Deutsche Telekom AG (DTEGF) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Deutsche Telekom AG (United States)

Based on various researches at Oak Spring University , Deutsche Telekom AG is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, challanges to central banks by blockchain based private currencies, etc

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Introduction to SWOT Analysis of Deutsche Telekom AG

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

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Strengths of Deutsche Telekom AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Deutsche Telekom AG are -

Innovation driven organization

– Deutsche Telekom AG is one of the most innovative firm in Communications Services sector.

Ability to recruit top talent

– Deutsche Telekom AG is one of the leading players in the Communications Services 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.

Cross disciplinary teams

– Horizontal connected teams at the Deutsche Telekom AG 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.

Effective Research and Development (R&D)

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

High brand equity

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

Learning organization

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

High switching costs

– The high switching costs that Deutsche Telekom AG 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.

Diverse revenue streams

– Deutsche Telekom AG is present in almost all the verticals within the Communications Services industry. This has provided Deutsche Telekom AG 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.

Highly skilled collaborators

– Deutsche Telekom AG has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Communications Services industry. Secondly the value chain collaborators of Deutsche Telekom AG have helped the firm to develop new products and bring them quickly to the marketplace.

Successful track record of launching new products

– Deutsche Telekom AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Deutsche Telekom AG 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.

Organizational Resilience of Deutsche Telekom AG

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

Superior customer experience

– The customer experience strategy of Deutsche Telekom AG in Communications Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Deutsche Telekom AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Deutsche Telekom AG are -

High dependence on Deutsche Telekom AG ‘s star products

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

No frontier risks strategy

– From the 10K / annual statement of Deutsche Telekom AG, it seems that company is thinking out the frontier risks that can impact Communications Services 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.

Interest costs

– Compare to the competition, Deutsche Telekom AG 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.

High operating costs

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

High cash cycle compare to competitors

Deutsche Telekom AG has a high cash cycle compare to other players in the Communications Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Aligning sales with marketing

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

Slow to strategic competitive environment developments

– As Deutsche Telekom AG is one of the leading players in the Communications Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Communications Services industry in last five years.

Products dominated business model

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

Ability to respond to the competition

– As the decision making is very deliberative at Deutsche Telekom AG, in the dynamic environment of Communications Services industry it has struggled to respond to the nimble upstart competition. Deutsche Telekom AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

High bargaining power of channel partners in Communications Services industry

– because of the regulatory requirements in United States, Deutsche Telekom AG 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 Communications Services industry.

Increasing silos among functional specialists

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

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Deutsche Telekom AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Deutsche Telekom AG are -

Buying journey improvements

– Deutsche Telekom AG can improve the customer journey of consumers in the Communications Services 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.

Developing new processes and practices

– Deutsche Telekom AG can develop new processes and procedures in Communications Services 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.

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. Deutsche Telekom AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Increase in government spending

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

Harnessing reconfiguration of the global supply chains

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

Loyalty marketing

– Deutsche Telekom AG 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.

Building a culture of innovation

– managers at Deutsche Telekom AG 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 Communications Services industry.

Reforming the budgeting process

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

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Communications Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Deutsche Telekom AG 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. Deutsche Telekom AG 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.

Using analytics as competitive advantage

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

Lowering marketing communication costs

– 5G expansion will open new opportunities for Deutsche Telekom AG in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Communications Services industry, and it will provide faster access to the consumers.

Leveraging digital technologies

– Deutsche Telekom AG 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.

Remote work and new talent hiring opportunities

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

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Threats Deutsche Telekom AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Deutsche Telekom AG are -

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. Deutsche Telekom AG needs to understand the core reasons impacting the Communications Services industry. This will help it in building a better workplace.

Regulatory challenges

– Deutsche Telekom AG 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 Communications Services industry regulations.

Technology acceleration in Forth Industrial Revolution

– Deutsche Telekom AG has witnessed rapid integration of technology during Covid-19 in the Communications Services industry. As one of the leading players in the industry, Deutsche Telekom AG needs to keep up with the evolution of technology in the Communications Services 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.

Stagnating economy with rate increase

– Deutsche Telekom AG 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 Communications Services industry.

Consumer confidence and its impact on Deutsche Telekom AG 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 Communications Services industry and other sectors.

High dependence on third party suppliers

– Deutsche Telekom AG 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.

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 Deutsche Telekom AG 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 Communications Services industry are lowering. It can presents Deutsche Telekom AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Communications Services 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 Deutsche Telekom AG.

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.

Environmental challenges

– Deutsche Telekom AG 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. Deutsche Telekom AG can take advantage of this fund but it will also bring new competitors in the Communications Services 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. Deutsche Telekom AG 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Deutsche Telekom AG 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 Deutsche Telekom AG prominent markets.

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Weighted SWOT Analysis of Deutsche Telekom AG Template, Example

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

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