Cavco (CVCO) SWOT Analysis / TOWS Matrix / MBA Resources
Mobile Homes & RVs
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Cavco (United States)
Based on various researches at Oak Spring University , Cavco is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, wage bills are increasing,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Cavco can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cavco, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cavco 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 Cavco can be done for the following purposes –
1. Strategic planning of Cavco
2. Improving business portfolio management of Cavco
3. Assessing feasibility of the new initiative in United States
4. Making a Mobile Homes & RVs sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cavco
Strengths of Cavco | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cavco are -
Highly skilled collaborators
– Cavco has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Mobile Homes & RVs industry. Secondly the value chain collaborators of Cavco have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Cavco
– The covid-19 pandemic has put organizational resilience at the centre of everthing Cavco does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy of Cavco comprises – understanding the underlying the factors in the Mobile Homes & RVs 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.
Cross disciplinary teams
– Horizontal connected teams at the Cavco 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 switching costs
– The high switching costs that Cavco 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.
Ability to recruit top talent
– Cavco is one of the leading players in the Mobile Homes & RVs 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.
Successful track record of launching new products
– Cavco has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cavco 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.
Effective Research and Development (R&D)
– Cavco has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Cavco staying ahead in the Mobile Homes & RVs industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Cavco has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cavco to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Cavco 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 Cavco is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Cavco emphasize – knowledge, initiative, and innovation.
Digital Transformation in Mobile Homes & RVs industry
- digital transformation varies from industry to industry. For Cavco digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cavco 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.
Analytics focus
– Cavco 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 Mobile Homes & RVs 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.
Weaknesses of Cavco | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cavco are -
Products dominated business model
– Even though Cavco has some of the most successful models in the Mobile Homes & RVs industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Cavco should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Cavco products
– To increase the profitability and margins on the products, Cavco needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at Cavco, in the dynamic environment of Mobile Homes & RVs industry it has struggled to respond to the nimble upstart competition. Cavco has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Cavco 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.
Need for greater diversity
– Cavco 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cavco is slow explore the new channels of communication. These new channels of communication can help Cavco to provide better information regarding Mobile Homes & RVs products and services. It can also build an online community to further reach out to potential customers.
High dependence on Cavco ‘s star products
– The top 2 products and services of Cavco still accounts for major business revenue. This dependence on star products in Mobile Homes & RVs industry has resulted into insufficient focus on developing new products, even though Cavco has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Cavco has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Mobile Homes & RVs industry over the last five years. Cavco 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.
Aligning sales with marketing
– From the outside it seems that Cavco needs to have more collaboration between its sales team and marketing team. Sales professionals in the Mobile Homes & RVs industry have deep experience in developing customer relationships. Marketing department at Cavco can leverage the sales team experience to cultivate customer relationships as Cavco is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Cavco is one of the leading players in the Mobile Homes & RVs industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Mobile Homes & RVs industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Cavco 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 Mobile Homes & RVs industry using digital technology.
Cavco Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Cavco are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cavco in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Mobile Homes & RVs 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 Cavco 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cavco can use these opportunities to build new business models that can help the communities that Cavco operates in. Secondly it can use opportunities from government spending in Mobile Homes & RVs sector.
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. Cavco can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Mobile Homes & RVs industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cavco 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. Cavco 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cavco 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 Cavco to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Mobile Homes & RVs industry, but it has also influenced the consumer preferences. Cavco can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Cavco has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Mobile Homes & RVs sector. This continuous investment in analytics has enabled Cavco to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cavco to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Cavco can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Cavco to increase its market reach. Cavco 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.
Learning at scale
– Online learning technologies has now opened space for Cavco to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Cavco 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 Mobile Homes & RVs industry.
Developing new processes and practices
– Cavco can develop new processes and procedures in Mobile Homes & RVs 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.
Threats Cavco External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Cavco 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. Cavco 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.
High dependence on third party suppliers
– Cavco 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.
Shortening product life cycle
– it is one of the major threat that Cavco is facing in Mobile Homes & RVs sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Cavco 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 Mobile Homes & RVs industry.
Environmental challenges
– Cavco 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. Cavco can take advantage of this fund but it will also bring new competitors in the Mobile Homes & RVs industry.
Regulatory challenges
– Cavco 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 Mobile Homes & RVs industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cavco 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 Cavco prominent markets.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cavco in Mobile Homes & RVs industry. The Mobile Homes & RVs industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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 Cavco business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Mobile Homes & RVs industry are lowering. It can presents Cavco with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Mobile Homes & RVs sector.
Increasing wage structure of Cavco
– 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 Cavco.
Consumer confidence and its impact on Cavco 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 Mobile Homes & RVs industry and other sectors.
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 Cavco in the Mobile Homes & RVs sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Cavco Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Cavco 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 Cavco 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 Cavco 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 Cavco 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 Cavco needs to make to build a sustainable competitive advantage.