Based on various researches at Oak Spring University , CNH Industrial NV is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing energy prices, wage bills are increasing, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%,
increasing transportation and logistics costs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of CNH Industrial NV
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that CNH Industrial NV can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the CNH Industrial NV, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which CNH Industrial NV 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 CNH Industrial NV can be done for the following purposes –
1. Strategic planning of CNH Industrial NV
2. Improving business portfolio management of CNH Industrial NV
3. Assessing feasibility of the new initiative in United States
4. Making a Constr. & Agric. Machinery sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of CNH Industrial NV
Strengths of CNH Industrial NV | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of CNH Industrial NV are -
Low bargaining power of suppliers
– Suppliers of CNH Industrial NV in the Capital Goods sector have low bargaining power. CNH Industrial NV has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps CNH Industrial NV to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– CNH Industrial NV is one of the most innovative firm in Constr. & Agric. Machinery sector.
Analytics focus
– CNH Industrial NV 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 Constr. & Agric. Machinery 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.
Successful track record of launching new products
– CNH Industrial NV has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. CNH Industrial NV 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.
Learning organization
- CNH Industrial NV 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 CNH Industrial NV is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at CNH Industrial NV emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Constr. & Agric. Machinery industry
– CNH Industrial NV is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– CNH Industrial NV has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – CNH Industrial NV staying ahead in the Constr. & Agric. Machinery industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Constr. & Agric. Machinery
– CNH Industrial NV is one of the leading players in the Constr. & Agric. Machinery industry in United States. Over the years it has not only transformed the business landscape in the Constr. & Agric. Machinery industry in United States but also across the existing markets. The ability to lead change has enabled CNH Industrial NV in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Constr. & Agric. Machinery industry
- digital transformation varies from industry to industry. For CNH Industrial NV digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. CNH Industrial NV 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.
Ability to recruit top talent
– CNH Industrial NV is one of the leading players in the Constr. & Agric. Machinery 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.
High switching costs
– The high switching costs that CNH Industrial NV 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.
High brand equity
– CNH Industrial NV has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled CNH Industrial NV to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of CNH Industrial NV | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CNH Industrial NV are -
High cash cycle compare to competitors
CNH Industrial NV has a high cash cycle compare to other players in the Constr. & Agric. Machinery industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, CNH Industrial NV has high operating costs in the Constr. & Agric. Machinery industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract CNH Industrial NV lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at CNH Industrial NV, in the dynamic environment of Constr. & Agric. Machinery industry it has struggled to respond to the nimble upstart competition. CNH Industrial NV has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of United States, CNH Industrial NV needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, CNH Industrial NV has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Constr. & Agric. Machinery industry over the last five years. CNH Industrial NV 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.
Capital Spending Reduction
– Even during the low interest decade, CNH Industrial NV 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 Constr. & Agric. Machinery industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, CNH Industrial NV is slow explore the new channels of communication. These new channels of communication can help CNH Industrial NV to provide better information regarding Constr. & Agric. Machinery products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of CNH Industrial NV products
– To increase the profitability and margins on the products, CNH Industrial NV needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of CNH Industrial NV, it seems that company is thinking out the frontier risks that can impact Constr. & Agric. Machinery 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.
Need for greater diversity
– CNH Industrial NV 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.
Interest costs
– Compare to the competition, CNH Industrial NV 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.
CNH Industrial NV Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of CNH Industrial NV are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, CNH Industrial NV 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 CNH Industrial NV to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for CNH Industrial NV 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 CNH Industrial NV to hire the very best people irrespective of their geographical location.
Manufacturing automation
– CNH Industrial NV can use the latest technology developments to improve its manufacturing and designing process in Constr. & Agric. Machinery 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, CNH Industrial NV can use these opportunities to build new business models that can help the communities that CNH Industrial NV operates in. Secondly it can use opportunities from government spending in Constr. & Agric. Machinery sector.
Loyalty marketing
– CNH Industrial NV 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Constr. & Agric. Machinery industry, but it has also influenced the consumer preferences. CNH Industrial NV can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– CNH Industrial NV can improve the customer journey of consumers in the Constr. & Agric. Machinery 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.
Use of Bitcoin and other crypto currencies for transactions in Constr. & Agric. Machinery industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for CNH Industrial NV in the Constr. & Agric. Machinery industry. Now CNH Industrial NV can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of CNH Industrial NV has opened avenues for new revenue streams for the organization in Constr. & Agric. Machinery industry. This can help CNH Industrial NV to build a more holistic ecosystem for CNH Industrial NV products in the Constr. & Agric. Machinery industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help CNH Industrial NV to increase its market reach. CNH Industrial NV 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, CNH Industrial NV is facing challenges because of the dominance of functional experts in the organization. CNH Industrial NV can utilize new technology in the field of Constr. & Agric. Machinery industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for CNH Industrial NV in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Constr. & Agric. Machinery 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 CNH Industrial NV 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.
Threats CNH Industrial NV External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of CNH Industrial NV are -
High dependence on third party suppliers
– CNH Industrial NV 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Constr. & Agric. Machinery industry are lowering. It can presents CNH Industrial NV with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Constr. & Agric. Machinery sector.
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 CNH Industrial NV.
Environmental challenges
– CNH Industrial NV 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. CNH Industrial NV can take advantage of this fund but it will also bring new competitors in the Constr. & Agric. Machinery industry.
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 CNH Industrial NV in the Constr. & Agric. Machinery sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that CNH Industrial NV is facing in Constr. & Agric. Machinery sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, CNH Industrial NV 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 CNH Industrial NV prominent markets.
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.
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. CNH Industrial NV needs to understand the core reasons impacting the Constr. & Agric. Machinery industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– CNH Industrial NV 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 Constr. & Agric. Machinery industry.
Easy access to finance
– Easy access to finance in Constr. & Agric. Machinery industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. CNH Industrial NV can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on CNH Industrial NV 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 Constr. & Agric. Machinery 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 CNH Industrial NV business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of CNH Industrial NV Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at CNH Industrial NV 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 CNH Industrial NV 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 CNH Industrial NV 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 CNH Industrial NV 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 CNH Industrial NV needs to make to build a sustainable competitive advantage.