Atlas Copco AB (ATLKY) SWOT Analysis / TOWS Matrix / MBA Resources
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Atlas Copco AB (United States)
Based on various researches at Oak Spring University , Atlas Copco AB is operating in a macro-environment that has been destablized by – technology disruption, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, geopolitical disruptions, increasing commodity prices, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Atlas Copco AB can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Atlas Copco AB, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Atlas Copco AB 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 Atlas Copco AB can be done for the following purposes –
1. Strategic planning of Atlas Copco AB
2. Improving business portfolio management of Atlas Copco AB
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 Atlas Copco AB
Strengths of Atlas Copco AB | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Atlas Copco AB are -
Cross disciplinary teams
– Horizontal connected teams at the Atlas Copco AB 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.
High brand equity
– Atlas Copco AB has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Atlas Copco AB to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Atlas Copco AB is present in almost all the verticals within the industry. This has provided Atlas Copco AB 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.
Highly skilled collaborators
– Atlas Copco AB 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 Atlas Copco AB have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Atlas Copco AB is one of the most innovative firm in sector.
Operational resilience
– The operational resilience strategy of Atlas Copco AB 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.
Analytics focus
– Atlas Copco AB 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 industry. The technology infrastructure of United States 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.
Effective Research and Development (R&D)
– Atlas Copco AB has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Atlas Copco AB staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Atlas Copco AB digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Atlas Copco AB 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.
Low bargaining power of suppliers
– Suppliers of Atlas Copco AB in the sector have low bargaining power. Atlas Copco AB has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Atlas Copco AB to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Atlas Copco AB has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Atlas Copco AB 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.
Learning organization
- Atlas Copco AB 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 Atlas Copco AB is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Atlas Copco AB emphasize – knowledge, initiative, and innovation.
Weaknesses of Atlas Copco AB | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Atlas Copco AB are -
Products dominated business model
– Even though Atlas Copco AB 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. Atlas Copco AB should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Atlas Copco AB 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, Atlas Copco AB 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.
Increasing silos among functional specialists
– The organizational structure of Atlas Copco AB is dominated by functional specialists. It is not different from other players in the industry, but Atlas Copco AB needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Atlas Copco AB to focus more on services in the industry rather than just following the product oriented approach.
Skills based hiring in industry
– The stress on hiring functional specialists at Atlas Copco AB 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.
Capital Spending Reduction
– Even during the low interest decade, Atlas Copco AB has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Need for greater diversity
– Atlas Copco AB 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.
High dependence on Atlas Copco AB ‘s star products
– The top 2 products and services of Atlas Copco AB still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Atlas Copco AB has relatively successful track record of launching new products.
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 Atlas Copco AB supply chain. Even after few cautionary changes, Atlas Copco AB is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Atlas Copco AB vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Atlas Copco AB needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department at Atlas Copco AB can leverage the sales team experience to cultivate customer relationships as Atlas Copco AB is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Atlas Copco AB 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.
Atlas Copco AB Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Atlas Copco AB are -
Creating value in data economy
– The success of analytics program of Atlas Copco AB has opened avenues for new revenue streams for the organization in industry. This can help Atlas Copco AB to build a more holistic ecosystem for Atlas Copco AB products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Atlas Copco AB to increase its market reach. Atlas Copco AB 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Atlas Copco AB 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 Atlas Copco AB to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Atlas Copco AB 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 Atlas Copco AB to hire the very best people irrespective of their geographical location.
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 Atlas Copco AB in the industry. Now Atlas Copco AB can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Atlas Copco AB can use these opportunities to build new business models that can help the communities that Atlas Copco AB operates in. Secondly it can use opportunities from government spending in sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Atlas Copco AB can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Atlas Copco AB can improve the customer journey of consumers in the 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.
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. Atlas Copco AB can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Atlas Copco AB 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 Atlas Copco AB to build a competitive advantage using analytics. The analytics driven competitive advantage can help Atlas Copco AB to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Atlas Copco AB is facing challenges because of the dominance of functional experts in the organization. Atlas Copco AB 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.
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. Atlas Copco AB can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Atlas Copco AB 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.
Threats Atlas Copco AB External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Atlas Copco AB are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Atlas Copco AB 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Atlas Copco AB with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Atlas Copco AB 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 industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Atlas Copco AB 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.
Technology acceleration in Forth Industrial Revolution
– Atlas Copco AB has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Atlas Copco AB 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.
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 Atlas Copco AB business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Atlas Copco AB 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.
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.
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 Atlas Copco AB in the sector and impact the bottomline of the organization.
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.
Increasing wage structure of Atlas Copco AB
– 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 Atlas Copco AB.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Atlas Copco AB 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 Atlas Copco AB prominent markets.
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 Atlas Copco AB.
Weighted SWOT Analysis of Atlas Copco AB Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Atlas Copco AB 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 Atlas Copco AB 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 Atlas Copco AB 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 Atlas Copco AB 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 Atlas Copco AB needs to make to build a sustainable competitive advantage.