Based on various researches at Oak Spring University , Compagnie Financiere Richemont is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , there is backlash against globalization, talent flight as more people leaving formal jobs,
geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Compagnie Financiere Richemont
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Compagnie Financiere Richemont can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Compagnie Financiere Richemont, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Compagnie Financiere Richemont 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 Compagnie Financiere Richemont can be done for the following purposes –
1. Strategic planning of Compagnie Financiere Richemont
2. Improving business portfolio management of Compagnie Financiere Richemont
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 Compagnie Financiere Richemont
Strengths of Compagnie Financiere Richemont | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Compagnie Financiere Richemont are -
Cross disciplinary teams
– Horizontal connected teams at the Compagnie Financiere Richemont 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.
Low bargaining power of suppliers
– Suppliers of Compagnie Financiere Richemont in the sector have low bargaining power. Compagnie Financiere Richemont has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Compagnie Financiere Richemont to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Compagnie Financiere Richemont is one of the most innovative firm in sector.
Superior customer experience
– The customer experience strategy of Compagnie Financiere Richemont in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Compagnie Financiere Richemont has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in industry
– Compagnie Financiere Richemont has clearly differentiated products in the market place. This has enabled Compagnie Financiere Richemont to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Compagnie Financiere Richemont to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy of Compagnie Financiere Richemont 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.
Ability to lead change in
– Compagnie Financiere Richemont is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled Compagnie Financiere Richemont in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Compagnie Financiere Richemont is present in almost all the verticals within the industry. This has provided Compagnie Financiere Richemont 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.
Learning organization
- Compagnie Financiere Richemont 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 Compagnie Financiere Richemont is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Compagnie Financiere Richemont emphasize – knowledge, initiative, and innovation.
High brand equity
– Compagnie Financiere Richemont has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Compagnie Financiere Richemont to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Compagnie Financiere Richemont
– The covid-19 pandemic has put organizational resilience at the centre of everthing Compagnie Financiere Richemont does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Compagnie Financiere Richemont | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Compagnie Financiere Richemont are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Compagnie Financiere Richemont is slow explore the new channels of communication. These new channels of communication can help Compagnie Financiere Richemont to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on Compagnie Financiere Richemont ‘s star products
– The top 2 products and services of Compagnie Financiere Richemont still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Compagnie Financiere Richemont has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Compagnie Financiere Richemont is dominated by functional specialists. It is not different from other players in the industry, but Compagnie Financiere Richemont needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Compagnie Financiere Richemont to focus more on services in the industry rather than just following the product oriented approach.
No frontier risks strategy
– From the 10K / annual statement of Compagnie Financiere Richemont, it seems that company is thinking out the frontier risks that can impact industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– From the outside it seems that Compagnie Financiere Richemont 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 Compagnie Financiere Richemont can leverage the sales team experience to cultivate customer relationships as Compagnie Financiere Richemont is planning to shift buying processes online.
High operating costs
– Compare to the competitors, Compagnie Financiere Richemont 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 Compagnie Financiere Richemont lucrative customers.
Need for greater diversity
– Compagnie Financiere Richemont 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.
Ability to respond to the competition
– As the decision making is very deliberative at Compagnie Financiere Richemont, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. Compagnie Financiere Richemont has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Compagnie Financiere Richemont supply chain. Even after few cautionary changes, Compagnie Financiere Richemont is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Compagnie Financiere Richemont vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of United States, Compagnie Financiere Richemont needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the industry, Compagnie Financiere Richemont 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.
Compagnie Financiere Richemont Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Compagnie Financiere Richemont are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Compagnie Financiere Richemont 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 Compagnie Financiere Richemont to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Compagnie Financiere Richemont 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. Compagnie Financiere Richemont 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.
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. Compagnie Financiere Richemont can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Compagnie Financiere Richemont has opened avenues for new revenue streams for the organization in industry. This can help Compagnie Financiere Richemont to build a more holistic ecosystem for Compagnie Financiere Richemont products in the industry by providing – data insight services, data privacy related products, data based consulting services, 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. Compagnie Financiere Richemont can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Compagnie Financiere Richemont 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 Compagnie Financiere Richemont to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Compagnie Financiere Richemont 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.
Building a culture of innovation
– managers at Compagnie Financiere Richemont 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Compagnie Financiere Richemont can use these opportunities to build new business models that can help the communities that Compagnie Financiere Richemont operates in. Secondly it can use opportunities from government spending in sector.
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 Compagnie Financiere Richemont 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Compagnie Financiere Richemont can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Compagnie Financiere Richemont 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Compagnie Financiere Richemont 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.
Threats Compagnie Financiere Richemont External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Compagnie Financiere Richemont are -
Consumer confidence and its impact on Compagnie Financiere Richemont 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.
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 Compagnie Financiere Richemont business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Compagnie Financiere Richemont 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 industry regulations.
Stagnating economy with rate increase
– Compagnie Financiere Richemont 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.
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 Compagnie Financiere Richemont.
Technology acceleration in Forth Industrial Revolution
– Compagnie Financiere Richemont has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Compagnie Financiere Richemont 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.
Shortening product life cycle
– it is one of the major threat that Compagnie Financiere Richemont is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Compagnie Financiere Richemont 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Compagnie Financiere Richemont 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 Compagnie Financiere Richemont prominent markets.
Environmental challenges
– Compagnie Financiere Richemont 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. Compagnie Financiere Richemont can take advantage of this fund but it will also bring new competitors in the industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Compagnie Financiere Richemont with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Compagnie Financiere Richemont
– 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 Compagnie Financiere Richemont.
Weighted SWOT Analysis of Compagnie Financiere Richemont Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Compagnie Financiere Richemont 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 Compagnie Financiere Richemont 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 Compagnie Financiere Richemont 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 Compagnie Financiere Richemont 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 Compagnie Financiere Richemont needs to make to build a sustainable competitive advantage.