De La Rue (DELRF) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for De La Rue (United States)

Based on various researches at Oak Spring University , De La Rue is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing energy prices, wage bills are increasing, there is increasing trade war between United States & China, technology disruption, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, geopolitical disruptions, increasing commodity prices, etc

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Introduction to SWOT Analysis of De La Rue

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that De La Rue can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the De La Rue, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which De La Rue 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 De La Rue can be done for the following purposes –
1. Strategic planning of De La Rue
2. Improving business portfolio management of De La Rue
3. Assessing feasibility of the new initiative in United States
4. Making a Office Supplies sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of De La Rue

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Strengths of De La Rue | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of De La Rue are -

Learning organization

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

High switching costs

– The high switching costs that De La Rue 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.

Strong track record of project management in the Office Supplies industry

– De La Rue is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Highly skilled collaborators

– De La Rue has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Office Supplies industry. Secondly the value chain collaborators of De La Rue have helped the firm to develop new products and bring them quickly to the marketplace.

Cross disciplinary teams

– Horizontal connected teams at the De La Rue 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.

Diverse revenue streams

– De La Rue is present in almost all the verticals within the Office Supplies industry. This has provided De La Rue 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.

Operational resilience

– The operational resilience strategy of De La Rue comprises – understanding the underlying the factors in the Office Supplies 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.

Effective Research and Development (R&D)

– De La Rue has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – De La Rue staying ahead in the Office Supplies industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Successful track record of launching new products

– De La Rue has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. De La Rue 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.

Low bargaining power of suppliers

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

Superior customer experience

– The customer experience strategy of De La Rue in Office Supplies industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Organizational Resilience of De La Rue

– The covid-19 pandemic has put organizational resilience at the centre of everthing De La Rue does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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Weaknesses of De La Rue | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of De La Rue are -

Aligning sales with marketing

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

Employees’ less understanding of De La Rue strategy

– From the outside it seems that the employees of De La Rue 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.

Capital Spending Reduction

– Even during the low interest decade, De La Rue 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 Office Supplies industry using digital technology.

Ability to respond to the competition

– As the decision making is very deliberative at De La Rue, in the dynamic environment of Office Supplies industry it has struggled to respond to the nimble upstart competition. De La Rue has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Compensation and incentives

– The revenue per employee of De La Rue is just above the Office Supplies 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.

Slow to strategic competitive environment developments

– As De La Rue is one of the leading players in the Office Supplies industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Office Supplies industry in last five years.

Slow to harness new channels of communication

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

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

Low market penetration in new markets

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

High dependence on De La Rue ‘s star products

– The top 2 products and services of De La Rue still accounts for major business revenue. This dependence on star products in Office Supplies industry has resulted into insufficient focus on developing new products, even though De La Rue has relatively successful track record of launching new products.

Interest costs

– Compare to the competition, De La Rue 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.

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De La Rue Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of De La Rue are -

Learning at scale

– Online learning technologies has now opened space for De La Rue 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.

Reforming the budgeting process

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

Leveraging digital technologies

– De La Rue 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Office Supplies industry, but it has also influenced the consumer preferences. De La Rue can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Loyalty marketing

– De La Rue 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, De La Rue 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 De La Rue to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. De La Rue can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Developing new processes and practices

– De La Rue can develop new processes and procedures in Office Supplies 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for De La Rue in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Office Supplies industry, and it will provide faster access to the consumers.

Low interest rates

– Even though inflation is raising its head in most developed economies, De La Rue 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 De La Rue to increase its market reach. De La Rue 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, De La Rue is facing challenges because of the dominance of functional experts in the organization. De La Rue can utilize new technology in the field of Office Supplies industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Buying journey improvements

– De La Rue can improve the customer journey of consumers in the Office Supplies 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.

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Threats De La Rue External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of De La Rue are -

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, De La Rue may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Office Supplies sector.

Increasing wage structure of De La Rue

– 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 De La Rue.

Stagnating economy with rate increase

– De La Rue 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 Office Supplies industry.

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. De La Rue 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.

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 De La Rue 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.

Shortening product life cycle

– it is one of the major threat that De La Rue is facing in Office Supplies sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

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

Easy access to finance

– Easy access to finance in Office Supplies industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. De La Rue can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 De La Rue in the Office Supplies sector and impact the bottomline of the organization.

High dependence on third party suppliers

– De La Rue 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.

Environmental challenges

– De La Rue 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. De La Rue can take advantage of this fund but it will also bring new competitors in the Office Supplies industry.

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 De La Rue.

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Weighted SWOT Analysis of De La Rue Template, Example

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

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