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 – increasing household debt because of falling income levels, wage bills are increasing, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy,
geopolitical disruptions, technology disruption, 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 -
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.
Highly skilled collaborators
– Kratos Defense&Security has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Aerospace & Defense industry. Secondly the value chain collaborators of Kratos Defense&Security have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Kratos Defense&Security 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.
Strong track record of project management in the Aerospace & Defense industry
– Kratos Defense&Security is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Kratos Defense&Security has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kratos Defense&Security to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Kratos Defense&Security is one of the leading players in the Aerospace & Defense 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.
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.
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.
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.
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.
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.
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 -
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.
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 Kratos Defense&Security supply chain. Even after few cautionary changes, Kratos Defense&Security is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kratos Defense&Security vulnerable to further global disruptions in South East Asia.
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.
Workers concerns about automation
– As automation is fast increasing in the Aerospace & Defense industry, Kratos Defense&Security 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.
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.
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.
Compensation and incentives
– The revenue per employee of Kratos Defense&Security is just above the Aerospace & Defense 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.
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.
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.
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.
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 -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Aerospace & Defense industry, but it has also influenced the consumer preferences. Kratos Defense&Security can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kratos Defense&Security is facing challenges because of the dominance of functional experts in the organization. Kratos Defense&Security can utilize new technology in the field of Aerospace & Defense industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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.
Use of Bitcoin and other crypto currencies for transactions in Aerospace & Defense industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kratos Defense&Security in the Aerospace & Defense industry. Now Kratos Defense&Security can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Kratos Defense&Security 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.
Manufacturing automation
– Kratos Defense&Security can use the latest technology developments to improve its manufacturing and designing process in Aerospace & Defense 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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Aerospace & Defense industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kratos Defense&Security can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kratos Defense&Security may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Aerospace & Defense sector.
High dependence on third party suppliers
– Kratos Defense&Security 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kratos Defense&Security 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 Kratos Defense&Security prominent markets.
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.
