West Fraser Timber (WFT) SWOT Analysis / TOWS Matrix / MBA Resources
Forestry & Wood Products
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for West Fraser Timber (Canada)
Based on various researches at Oak Spring University , West Fraser Timber is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing energy prices, increasing commodity prices, technology disruption, talent flight as more people leaving formal jobs,
wage bills are increasing, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of West Fraser Timber
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that West Fraser Timber can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the West Fraser Timber, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which West Fraser Timber 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 West Fraser Timber can be done for the following purposes –
1. Strategic planning of West Fraser Timber
2. Improving business portfolio management of West Fraser Timber
3. Assessing feasibility of the new initiative in Canada
4. Making a Forestry & Wood Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of West Fraser Timber
Strengths of West Fraser Timber | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of West Fraser Timber are -
Highly skilled collaborators
– West Fraser Timber has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Forestry & Wood Products industry. Secondly the value chain collaborators of West Fraser Timber have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Forestry & Wood Products
– West Fraser Timber is one of the leading players in the Forestry & Wood Products industry in Canada. Over the years it has not only transformed the business landscape in the Forestry & Wood Products industry in Canada but also across the existing markets. The ability to lead change has enabled West Fraser Timber in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the West Fraser Timber 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.
Innovation driven organization
– West Fraser Timber is one of the most innovative firm in Forestry & Wood Products sector.
Strong track record of project management in the Forestry & Wood Products industry
– West Fraser Timber is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– West Fraser Timber has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled West Fraser Timber to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– West Fraser Timber has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. West Fraser Timber has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Digital Transformation in Forestry & Wood Products industry
- digital transformation varies from industry to industry. For West Fraser Timber digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. West Fraser Timber 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.
Training and development
– West Fraser Timber has one of the best training and development program in Basic Materials 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.
Diverse revenue streams
– West Fraser Timber is present in almost all the verticals within the Forestry & Wood Products industry. This has provided West Fraser Timber 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.
Sustainable margins compare to other players in Forestry & Wood Products industry
– West Fraser Timber has clearly differentiated products in the market place. This has enabled West Fraser Timber to fetch slight price premium compare to the competitors in the Forestry & Wood Products industry. The sustainable margins have also helped West Fraser Timber to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy of West Fraser Timber comprises – understanding the underlying the factors in the Forestry & Wood 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.
Weaknesses of West Fraser Timber | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of West Fraser Timber are -
Slow to strategic competitive environment developments
– As West Fraser Timber is one of the leading players in the Forestry & Wood Products industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Forestry & Wood Products industry in last five years.
Low market penetration in new markets
– Outside its home market of Canada, West Fraser Timber needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee of West Fraser Timber is just above the Forestry & Wood 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.
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 West Fraser Timber supply chain. Even after few cautionary changes, West Fraser Timber is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left West Fraser Timber vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the Forestry & Wood Products industry, West Fraser Timber 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.
Products dominated business model
– Even though West Fraser Timber has some of the most successful models in the Forestry & Wood Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. West Fraser Timber should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of West Fraser Timber is dominated by functional specialists. It is not different from other players in the Forestry & Wood Products industry, but West Fraser Timber needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help West Fraser Timber to focus more on services in the Forestry & Wood Products industry rather than just following the product oriented approach.
High dependence on West Fraser Timber ‘s star products
– The top 2 products and services of West Fraser Timber still accounts for major business revenue. This dependence on star products in Forestry & Wood Products industry has resulted into insufficient focus on developing new products, even though West Fraser Timber has relatively successful track record of launching new products.
High cash cycle compare to competitors
West Fraser Timber has a high cash cycle compare to other players in the Forestry & Wood Products industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, West Fraser Timber 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.
No frontier risks strategy
– From the 10K / annual statement of West Fraser Timber, it seems that company is thinking out the frontier risks that can impact Forestry & Wood Products 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.
West Fraser Timber Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of West Fraser Timber are -
Use of Bitcoin and other crypto currencies for transactions in Forestry & Wood Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for West Fraser Timber in the Forestry & Wood Products industry. Now West Fraser Timber can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for West Fraser Timber 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 West Fraser Timber to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, West Fraser Timber 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.
Better consumer reach
– The expansion of the 5G network will help West Fraser Timber to increase its market reach. West Fraser Timber 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for West Fraser Timber in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Forestry & Wood Products industry, and it will provide faster access to the consumers.
Buying journey improvements
– West Fraser Timber can improve the customer journey of consumers in the Forestry & Wood 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.
Building a culture of innovation
– managers at West Fraser Timber 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 Forestry & Wood Products industry.
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. West Fraser Timber can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– West Fraser Timber can develop new processes and procedures in Forestry & Wood Products 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.
Using analytics as competitive advantage
– West Fraser Timber has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Forestry & Wood Products sector. This continuous investment in analytics has enabled West Fraser Timber to build a competitive advantage using analytics. The analytics driven competitive advantage can help West Fraser Timber to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Forestry & Wood Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. West Fraser Timber 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. West Fraser Timber 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, West Fraser Timber is facing challenges because of the dominance of functional experts in the organization. West Fraser Timber can utilize new technology in the field of Forestry & Wood Products industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of West Fraser Timber has opened avenues for new revenue streams for the organization in Forestry & Wood Products industry. This can help West Fraser Timber to build a more holistic ecosystem for West Fraser Timber products in the Forestry & Wood Products industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats West Fraser Timber External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of West Fraser Timber are -
Easy access to finance
– Easy access to finance in Forestry & Wood Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. West Fraser Timber can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– West Fraser Timber 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.
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. West Fraser Timber needs to understand the core reasons impacting the Forestry & Wood 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 West Fraser Timber business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, West Fraser Timber may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Forestry & Wood Products sector.
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. West Fraser Timber 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Forestry & Wood Products industry are lowering. It can presents West Fraser Timber with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Forestry & Wood Products sector.
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 West Fraser Timber in the Forestry & Wood Products sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, West Fraser Timber 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 West Fraser Timber prominent markets.
Increasing wage structure of West Fraser Timber
– 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 West Fraser Timber.
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 West Fraser Timber.
Weighted SWOT Analysis of West Fraser Timber Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at West Fraser Timber 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 West Fraser Timber 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 West Fraser Timber 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 West Fraser Timber 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 West Fraser Timber needs to make to build a sustainable competitive advantage.