Inter Pipeline (IPL) SWOT Analysis / TOWS Matrix / MBA Resources
Oil Well Services & Equipment
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Inter Pipeline (Canada)
Based on various researches at Oak Spring University , Inter Pipeline is operating in a macro-environment that has been destablized by – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, increasing energy prices, there is increasing trade war between United States & China,
challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Inter Pipeline can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inter Pipeline, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inter Pipeline 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 Inter Pipeline can be done for the following purposes –
1. Strategic planning of Inter Pipeline
2. Improving business portfolio management of Inter Pipeline
3. Assessing feasibility of the new initiative in Canada
4. Making a Oil Well Services & Equipment sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Inter Pipeline
Strengths of Inter Pipeline | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inter Pipeline are -
Operational resilience
– The operational resilience strategy of Inter Pipeline comprises – understanding the underlying the factors in the Oil Well Services & Equipment 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.
Innovation driven organization
– Inter Pipeline is one of the most innovative firm in Oil Well Services & Equipment sector.
Ability to lead change in Oil Well Services & Equipment
– Inter Pipeline is one of the leading players in the Oil Well Services & Equipment industry in Canada. Over the years it has not only transformed the business landscape in the Oil Well Services & Equipment industry in Canada but also across the existing markets. The ability to lead change has enabled Inter Pipeline in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Oil Well Services & Equipment industry
- digital transformation varies from industry to industry. For Inter Pipeline digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inter Pipeline 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.
Sustainable margins compare to other players in Oil Well Services & Equipment industry
– Inter Pipeline has clearly differentiated products in the market place. This has enabled Inter Pipeline to fetch slight price premium compare to the competitors in the Oil Well Services & Equipment industry. The sustainable margins have also helped Inter Pipeline to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Inter Pipeline has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Oil Well Services & Equipment industry. Secondly the value chain collaborators of Inter Pipeline have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Inter Pipeline is present in almost all the verticals within the Oil Well Services & Equipment industry. This has provided Inter Pipeline 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.
Superior customer experience
– The customer experience strategy of Inter Pipeline in Oil Well Services & Equipment industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Inter Pipeline in the Energy sector have low bargaining power. Inter Pipeline has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inter Pipeline to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Inter Pipeline has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Inter Pipeline staying ahead in the Oil Well Services & Equipment industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Inter Pipeline is one of the leading players in the Oil Well Services & Equipment 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.
Strong track record of project management in the Oil Well Services & Equipment industry
– Inter Pipeline is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Inter Pipeline | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Inter Pipeline are -
Need for greater diversity
– Inter Pipeline 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 Inter Pipeline supply chain. Even after few cautionary changes, Inter Pipeline is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Inter Pipeline vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Inter Pipeline products
– To increase the profitability and margins on the products, Inter Pipeline needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Inter Pipeline is dominated by functional specialists. It is not different from other players in the Oil Well Services & Equipment industry, but Inter Pipeline needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Inter Pipeline to focus more on services in the Oil Well Services & Equipment industry rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the Oil Well Services & Equipment industry, Inter Pipeline 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 strategic competitive environment developments
– As Inter Pipeline is one of the leading players in the Oil Well Services & Equipment industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Oil Well Services & Equipment industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Inter Pipeline 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 Oil Well Services & Equipment industry using digital technology.
Aligning sales with marketing
– From the outside it seems that Inter Pipeline needs to have more collaboration between its sales team and marketing team. Sales professionals in the Oil Well Services & Equipment industry have deep experience in developing customer relationships. Marketing department at Inter Pipeline can leverage the sales team experience to cultivate customer relationships as Inter Pipeline is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Inter Pipeline is just above the Oil Well Services & Equipment 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.
Ability to respond to the competition
– As the decision making is very deliberative at Inter Pipeline, in the dynamic environment of Oil Well Services & Equipment industry it has struggled to respond to the nimble upstart competition. Inter Pipeline has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Inter Pipeline is slow explore the new channels of communication. These new channels of communication can help Inter Pipeline to provide better information regarding Oil Well Services & Equipment products and services. It can also build an online community to further reach out to potential customers.
Inter Pipeline Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Inter Pipeline are -
Using analytics as competitive advantage
– Inter Pipeline has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Oil Well Services & Equipment sector. This continuous investment in analytics has enabled Inter Pipeline to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inter Pipeline to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Inter Pipeline 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 Inter Pipeline to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Inter Pipeline to increase its market reach. Inter Pipeline 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.
Developing new processes and practices
– Inter Pipeline can develop new processes and procedures in Oil Well Services & Equipment 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.
Learning at scale
– Online learning technologies has now opened space for Inter Pipeline 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.
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. Inter Pipeline can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Inter Pipeline 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 Inter Pipeline to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Inter Pipeline 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.
Buying journey improvements
– Inter Pipeline can improve the customer journey of consumers in the Oil Well Services & Equipment 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Inter Pipeline 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inter Pipeline can use these opportunities to build new business models that can help the communities that Inter Pipeline operates in. Secondly it can use opportunities from government spending in Oil Well Services & Equipment sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Inter Pipeline is facing challenges because of the dominance of functional experts in the organization. Inter Pipeline can utilize new technology in the field of Oil Well Services & Equipment industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Oil Well Services & Equipment industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Inter Pipeline in the Oil Well Services & Equipment industry. Now Inter Pipeline can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Inter Pipeline External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Inter Pipeline are -
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. Inter Pipeline needs to understand the core reasons impacting the Oil Well Services & Equipment industry. This will help it in building a better workplace.
Environmental challenges
– Inter Pipeline 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. Inter Pipeline can take advantage of this fund but it will also bring new competitors in the Oil Well Services & Equipment industry.
Stagnating economy with rate increase
– Inter Pipeline 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 Oil Well Services & Equipment industry.
Consumer confidence and its impact on Inter Pipeline 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 Oil Well Services & Equipment 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 Inter Pipeline business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Inter Pipeline has witnessed rapid integration of technology during Covid-19 in the Oil Well Services & Equipment industry. As one of the leading players in the industry, Inter Pipeline needs to keep up with the evolution of technology in the Oil Well Services & Equipment 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.
Easy access to finance
– Easy access to finance in Oil Well Services & Equipment industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Inter Pipeline can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Inter Pipeline
– 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 Inter Pipeline.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Inter Pipeline in Oil Well Services & Equipment industry. The Oil Well Services & Equipment 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.
High dependence on third party suppliers
– Inter Pipeline 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.
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.
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. Inter Pipeline 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Inter Pipeline may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Oil Well Services & Equipment sector.
Weighted SWOT Analysis of Inter Pipeline Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Inter Pipeline 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 Inter Pipeline 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 Inter Pipeline 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 Inter Pipeline 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 Inter Pipeline needs to make to build a sustainable competitive advantage.
