II-VI (IIVI) SWOT Analysis / TOWS Matrix / MBA Resources
Scientific & Technical Instr.
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for II-VI (United States)
Based on various researches at Oak Spring University , II-VI is operating in a macro-environment that has been destablized by – increasing commodity prices, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that II-VI can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the II-VI, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which II-VI 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 II-VI can be done for the following purposes –
1. Strategic planning of II-VI
2. Improving business portfolio management of II-VI
3. Assessing feasibility of the new initiative in United States
4. Making a Scientific & Technical Instr. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of II-VI
Strengths of II-VI | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of II-VI are -
Innovation driven organization
– II-VI is one of the most innovative firm in Scientific & Technical Instr. sector.
Superior customer experience
– The customer experience strategy of II-VI in Scientific & Technical Instr. industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the II-VI 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.
Ability to lead change in Scientific & Technical Instr.
– II-VI is one of the leading players in the Scientific & Technical Instr. industry in United States. Over the years it has not only transformed the business landscape in the Scientific & Technical Instr. industry in United States but also across the existing markets. The ability to lead change has enabled II-VI in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– II-VI has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Scientific & Technical Instr. industry. Secondly the value chain collaborators of II-VI have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– II-VI is present in almost all the verticals within the Scientific & Technical Instr. industry. This has provided II-VI 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.
Ability to recruit top talent
– II-VI is one of the leading players in the Scientific & Technical Instr. 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.
Low bargaining power of suppliers
– Suppliers of II-VI in the Technology sector have low bargaining power. II-VI has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps II-VI to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Scientific & Technical Instr. industry
- digital transformation varies from industry to industry. For II-VI digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. II-VI has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of II-VI
– The covid-19 pandemic has put organizational resilience at the centre of everthing II-VI does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management in the Scientific & Technical Instr. industry
– II-VI is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- II-VI 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 II-VI is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at II-VI emphasize – knowledge, initiative, and innovation.
Weaknesses of II-VI | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of II-VI are -
Slow decision making process
– As mentioned earlier in the report, II-VI has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Scientific & Technical Instr. industry over the last five years. II-VI even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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 II-VI supply chain. Even after few cautionary changes, II-VI is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left II-VI vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of United States, II-VI needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Scientific & Technical Instr. industry
– because of the regulatory requirements in United States, II-VI 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 Scientific & Technical Instr. industry.
Interest costs
– Compare to the competition, II-VI 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 dependence on II-VI ‘s star products
– The top 2 products and services of II-VI still accounts for major business revenue. This dependence on star products in Scientific & Technical Instr. industry has resulted into insufficient focus on developing new products, even though II-VI has relatively successful track record of launching new products.
High cash cycle compare to competitors
II-VI has a high cash cycle compare to other players in the Scientific & Technical Instr. industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– II-VI 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.
Capital Spending Reduction
– Even during the low interest decade, II-VI 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 Scientific & Technical Instr. industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of II-VI, it seems that company is thinking out the frontier risks that can impact Scientific & Technical Instr. 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.
Workers concerns about automation
– As automation is fast increasing in the Scientific & Technical Instr. industry, II-VI 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.
II-VI Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of II-VI are -
Creating value in data economy
– The success of analytics program of II-VI has opened avenues for new revenue streams for the organization in Scientific & Technical Instr. industry. This can help II-VI to build a more holistic ecosystem for II-VI products in the Scientific & Technical Instr. industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects II-VI can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, II-VI is facing challenges because of the dominance of functional experts in the organization. II-VI can utilize new technology in the field of Scientific & Technical Instr. industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– II-VI can use the latest technology developments to improve its manufacturing and designing process in Scientific & Technical Instr. 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.
Use of Bitcoin and other crypto currencies for transactions in Scientific & Technical Instr. industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for II-VI in the Scientific & Technical Instr. industry. Now II-VI can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, II-VI can use these opportunities to build new business models that can help the communities that II-VI operates in. Secondly it can use opportunities from government spending in Scientific & Technical Instr. sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, II-VI 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Scientific & Technical Instr. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. II-VI 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. II-VI 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Scientific & Technical Instr. industry, but it has also influenced the consumer preferences. II-VI can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 II-VI 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.
Buying journey improvements
– II-VI can improve the customer journey of consumers in the Scientific & Technical Instr. 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for II-VI 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 II-VI to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for II-VI 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.
Threats II-VI External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of II-VI are -
Technology acceleration in Forth Industrial Revolution
– II-VI has witnessed rapid integration of technology during Covid-19 in the Scientific & Technical Instr. industry. As one of the leading players in the industry, II-VI needs to keep up with the evolution of technology in the Scientific & Technical Instr. 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, II-VI may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Scientific & Technical Instr. sector.
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 II-VI in the Scientific & Technical Instr. sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for II-VI in Scientific & Technical Instr. industry. The Scientific & Technical Instr. 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.
Increasing wage structure of II-VI
– 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 II-VI.
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. II-VI 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.
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 II-VI.
Shortening product life cycle
– it is one of the major threat that II-VI is facing in Scientific & Technical Instr. sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– II-VI 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 Scientific & Technical Instr. industry.
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 II-VI business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– II-VI 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 Scientific & Technical Instr. industry regulations.
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.
Environmental challenges
– II-VI 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. II-VI can take advantage of this fund but it will also bring new competitors in the Scientific & Technical Instr. industry.
Weighted SWOT Analysis of II-VI Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at II-VI 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 II-VI 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 II-VI 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 II-VI 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 II-VI needs to make to build a sustainable competitive advantage.
