Canadian Pacific Railway (CP) SWOT Analysis / TOWS Matrix / MBA Resources
Railroads
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Canadian Pacific Railway (Canada)
Based on various researches at Oak Spring University , Canadian Pacific Railway is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, increasing commodity prices, technology disruption, increasing energy prices, cloud computing is disrupting traditional business models, wage bills are increasing, geopolitical disruptions,
banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Canadian Pacific Railway
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Canadian Pacific Railway can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Canadian Pacific Railway, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Canadian Pacific Railway 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 Canadian Pacific Railway can be done for the following purposes –
1. Strategic planning of Canadian Pacific Railway
2. Improving business portfolio management of Canadian Pacific Railway
3. Assessing feasibility of the new initiative in Canada
4. Making a Railroads sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Canadian Pacific Railway
Strengths of Canadian Pacific Railway | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Canadian Pacific Railway are -
Strong track record of project management in the Railroads industry
– Canadian Pacific Railway is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Canadian Pacific Railway is present in almost all the verticals within the Railroads industry. This has provided Canadian Pacific Railway 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.
Digital Transformation in Railroads industry
- digital transformation varies from industry to industry. For Canadian Pacific Railway digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Canadian Pacific Railway 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.
Analytics focus
– Canadian Pacific Railway 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 Railroads industry. The technology infrastructure of Canada 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.
Superior customer experience
– The customer experience strategy of Canadian Pacific Railway in Railroads industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Railroads
– Canadian Pacific Railway is one of the leading players in the Railroads industry in Canada. Over the years it has not only transformed the business landscape in the Railroads industry in Canada but also across the existing markets. The ability to lead change has enabled Canadian Pacific Railway in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Canadian Pacific Railway has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Canadian Pacific Railway staying ahead in the Railroads industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Canadian Pacific Railway has one of the best training and development program in Transportation 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.
High brand equity
– Canadian Pacific Railway has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Canadian Pacific Railway to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of Canadian Pacific Railway comprises – understanding the underlying the factors in the Railroads 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 Railroads industry
– Canadian Pacific Railway has clearly differentiated products in the market place. This has enabled Canadian Pacific Railway to fetch slight price premium compare to the competitors in the Railroads industry. The sustainable margins have also helped Canadian Pacific Railway to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Canadian Pacific Railway is one of the leading players in the Railroads industry in Canada. It is in a position to attract the best talent available in Canada. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses of Canadian Pacific Railway | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Canadian Pacific Railway are -
Low market penetration in new markets
– Outside its home market of Canada, Canadian Pacific Railway needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Canadian Pacific Railway is slow explore the new channels of communication. These new channels of communication can help Canadian Pacific Railway to provide better information regarding Railroads products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Canadian Pacific Railway strategy
– From the outside it seems that the employees of Canadian Pacific Railway 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.
Aligning sales with marketing
– From the outside it seems that Canadian Pacific Railway needs to have more collaboration between its sales team and marketing team. Sales professionals in the Railroads industry have deep experience in developing customer relationships. Marketing department at Canadian Pacific Railway can leverage the sales team experience to cultivate customer relationships as Canadian Pacific Railway is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative at Canadian Pacific Railway, in the dynamic environment of Railroads industry it has struggled to respond to the nimble upstart competition. Canadian Pacific Railway has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Canadian Pacific Railway has some of the most successful models in the Railroads industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Canadian Pacific Railway should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, Canadian Pacific Railway has high operating costs in the Railroads industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Canadian Pacific Railway lucrative customers.
High bargaining power of channel partners in Railroads industry
– because of the regulatory requirements in Canada, Canadian Pacific Railway 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 Railroads industry.
Workers concerns about automation
– As automation is fast increasing in the Railroads industry, Canadian Pacific Railway 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.
Need for greater diversity
– Canadian Pacific Railway 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 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 Canadian Pacific Railway supply chain. Even after few cautionary changes, Canadian Pacific Railway is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Canadian Pacific Railway vulnerable to further global disruptions in South East Asia.
Canadian Pacific Railway Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Canadian Pacific Railway are -
Buying journey improvements
– Canadian Pacific Railway can improve the customer journey of consumers in the Railroads 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Railroads industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Canadian Pacific Railway 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. Canadian Pacific Railway 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Canadian Pacific Railway in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Railroads industry, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Railroads industry, but it has also influenced the consumer preferences. Canadian Pacific Railway can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Canadian Pacific Railway can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Canadian Pacific Railway can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Canadian Pacific Railway can use these opportunities to build new business models that can help the communities that Canadian Pacific Railway operates in. Secondly it can use opportunities from government spending in Railroads sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Canadian Pacific Railway is facing challenges because of the dominance of functional experts in the organization. Canadian Pacific Railway can utilize new technology in the field of Railroads industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Canadian Pacific Railway 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.
Developing new processes and practices
– Canadian Pacific Railway can develop new processes and procedures in Railroads 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.
Loyalty marketing
– Canadian Pacific Railway 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.
Building a culture of innovation
– managers at Canadian Pacific Railway 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 Railroads industry.
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 Canadian Pacific Railway 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.
Threats Canadian Pacific Railway External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Canadian Pacific Railway are -
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. Canadian Pacific Railway 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.
Shortening product life cycle
– it is one of the major threat that Canadian Pacific Railway is facing in Railroads sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Canadian Pacific Railway in the Railroads sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Canadian Pacific Railway in Railroads industry. The Railroads 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.
Regulatory challenges
– Canadian Pacific Railway 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 Railroads industry regulations.
Increasing wage structure of Canadian Pacific Railway
– 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 Canadian Pacific Railway.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Railroads industry are lowering. It can presents Canadian Pacific Railway with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Railroads 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.
Consumer confidence and its impact on Canadian Pacific Railway 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 Railroads industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Canadian Pacific Railway 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 Canadian Pacific Railway prominent markets.
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 Canadian Pacific Railway.
Technology acceleration in Forth Industrial Revolution
– Canadian Pacific Railway has witnessed rapid integration of technology during Covid-19 in the Railroads industry. As one of the leading players in the industry, Canadian Pacific Railway needs to keep up with the evolution of technology in the Railroads 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 Canadian Pacific Railway Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Canadian Pacific Railway 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 Canadian Pacific Railway 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 Canadian Pacific Railway 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 Canadian Pacific Railway 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 Canadian Pacific Railway needs to make to build a sustainable competitive advantage.