SWOT Analysis / TOWS Matrix for Kratos Defense&Security (United States)
Based on various researches at Oak Spring University , Kratos Defense&Security is operating in a macro-environment that has been destablized by – there is backlash against globalization, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies,
wage bills are increasing, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Kratos Defense&Security
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kratos Defense&Security can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kratos Defense&Security, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kratos Defense&Security 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 Kratos Defense&Security can be done for the following purposes –
1. Strategic planning of Kratos Defense&Security
2. Improving business portfolio management of Kratos Defense&Security
3. Assessing feasibility of the new initiative in United States
4. Making a Aerospace & Defense sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kratos Defense&Security
Strengths of Kratos Defense&Security | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kratos Defense&Security are -
Operational resilience
– The operational resilience strategy of Kratos Defense&Security comprises – understanding the underlying the factors in the Aerospace & Defense 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.
Effective Research and Development (R&D)
– Kratos Defense&Security has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kratos Defense&Security staying ahead in the Aerospace & Defense industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Kratos Defense&Security in the Capital Goods sector have low bargaining power. Kratos Defense&Security has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kratos Defense&Security to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Aerospace & Defense industry
– Kratos Defense&Security has clearly differentiated products in the market place. This has enabled Kratos Defense&Security to fetch slight price premium compare to the competitors in the Aerospace & Defense industry. The sustainable margins have also helped Kratos Defense&Security to invest into research and development (R&D) and innovation.
Analytics focus
– Kratos Defense&Security 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 Aerospace & Defense 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.
Training and development
– Kratos Defense&Security has one of the best training and development program in Capital Goods 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.
Ability to lead change in Aerospace & Defense
– Kratos Defense&Security is one of the leading players in the Aerospace & Defense industry in United States. Over the years it has not only transformed the business landscape in the Aerospace & Defense industry in United States but also across the existing markets. The ability to lead change has enabled Kratos Defense&Security in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Kratos Defense&Security 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 Kratos Defense&Security is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Kratos Defense&Security emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Kratos Defense&Security is present in almost all the verticals within the Aerospace & Defense industry. This has provided Kratos Defense&Security 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.
Successful track record of launching new products
– Kratos Defense&Security has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kratos Defense&Security 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 Kratos Defense&Security
– The covid-19 pandemic has put organizational resilience at the centre of everthing Kratos Defense&Security does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Kratos Defense&Security 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.
Weaknesses of Kratos Defense&Security | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kratos Defense&Security are -
Increasing silos among functional specialists
– The organizational structure of Kratos Defense&Security is dominated by functional specialists. It is not different from other players in the Aerospace & Defense industry, but Kratos Defense&Security needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kratos Defense&Security to focus more on services in the Aerospace & Defense industry rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kratos Defense&Security is slow explore the new channels of communication. These new channels of communication can help Kratos Defense&Security to provide better information regarding Aerospace & Defense products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of United States, Kratos Defense&Security needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Kratos Defense&Security, in the dynamic environment of Aerospace & Defense industry it has struggled to respond to the nimble upstart competition. Kratos Defense&Security has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Employees’ less understanding of Kratos Defense&Security strategy
– From the outside it seems that the employees of Kratos Defense&Security 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.
Aligning sales with marketing
– From the outside it seems that Kratos Defense&Security needs to have more collaboration between its sales team and marketing team. Sales professionals in the Aerospace & Defense industry have deep experience in developing customer relationships. Marketing department at Kratos Defense&Security can leverage the sales team experience to cultivate customer relationships as Kratos Defense&Security is planning to shift buying processes online.
Interest costs
– Compare to the competition, Kratos Defense&Security 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.
Lack of clear differentiation of Kratos Defense&Security products
– To increase the profitability and margins on the products, Kratos Defense&Security needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Kratos Defense&Security has high operating costs in the Aerospace & Defense industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kratos Defense&Security lucrative customers.
High bargaining power of channel partners in Aerospace & Defense industry
– because of the regulatory requirements in United States, Kratos Defense&Security 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 Aerospace & Defense industry.
Products dominated business model
– Even though Kratos Defense&Security has some of the most successful models in the Aerospace & Defense industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Kratos Defense&Security should strive to include more intangible value offerings along with its core products and services.
Kratos Defense&Security Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kratos Defense&Security are -
Leveraging digital technologies
– Kratos Defense&Security 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.
Better consumer reach
– The expansion of the 5G network will help Kratos Defense&Security to increase its market reach. Kratos Defense&Security 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kratos Defense&Security 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 Kratos Defense&Security to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Kratos Defense&Security can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Kratos Defense&Security has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Aerospace & Defense sector. This continuous investment in analytics has enabled Kratos Defense&Security to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kratos Defense&Security to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Building a culture of innovation
– managers at Kratos Defense&Security 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 Aerospace & Defense industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Aerospace & Defense industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kratos Defense&Security 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. Kratos Defense&Security 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.
Buying journey improvements
– Kratos Defense&Security can improve the customer journey of consumers in the Aerospace & Defense 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.
Creating value in data economy
– The success of analytics program of Kratos Defense&Security has opened avenues for new revenue streams for the organization in Aerospace & Defense industry. This can help Kratos Defense&Security to build a more holistic ecosystem for Kratos Defense&Security products in the Aerospace & Defense industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kratos Defense&Security 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 Kratos Defense&Security to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Kratos Defense&Security can develop new processes and procedures in Aerospace & Defense 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.
Learning at scale
– Online learning technologies has now opened space for Kratos Defense&Security 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kratos Defense&Security can use these opportunities to build new business models that can help the communities that Kratos Defense&Security operates in. Secondly it can use opportunities from government spending in Aerospace & Defense sector.
Threats Kratos Defense&Security External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kratos Defense&Security are -
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
– Kratos Defense&Security 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. Kratos Defense&Security can take advantage of this fund but it will also bring new competitors in the Aerospace & Defense 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. Kratos Defense&Security 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 Kratos Defense&Security.
Stagnating economy with rate increase
– Kratos Defense&Security 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 Aerospace & Defense industry.
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. Kratos Defense&Security needs to understand the core reasons impacting the Aerospace & Defense industry. This will help it in building a better workplace.
Regulatory challenges
– Kratos Defense&Security 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 Aerospace & Defense industry regulations.
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 Kratos Defense&Security business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Kratos Defense&Security is facing in Aerospace & Defense sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Kratos Defense&Security in the Aerospace & Defense sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Kratos Defense&Security has witnessed rapid integration of technology during Covid-19 in the Aerospace & Defense industry. As one of the leading players in the industry, Kratos Defense&Security needs to keep up with the evolution of technology in the Aerospace & Defense 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kratos Defense&Security in Aerospace & Defense industry. The Aerospace & Defense 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Aerospace & Defense industry are lowering. It can presents Kratos Defense&Security with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Aerospace & Defense sector.
Weighted SWOT Analysis of Kratos Defense&Security Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kratos Defense&Security 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 Kratos Defense&Security 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 Kratos Defense&Security 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 Kratos Defense&Security 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 Kratos Defense&Security needs to make to build a sustainable competitive advantage.