Dentsu ADR (DNTUY) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Dentsu ADR (United States)

Based on various researches at Oak Spring University , Dentsu ADR is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Dentsu ADR

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

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Strengths of Dentsu ADR | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Dentsu ADR are -

High switching costs

– The high switching costs that Dentsu ADR 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.

Analytics focus

– Dentsu ADR 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 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.

Effective Research and Development (R&D)

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

Learning organization

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

Innovation driven organization

– Dentsu ADR is one of the most innovative firm in sector.

Cross disciplinary teams

– Horizontal connected teams at the Dentsu ADR 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

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

Sustainable margins compare to other players in industry

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

Superior customer experience

– The customer experience strategy of Dentsu ADR in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Successful track record of launching new products

– Dentsu ADR has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dentsu ADR 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 Dentsu ADR in the sector have low bargaining power. Dentsu ADR has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dentsu ADR to manage not only supply disruptions but also source products at highly competitive prices.

Training and development

– Dentsu ADR has one of the best training and development program in 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.

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Weaknesses of Dentsu ADR | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Dentsu ADR are -

High operating costs

– Compare to the competitors, Dentsu ADR has high operating costs in the industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Dentsu ADR lucrative customers.

Capital Spending Reduction

– Even during the low interest decade, Dentsu ADR 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 industry using digital technology.

Lack of clear differentiation of Dentsu ADR products

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

High dependence on Dentsu ADR ‘s star products

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

Employees’ less understanding of Dentsu ADR strategy

– From the outside it seems that the employees of Dentsu ADR 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.

Products dominated business model

– Even though Dentsu ADR has some of the most successful models in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Dentsu ADR should strive to include more intangible value offerings along with its core products and services.

Need for greater diversity

– Dentsu ADR 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.

Compensation and incentives

– The revenue per employee of Dentsu ADR is just above the 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.

Workers concerns about automation

– As automation is fast increasing in the industry, Dentsu ADR needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

Increasing silos among functional specialists

– The organizational structure of Dentsu ADR is dominated by functional specialists. It is not different from other players in the industry, but Dentsu ADR needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dentsu ADR to focus more on services in the industry rather than just following the product oriented approach.

Aligning sales with marketing

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

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Dentsu ADR Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Dentsu ADR are -

Loyalty marketing

– Dentsu ADR 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.

Leveraging digital technologies

– Dentsu ADR 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 industry, but it has also influenced the consumer preferences. Dentsu ADR can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Dentsu ADR is facing challenges because of the dominance of functional experts in the organization. Dentsu ADR can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Buying journey improvements

– Dentsu ADR can improve the customer journey of consumers in the 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 industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Dentsu ADR in the industry. Now Dentsu ADR can target international markets with far fewer capital restrictions requirements than the existing system.

Developing new processes and practices

– Dentsu ADR can develop new processes and procedures in 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dentsu ADR can use these opportunities to build new business models that can help the communities that Dentsu ADR operates in. Secondly it can use opportunities from government spending in sector.

Creating value in data economy

– The success of analytics program of Dentsu ADR has opened avenues for new revenue streams for the organization in industry. This can help Dentsu ADR to build a more holistic ecosystem for Dentsu ADR products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Using analytics as competitive advantage

– Dentsu ADR has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled Dentsu ADR to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dentsu ADR to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Remote work and new talent hiring opportunities

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

Learning at scale

– Online learning technologies has now opened space for Dentsu ADR 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 Dentsu ADR 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 industry.

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Threats Dentsu ADR External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Dentsu ADR are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Dentsu ADR in industry. The 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.

Easy access to finance

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

Barriers of entry lowering

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

Stagnating economy with rate increase

– Dentsu ADR 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 industry.

Shortening product life cycle

– it is one of the major threat that Dentsu ADR is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.

High dependence on third party suppliers

– Dentsu ADR 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.

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 Dentsu ADR in the sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Dentsu ADR has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Dentsu ADR needs to keep up with the evolution of technology in the 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.

Regulatory challenges

– Dentsu ADR 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 industry regulations.

Learning curve for new practices

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

Consumer confidence and its impact on Dentsu ADR 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 industry and other sectors.

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 Dentsu ADR.

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Weighted SWOT Analysis of Dentsu ADR Template, Example

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

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