Black Diamond (CLAR) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Black Diamond (United States)

Based on various researches at Oak Spring University , Black Diamond is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, etc

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Introduction to SWOT Analysis of Black Diamond

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Black Diamond can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Black Diamond, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Black Diamond 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Black Diamond can be done for the following purposes –
1. Strategic planning of Black Diamond
2. Improving business portfolio management of Black Diamond
3. Assessing feasibility of the new initiative in United States
4. Making a Recreational Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Black Diamond

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Strengths of Black Diamond | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Black Diamond are -

Diverse revenue streams

– Black Diamond is present in almost all the verticals within the Recreational Products industry. This has provided Black Diamond 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.

Analytics focus

– Black Diamond 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 Recreational Products 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.

Operational resilience

– The operational resilience strategy of Black Diamond comprises – understanding the underlying the factors in the Recreational Products 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 Recreational Products

– Black Diamond is one of the leading players in the Recreational Products industry in United States. Over the years it has not only transformed the business landscape in the Recreational Products industry in United States but also across the existing markets. The ability to lead change has enabled Black Diamond in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Low bargaining power of suppliers

– Suppliers of Black Diamond in the Consumer Cyclical sector have low bargaining power. Black Diamond has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Black Diamond to manage not only supply disruptions but also source products at highly competitive prices.

Learning organization

- Black Diamond 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 Black Diamond is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Black Diamond emphasize – knowledge, initiative, and innovation.

Digital Transformation in Recreational Products industry

- digital transformation varies from industry to industry. For Black Diamond digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Black Diamond 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.

High switching costs

– The high switching costs that Black Diamond 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.

Training and development

– Black Diamond has one of the best training and development program in Consumer Cyclical 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.

Innovation driven organization

– Black Diamond is one of the most innovative firm in Recreational Products sector.

High brand equity

– Black Diamond has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Black Diamond to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Black Diamond is one of the leading players in the Recreational Products industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.

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Weaknesses of Black Diamond | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Black Diamond are -

Interest costs

– Compare to the competition, Black Diamond has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

Low market penetration in new markets

– Outside its home market of United States, Black Diamond needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Lack of clear differentiation of Black Diamond products

– To increase the profitability and margins on the products, Black Diamond needs to provide more differentiated products than what it is currently offering in the marketplace.

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 Black Diamond supply chain. Even after few cautionary changes, Black Diamond is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Black Diamond vulnerable to further global disruptions in South East Asia.

High operating costs

– Compare to the competitors, Black Diamond has high operating costs in the Recreational Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Black Diamond lucrative customers.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Black Diamond is slow explore the new channels of communication. These new channels of communication can help Black Diamond to provide better information regarding Recreational Products products and services. It can also build an online community to further reach out to potential customers.

Aligning sales with marketing

– From the outside it seems that Black Diamond needs to have more collaboration between its sales team and marketing team. Sales professionals in the Recreational Products industry have deep experience in developing customer relationships. Marketing department at Black Diamond can leverage the sales team experience to cultivate customer relationships as Black Diamond is planning to shift buying processes online.

Compensation and incentives

– The revenue per employee of Black Diamond is just above the Recreational Products 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.

Need for greater diversity

– Black Diamond 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.

Products dominated business model

– Even though Black Diamond has some of the most successful models in the Recreational Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Black Diamond should strive to include more intangible value offerings along with its core products and services.

High bargaining power of channel partners in Recreational Products industry

– because of the regulatory requirements in United States, Black Diamond 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 Recreational Products industry.

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Black Diamond Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Black Diamond are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Black Diamond can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Black Diamond can use these opportunities to build new business models that can help the communities that Black Diamond operates in. Secondly it can use opportunities from government spending in Recreational Products sector.

Use of Bitcoin and other crypto currencies for transactions in Recreational Products industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Black Diamond in the Recreational Products industry. Now Black Diamond can target international markets with far fewer capital restrictions requirements than the existing system.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Black Diamond in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Recreational Products industry, and it will provide faster access to the consumers.

Loyalty marketing

– Black Diamond 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 Black Diamond 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 Recreational Products industry.

Manufacturing automation

– Black Diamond can use the latest technology developments to improve its manufacturing and designing process in Recreational Products sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

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. Black Diamond can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Buying journey improvements

– Black Diamond can improve the customer journey of consumers in the Recreational Products 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.

Better consumer reach

– The expansion of the 5G network will help Black Diamond to increase its market reach. Black Diamond 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.

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 Black Diamond 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Black Diamond is facing challenges because of the dominance of functional experts in the organization. Black Diamond can utilize new technology in the field of Recreational Products 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 Recreational Products industry, but it has also influenced the consumer preferences. Black Diamond can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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Threats Black Diamond External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Black Diamond 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. Black Diamond 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, Black Diamond may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Recreational Products sector.

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. Black Diamond needs to understand the core reasons impacting the Recreational Products industry. This will help it in building a better workplace.

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 Black Diamond business can come under increasing regulations regarding data privacy, data security, etc.

High dependence on third party suppliers

– Black Diamond 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 acceleration in Forth Industrial Revolution

– Black Diamond has witnessed rapid integration of technology during Covid-19 in the Recreational Products industry. As one of the leading players in the industry, Black Diamond needs to keep up with the evolution of technology in the Recreational Products 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 Black Diamond is facing in Recreational Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– Black Diamond 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 Recreational Products industry.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Recreational Products industry are lowering. It can presents Black Diamond with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Recreational Products sector.

Environmental challenges

– Black Diamond 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. Black Diamond can take advantage of this fund but it will also bring new competitors in the Recreational Products industry.

Increasing wage structure of Black Diamond

– 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 Black Diamond.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Black Diamond 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 Black Diamond prominent markets.

Regulatory challenges

– Black Diamond 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 Recreational Products industry regulations.

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Weighted SWOT Analysis of Black Diamond Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Black Diamond 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 Black Diamond 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 Black Diamond 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 Black Diamond 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 Black Diamond needs to make to build a sustainable competitive advantage.

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