SWOT Analysis / TOWS Matrix for F5 Networks (United States)
Based on various researches at Oak Spring University , F5 Networks is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, increasing transportation and logistics costs, increasing commodity prices, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google,
central banks are concerned over increasing inflation, there is increasing trade war between United States & China, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that F5 Networks can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the F5 Networks, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which F5 Networks 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 F5 Networks can be done for the following purposes –
1. Strategic planning of F5 Networks
2. Improving business portfolio management of F5 Networks
3. Assessing feasibility of the new initiative in United States
4. Making a Computer Networks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of F5 Networks
Strengths of F5 Networks | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of F5 Networks are -
Operational resilience
– The operational resilience strategy of F5 Networks comprises – understanding the underlying the factors in the Computer Networks 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.
Training and development
– F5 Networks has one of the best training and development program in Technology 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.
High switching costs
– The high switching costs that F5 Networks 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.
Sustainable margins compare to other players in Computer Networks industry
– F5 Networks has clearly differentiated products in the market place. This has enabled F5 Networks to fetch slight price premium compare to the competitors in the Computer Networks industry. The sustainable margins have also helped F5 Networks to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of F5 Networks in the Technology sector have low bargaining power. F5 Networks has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps F5 Networks to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– F5 Networks is one of the leading players in the Computer Networks 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.
Superior customer experience
– The customer experience strategy of F5 Networks in Computer Networks industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– F5 Networks has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled F5 Networks to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– F5 Networks has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – F5 Networks staying ahead in the Computer Networks industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of F5 Networks
– The covid-19 pandemic has put organizational resilience at the centre of everthing F5 Networks does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– F5 Networks is present in almost all the verticals within the Computer Networks industry. This has provided F5 Networks 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.
Analytics focus
– F5 Networks 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 Computer Networks 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 F5 Networks | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of F5 Networks are -
High operating costs
– Compare to the competitors, F5 Networks has high operating costs in the Computer Networks industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract F5 Networks lucrative customers.
Interest costs
– Compare to the competition, F5 Networks 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.
Compensation and incentives
– The revenue per employee of F5 Networks is just above the Computer Networks 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, F5 Networks is slow explore the new channels of communication. These new channels of communication can help F5 Networks to provide better information regarding Computer Networks products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though F5 Networks has some of the most successful models in the Computer Networks industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. F5 Networks should strive to include more intangible value offerings along with its core products and services.
Skills based hiring in Computer Networks industry
– The stress on hiring functional specialists at F5 Networks 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 F5 Networks products
– To increase the profitability and margins on the products, F5 Networks needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners in Computer Networks industry
– because of the regulatory requirements in United States, F5 Networks 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 Computer Networks industry.
Increasing silos among functional specialists
– The organizational structure of F5 Networks is dominated by functional specialists. It is not different from other players in the Computer Networks industry, but F5 Networks needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help F5 Networks to focus more on services in the Computer Networks industry rather than just following the product oriented approach.
High cash cycle compare to competitors
F5 Networks has a high cash cycle compare to other players in the Computer Networks 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 F5 Networks needs to have more collaboration between its sales team and marketing team. Sales professionals in the Computer Networks industry have deep experience in developing customer relationships. Marketing department at F5 Networks can leverage the sales team experience to cultivate customer relationships as F5 Networks is planning to shift buying processes online.
F5 Networks Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of F5 Networks are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, F5 Networks is facing challenges because of the dominance of functional experts in the organization. F5 Networks can utilize new technology in the field of Computer Networks industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 F5 Networks 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
– F5 Networks 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, F5 Networks 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 F5 Networks to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Computer Networks industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. F5 Networks 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. F5 Networks 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.
Use of Bitcoin and other crypto currencies for transactions in Computer Networks industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for F5 Networks in the Computer Networks industry. Now F5 Networks can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects F5 Networks can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, F5 Networks 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.
Leveraging digital technologies
– F5 Networks 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.
Manufacturing automation
– F5 Networks can use the latest technology developments to improve its manufacturing and designing process in Computer Networks 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.
Buying journey improvements
– F5 Networks can improve the customer journey of consumers in the Computer Networks 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.
Learning at scale
– Online learning technologies has now opened space for F5 Networks 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.
Using analytics as competitive advantage
– F5 Networks has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Computer Networks sector. This continuous investment in analytics has enabled F5 Networks to build a competitive advantage using analytics. The analytics driven competitive advantage can help F5 Networks to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats F5 Networks External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of F5 Networks are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, F5 Networks 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 F5 Networks prominent markets.
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. F5 Networks 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.
Stagnating economy with rate increase
– F5 Networks 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 Computer Networks industry.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, F5 Networks may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Computer Networks sector.
Increasing wage structure of F5 Networks
– 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 F5 Networks.
High dependence on third party suppliers
– F5 Networks 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.
Easy access to finance
– Easy access to finance in Computer Networks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. F5 Networks can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on F5 Networks 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 Computer Networks industry and other sectors.
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. F5 Networks needs to understand the core reasons impacting the Computer Networks industry. This will help it in building a better workplace.
Environmental challenges
– F5 Networks 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. F5 Networks can take advantage of this fund but it will also bring new competitors in the Computer Networks industry.
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
– F5 Networks 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 Computer Networks industry regulations.
Weighted SWOT Analysis of F5 Networks Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at F5 Networks 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 F5 Networks 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 F5 Networks 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 F5 Networks 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 F5 Networks needs to make to build a sustainable competitive advantage.
