SWOT Analysis / TOWS Matrix for Ritchie Bros Auctioneers (Canada)
Based on various researches at Oak Spring University , Ritchie Bros Auctioneers is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing energy prices, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, wage bills are increasing, geopolitical disruptions,
digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, etc
Introduction to SWOT Analysis of Ritchie Bros Auctioneers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Ritchie Bros Auctioneers can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ritchie Bros Auctioneers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers can be done for the following purposes –
1. Strategic planning of Ritchie Bros Auctioneers
2. Improving business portfolio management of Ritchie Bros Auctioneers
3. Assessing feasibility of the new initiative in Canada
4. Making a Misc. Capital Goods sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ritchie Bros Auctioneers
Strengths of Ritchie Bros Auctioneers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ritchie Bros Auctioneers are -
Learning organization
- Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Ritchie Bros Auctioneers emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Ritchie Bros Auctioneers has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Ritchie Bros Auctioneers staying ahead in the Misc. Capital Goods industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Ritchie Bros Auctioneers has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Misc. Capital Goods industry. Secondly the value chain collaborators of Ritchie Bros Auctioneers have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Ritchie Bros Auctioneers 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.
High brand equity
– Ritchie Bros Auctioneers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ritchie Bros Auctioneers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of Ritchie Bros Auctioneers comprises – understanding the underlying the factors in the Misc. Capital Goods 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.
Organizational Resilience of Ritchie Bros Auctioneers
– The covid-19 pandemic has put organizational resilience at the centre of everthing Ritchie Bros Auctioneers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Misc. Capital Goods industry
- digital transformation varies from industry to industry. For Ritchie Bros Auctioneers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ritchie Bros Auctioneers 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 Misc. Capital Goods industry
– Ritchie Bros Auctioneers has clearly differentiated products in the market place. This has enabled Ritchie Bros Auctioneers to fetch slight price premium compare to the competitors in the Misc. Capital Goods industry. The sustainable margins have also helped Ritchie Bros Auctioneers to invest into research and development (R&D) and innovation.
Innovation driven organization
– Ritchie Bros Auctioneers is one of the most innovative firm in Misc. Capital Goods sector.
Low bargaining power of suppliers
– Suppliers of Ritchie Bros Auctioneers in the Capital Goods sector have low bargaining power. Ritchie Bros Auctioneers has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ritchie Bros Auctioneers to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Ritchie Bros Auctioneers in Misc. Capital Goods industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Ritchie Bros Auctioneers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ritchie Bros Auctioneers are -
Slow decision making process
– As mentioned earlier in the report, Ritchie Bros Auctioneers has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Misc. Capital Goods industry over the last five years. Ritchie Bros Auctioneers even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee of Ritchie Bros Auctioneers is just above the Misc. Capital Goods 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 bargaining power of channel partners in Misc. Capital Goods industry
– because of the regulatory requirements in Canada, Ritchie Bros Auctioneers 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 Misc. Capital Goods industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ritchie Bros Auctioneers is slow explore the new channels of communication. These new channels of communication can help Ritchie Bros Auctioneers to provide better information regarding Misc. Capital Goods products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Canada, Ritchie Bros Auctioneers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Ritchie Bros Auctioneers 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.
Increasing silos among functional specialists
– The organizational structure of Ritchie Bros Auctioneers is dominated by functional specialists. It is not different from other players in the Misc. Capital Goods industry, but Ritchie Bros Auctioneers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ritchie Bros Auctioneers to focus more on services in the Misc. Capital Goods industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, Ritchie Bros Auctioneers has high operating costs in the Misc. Capital Goods industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Ritchie Bros Auctioneers lucrative customers.
Slow to strategic competitive environment developments
– As Ritchie Bros Auctioneers is one of the leading players in the Misc. Capital Goods industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Misc. Capital Goods industry in last five years.
Skills based hiring in Misc. Capital Goods industry
– The stress on hiring functional specialists at Ritchie Bros Auctioneers has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ less understanding of Ritchie Bros Auctioneers strategy
– From the outside it seems that the employees of Ritchie Bros Auctioneers don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ritchie Bros Auctioneers Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Ritchie Bros Auctioneers are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Ritchie Bros Auctioneers 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 Misc. Capital Goods industry.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ritchie Bros Auctioneers in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Capital Goods industry, and it will provide faster access to the consumers.
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 Ritchie Bros Auctioneers 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Capital Goods industry, but it has also influenced the consumer preferences. Ritchie Bros Auctioneers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Ritchie Bros Auctioneers can develop new processes and procedures in Misc. Capital Goods 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Misc. Capital Goods industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ritchie Bros Auctioneers 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. Ritchie Bros Auctioneers 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.
Loyalty marketing
– Ritchie Bros Auctioneers 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.
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. Ritchie Bros Auctioneers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ritchie Bros Auctioneers 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, Ritchie Bros Auctioneers can use these opportunities to build new business models that can help the communities that Ritchie Bros Auctioneers operates in. Secondly it can use opportunities from government spending in Misc. Capital Goods sector.
Using analytics as competitive advantage
– Ritchie Bros Auctioneers has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Capital Goods sector. This continuous investment in analytics has enabled Ritchie Bros Auctioneers to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ritchie Bros Auctioneers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ritchie Bros Auctioneers can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Ritchie Bros Auctioneers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Ritchie Bros Auctioneers are -
Easy access to finance
– Easy access to finance in Misc. Capital Goods industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ritchie Bros Auctioneers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Ritchie Bros Auctioneers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Capital Goods sector.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Misc. Capital Goods industry are lowering. It can presents Ritchie Bros Auctioneers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Misc. Capital Goods sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers prominent markets.
Shortening product life cycle
– it is one of the major threat that Ritchie Bros Auctioneers is facing in Misc. Capital Goods sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Ritchie Bros Auctioneers business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Ritchie Bros Auctioneers 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. Ritchie Bros Auctioneers can take advantage of this fund but it will also bring new competitors in the Misc. Capital Goods industry.
Technology acceleration in Forth Industrial Revolution
– Ritchie Bros Auctioneers has witnessed rapid integration of technology during Covid-19 in the Misc. Capital Goods industry. As one of the leading players in the industry, Ritchie Bros Auctioneers needs to keep up with the evolution of technology in the Misc. Capital Goods 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.
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. Ritchie Bros Auctioneers needs to understand the core reasons impacting the Misc. Capital Goods industry. This will help it in building a better workplace.
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. Ritchie Bros Auctioneers 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.
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.
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 Ritchie Bros Auctioneers in the Misc. Capital Goods sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Ritchie Bros Auctioneers 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.
Weighted SWOT Analysis of Ritchie Bros Auctioneers Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers needs to make to build a sustainable competitive advantage.