund but it will also bring new competitors in the Scientific & Technical Instr. industry.
Technology acceleration in Forth Industrial Revolution
– Ametek has witnessed rapid integration of technology during Covid-19 in the Scientific & Technical Instr. industry. As one of the leading players in the industry, Ametek needs to keep up with the evolution of technology in the Scientific & Technical Instr. 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.
Weighted SWOT Analysis of Ametek Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Ametek 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 Ametek 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 Ametek 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 Ametek 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 Ametek needs to make to build a sustainable competitive advantage.