SWOT Analysis / TOWS Matrix for Noranda Aluminum (United States)
Based on various researches at Oak Spring University , Noranda Aluminum is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, increasing commodity prices, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, increasing energy prices, talent flight as more people leaving formal jobs, geopolitical disruptions,
competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Noranda Aluminum can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Noranda Aluminum, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Noranda Aluminum 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 Noranda Aluminum can be done for the following purposes –
1. Strategic planning of Noranda Aluminum
2. Improving business portfolio management of Noranda Aluminum
3. Assessing feasibility of the new initiative in United States
4. Making a Metal Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Noranda Aluminum
Strengths of Noranda Aluminum | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Noranda Aluminum are -
Ability to recruit top talent
– Noranda Aluminum is one of the leading players in the Metal Mining industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Noranda Aluminum in Metal Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Noranda Aluminum is present in almost all the verticals within the Metal Mining industry. This has provided Noranda Aluminum 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.
Learning organization
- Noranda Aluminum 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 Noranda Aluminum is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Noranda Aluminum emphasize – knowledge, initiative, and innovation.
Ability to lead change in Metal Mining
– Noranda Aluminum is one of the leading players in the Metal Mining industry in United States. Over the years it has not only transformed the business landscape in the Metal Mining industry in United States but also across the existing markets. The ability to lead change has enabled Noranda Aluminum in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Noranda Aluminum has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Noranda Aluminum staying ahead in the Metal Mining industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Metal Mining industry
– Noranda Aluminum has clearly differentiated products in the market place. This has enabled Noranda Aluminum to fetch slight price premium compare to the competitors in the Metal Mining industry. The sustainable margins have also helped Noranda Aluminum to invest into research and development (R&D) and innovation.
Innovation driven organization
– Noranda Aluminum is one of the most innovative firm in Metal Mining sector.
Highly skilled collaborators
– Noranda Aluminum has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Metal Mining industry. Secondly the value chain collaborators of Noranda Aluminum have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Noranda Aluminum has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Noranda Aluminum 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.
Cross disciplinary teams
– Horizontal connected teams at the Noranda Aluminum 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.
High switching costs
– The high switching costs that Noranda Aluminum 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 Noranda Aluminum | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Noranda Aluminum are -
Increasing silos among functional specialists
– The organizational structure of Noranda Aluminum is dominated by functional specialists. It is not different from other players in the Metal Mining industry, but Noranda Aluminum needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Noranda Aluminum to focus more on services in the Metal Mining industry rather than just following the product oriented approach.
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 Noranda Aluminum supply chain. Even after few cautionary changes, Noranda Aluminum is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Noranda Aluminum vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of United States, Noranda Aluminum needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Noranda Aluminum is slow explore the new channels of communication. These new channels of communication can help Noranda Aluminum to provide better information regarding Metal Mining products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Noranda Aluminum 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.
Slow to strategic competitive environment developments
– As Noranda Aluminum is one of the leading players in the Metal Mining industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Metal Mining industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the Metal Mining industry, Noranda Aluminum 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.
Capital Spending Reduction
– Even during the low interest decade, Noranda Aluminum 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 Metal Mining industry using digital technology.
High cash cycle compare to competitors
Noranda Aluminum has a high cash cycle compare to other players in the Metal Mining industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– From the outside it seems that Noranda Aluminum needs to have more collaboration between its sales team and marketing team. Sales professionals in the Metal Mining industry have deep experience in developing customer relationships. Marketing department at Noranda Aluminum can leverage the sales team experience to cultivate customer relationships as Noranda Aluminum is planning to shift buying processes online.
Lack of clear differentiation of Noranda Aluminum products
– To increase the profitability and margins on the products, Noranda Aluminum needs to provide more differentiated products than what it is currently offering in the marketplace.
Noranda Aluminum Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Noranda Aluminum are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Noranda Aluminum 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.
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 Noranda Aluminum 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.
Use of Bitcoin and other crypto currencies for transactions in Metal Mining industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Noranda Aluminum in the Metal Mining industry. Now Noranda Aluminum can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Noranda Aluminum can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Noranda Aluminum can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Noranda Aluminum is facing challenges because of the dominance of functional experts in the organization. Noranda Aluminum can utilize new technology in the field of Metal Mining industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Noranda Aluminum can use these opportunities to build new business models that can help the communities that Noranda Aluminum operates in. Secondly it can use opportunities from government spending in Metal Mining sector.
Learning at scale
– Online learning technologies has now opened space for Noranda Aluminum 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.
Creating value in data economy
– The success of analytics program of Noranda Aluminum has opened avenues for new revenue streams for the organization in Metal Mining industry. This can help Noranda Aluminum to build a more holistic ecosystem for Noranda Aluminum products in the Metal Mining industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Noranda Aluminum 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Noranda Aluminum 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 Noranda Aluminum to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Metal Mining industry, but it has also influenced the consumer preferences. Noranda Aluminum can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Noranda Aluminum to increase its market reach. Noranda Aluminum 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.
Threats Noranda Aluminum External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Noranda Aluminum are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Noranda Aluminum 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 Noranda Aluminum prominent markets.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Noranda Aluminum in Metal Mining industry. The Metal Mining 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.
Regulatory challenges
– Noranda Aluminum 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 Metal Mining industry regulations.
Easy access to finance
– Easy access to finance in Metal Mining industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Noranda Aluminum can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Noranda Aluminum needs to understand the core reasons impacting the Metal Mining industry. This will help it in building a better workplace.
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 Noranda Aluminum.
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 Noranda Aluminum business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Noranda Aluminum
– 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 Noranda Aluminum.
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
– Noranda Aluminum 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. Noranda Aluminum can take advantage of this fund but it will also bring new competitors in the Metal Mining industry.
Technology acceleration in Forth Industrial Revolution
– Noranda Aluminum has witnessed rapid integration of technology during Covid-19 in the Metal Mining industry. As one of the leading players in the industry, Noranda Aluminum needs to keep up with the evolution of technology in the Metal Mining 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.
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 Noranda Aluminum in the Metal Mining sector and impact the bottomline of the organization.
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. Noranda Aluminum 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.
Weighted SWOT Analysis of Noranda Aluminum Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Noranda Aluminum 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 Noranda Aluminum 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 Noranda Aluminum 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 Noranda Aluminum 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 Noranda Aluminum needs to make to build a sustainable competitive advantage.