Mercer Int (MERC) SWOT Analysis / TOWS Matrix / MBA Resources
Paper & Paper Products
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Mercer Int (United States)
Based on various researches at Oak Spring University , Mercer Int is operating in a macro-environment that has been destablized by – wage bills are increasing, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion,
supply chains are disrupted by pandemic , there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Mercer Int can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mercer Int, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mercer Int 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 Mercer Int can be done for the following purposes –
1. Strategic planning of Mercer Int
2. Improving business portfolio management of Mercer Int
3. Assessing feasibility of the new initiative in United States
4. Making a Paper & Paper Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Mercer Int
Strengths of Mercer Int | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mercer Int are -
Sustainable margins compare to other players in Paper & Paper Products industry
– Mercer Int has clearly differentiated products in the market place. This has enabled Mercer Int to fetch slight price premium compare to the competitors in the Paper & Paper Products industry. The sustainable margins have also helped Mercer Int to invest into research and development (R&D) and innovation.
Ability to lead change in Paper & Paper Products
– Mercer Int is one of the leading players in the Paper & Paper Products industry in United States. Over the years it has not only transformed the business landscape in the Paper & Paper Products industry in United States but also across the existing markets. The ability to lead change has enabled Mercer Int in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Mercer Int in Paper & Paper Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of Mercer Int
– The covid-19 pandemic has put organizational resilience at the centre of everthing Mercer Int does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Mercer Int 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 Paper & Paper Products 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.
Successful track record of launching new products
– Mercer Int has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mercer Int 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.
Innovation driven organization
– Mercer Int is one of the most innovative firm in Paper & Paper Products sector.
Operational resilience
– The operational resilience strategy of Mercer Int comprises – understanding the underlying the factors in the Paper & Paper Products 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
– Mercer Int has one of the best training and development program in Basic Materials 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.
Digital Transformation in Paper & Paper Products industry
- digital transformation varies from industry to industry. For Mercer Int digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mercer Int 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.
Learning organization
- Mercer Int 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 Mercer Int is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Mercer Int emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Mercer Int has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Paper & Paper Products industry. Secondly the value chain collaborators of Mercer Int have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Mercer Int | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Mercer Int are -
Compensation and incentives
– The revenue per employee of Mercer Int is just above the Paper & Paper Products 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.
Need for greater diversity
– Mercer Int 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.
Aligning sales with marketing
– From the outside it seems that Mercer Int needs to have more collaboration between its sales team and marketing team. Sales professionals in the Paper & Paper Products industry have deep experience in developing customer relationships. Marketing department at Mercer Int can leverage the sales team experience to cultivate customer relationships as Mercer Int is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Mercer Int has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Paper & Paper Products industry over the last five years. Mercer Int 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.
Workers concerns about automation
– As automation is fast increasing in the Paper & Paper Products industry, Mercer Int 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.
High bargaining power of channel partners in Paper & Paper Products industry
– because of the regulatory requirements in United States, Mercer Int 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 Paper & Paper Products industry.
Interest costs
– Compare to the competition, Mercer Int 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.
Ability to respond to the competition
– As the decision making is very deliberative at Mercer Int, in the dynamic environment of Paper & Paper Products industry it has struggled to respond to the nimble upstart competition. Mercer Int has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Mercer Int ‘s star products
– The top 2 products and services of Mercer Int still accounts for major business revenue. This dependence on star products in Paper & Paper Products industry has resulted into insufficient focus on developing new products, even though Mercer Int has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, Mercer Int has high operating costs in the Paper & Paper Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Mercer Int lucrative customers.
Low market penetration in new markets
– Outside its home market of United States, Mercer Int needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Mercer Int Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Mercer Int are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Paper & Paper Products industry, but it has also influenced the consumer preferences. Mercer Int can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions in Paper & Paper Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Mercer Int in the Paper & Paper Products industry. Now Mercer Int can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Mercer Int 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.
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. Mercer Int can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mercer Int 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 Mercer Int to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Mercer Int 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
– Mercer Int 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Paper & Paper Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Mercer Int 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. Mercer Int 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mercer Int in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Paper & Paper Products industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Mercer Int to increase its market reach. Mercer Int 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mercer Int can use these opportunities to build new business models that can help the communities that Mercer Int operates in. Secondly it can use opportunities from government spending in Paper & Paper Products sector.
Manufacturing automation
– Mercer Int can use the latest technology developments to improve its manufacturing and designing process in Paper & Paper Products 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 Mercer Int 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 Mercer Int to hire the very best people irrespective of their geographical location.
Threats Mercer Int External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Mercer Int are -
Easy access to finance
– Easy access to finance in Paper & Paper Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Mercer Int can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Mercer Int in Paper & Paper Products industry. The Paper & Paper Products 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.
High dependence on third party suppliers
– Mercer Int 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.
Shortening product life cycle
– it is one of the major threat that Mercer Int is facing in Paper & Paper Products 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 Paper & Paper Products industry are lowering. It can presents Mercer Int with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Paper & Paper Products sector.
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.
Increasing wage structure of Mercer Int
– 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 Mercer Int.
Stagnating economy with rate increase
– Mercer Int 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 Paper & Paper Products industry.
Environmental challenges
– Mercer Int 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. Mercer Int can take advantage of this fund but it will also bring new competitors in the Paper & Paper Products 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. Mercer Int 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 Mercer Int.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Mercer Int 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 Mercer Int prominent markets.
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.
Weighted SWOT Analysis of Mercer Int Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Mercer Int 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 Mercer Int 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 Mercer Int 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 Mercer Int 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 Mercer Int needs to make to build a sustainable competitive advantage.