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 – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, 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 -

Analytics focus

– De La Rue 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 Office Supplies 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.

Ability to recruit top talent

– De La Rue is one of the leading players in the Office Supplies 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.

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.

Ability to lead change in Office Supplies

– De La Rue is one of the leading players in the Office Supplies industry in United States. Over the years it has not only transformed the business landscape in the Office Supplies industry in United States but also across the existing markets. The ability to lead change has enabled De La Rue in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Training and development

– De La Rue has one of the best training and development program in Consumer/Non-Cyclical 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.

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.

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.

Sustainable margins compare to other players in Office Supplies industry

– De La Rue has clearly differentiated products in the market place. This has enabled De La Rue to fetch slight price premium compare to the competitors in the Office Supplies industry. The sustainable margins have also helped De La Rue to invest into research and development (R&D) and innovation.

High brand equity

– De La Rue has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled De La Rue to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

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.

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.

Innovation driven organization

– De La Rue is one of the most innovative firm in Office Supplies sector.

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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 -

High bargaining power of channel partners in Office Supplies industry

– because of the regulatory requirements in United States, De La Rue 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 Office Supplies industry.

Skills based hiring in Office Supplies industry

– The stress on hiring functional specialists at De La Rue 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.

Lack of clear differentiation of De La Rue products

– To increase the profitability and margins on the products, De La Rue needs to provide more differentiated products than what it is currently offering in the marketplace.

Need for greater diversity

– De La Rue 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.

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.

High cash cycle compare to competitors

De La Rue has a high cash cycle compare to other players in the Office Supplies industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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.

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.

No frontier risks strategy

– From the 10K / annual statement of De La Rue, it seems that company is thinking out the frontier risks that can impact Office Supplies 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.

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.

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 -

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 De La Rue 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.

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.

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.

Manufacturing automation

– De La Rue can use the latest technology developments to improve its manufacturing and designing process in Office Supplies 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.

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.

Using analytics as competitive advantage

– De La Rue has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Office Supplies sector. This continuous investment in analytics has enabled De La Rue to build a competitive advantage using analytics. The analytics driven competitive advantage can help De La Rue 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 Office Supplies industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. De La Rue 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. De La Rue 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for De La Rue 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 De La Rue to hire the very best people irrespective of their geographical location.

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.

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.

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.

Creating value in data economy

– The success of analytics program of De La Rue has opened avenues for new revenue streams for the organization in Office Supplies industry. This can help De La Rue to build a more holistic ecosystem for De La Rue products in the Office Supplies 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 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.

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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 -

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.

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.

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.

Technology acceleration in Forth Industrial Revolution

– De La Rue has witnessed rapid integration of technology during Covid-19 in the Office Supplies industry. As one of the leading players in the industry, De La Rue needs to keep up with the evolution of technology in the Office Supplies 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.

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.

Regulatory challenges

– De La Rue 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 Office Supplies industry regulations.

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.

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.

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 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.

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.

Consumer confidence and its impact on De La Rue 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 Office Supplies 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 De La Rue business can come under increasing regulations regarding data privacy, data security, etc.

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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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