Nexstar (NXST) SWOT Analysis / TOWS Matrix / MBA Resources
Broadcasting & Cable TV
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Nexstar (United States)
Based on various researches at Oak Spring University , Nexstar is operating in a macro-environment that has been destablized by – wage bills are increasing, central banks are concerned over increasing inflation, there is backlash against globalization, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nexstar can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nexstar, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nexstar 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 Nexstar can be done for the following purposes –
1. Strategic planning of Nexstar
2. Improving business portfolio management of Nexstar
3. Assessing feasibility of the new initiative in United States
4. Making a Broadcasting & Cable TV sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nexstar
Strengths of Nexstar | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nexstar are -
Ability to lead change in Broadcasting & Cable TV
– Nexstar is one of the leading players in the Broadcasting & Cable TV industry in United States. Over the years it has not only transformed the business landscape in the Broadcasting & Cable TV industry in United States but also across the existing markets. The ability to lead change has enabled Nexstar in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Nexstar 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.
Successful track record of launching new products
– Nexstar has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nexstar 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 Nexstar 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 brand equity
– Nexstar has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nexstar to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Nexstar has one of the best training and development program in Services 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.
Operational resilience
– The operational resilience strategy of Nexstar comprises – understanding the underlying the factors in the Broadcasting & Cable TV 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.
Strong track record of project management in the Broadcasting & Cable TV industry
– Nexstar is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Nexstar is one of the most innovative firm in Broadcasting & Cable TV sector.
Highly skilled collaborators
– Nexstar has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Broadcasting & Cable TV industry. Secondly the value chain collaborators of Nexstar have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Nexstar has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nexstar staying ahead in the Broadcasting & Cable TV industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Nexstar in Broadcasting & Cable TV industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Nexstar | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nexstar are -
High bargaining power of channel partners in Broadcasting & Cable TV industry
– because of the regulatory requirements in United States, Nexstar 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 Broadcasting & Cable TV industry.
Slow to strategic competitive environment developments
– As Nexstar is one of the leading players in the Broadcasting & Cable TV industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Broadcasting & Cable TV industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative at Nexstar, in the dynamic environment of Broadcasting & Cable TV industry it has struggled to respond to the nimble upstart competition. Nexstar has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Nexstar has a high cash cycle compare to other players in the Broadcasting & Cable TV industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee of Nexstar is just above the Broadcasting & Cable TV 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.
Employees’ less understanding of Nexstar strategy
– From the outside it seems that the employees of Nexstar 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.
No frontier risks strategy
– From the 10K / annual statement of Nexstar, it seems that company is thinking out the frontier risks that can impact Broadcasting & Cable TV industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– From the outside it seems that Nexstar needs to have more collaboration between its sales team and marketing team. Sales professionals in the Broadcasting & Cable TV industry have deep experience in developing customer relationships. Marketing department at Nexstar can leverage the sales team experience to cultivate customer relationships as Nexstar is planning to shift buying processes online.
Interest costs
– Compare to the competition, Nexstar 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.
Increasing silos among functional specialists
– The organizational structure of Nexstar is dominated by functional specialists. It is not different from other players in the Broadcasting & Cable TV industry, but Nexstar needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nexstar to focus more on services in the Broadcasting & Cable TV industry rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of United States, Nexstar needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Nexstar Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nexstar are -
Leveraging digital technologies
– Nexstar 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
– Nexstar has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Broadcasting & Cable TV sector. This continuous investment in analytics has enabled Nexstar to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nexstar 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 Nexstar 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 Broadcasting & Cable TV industry.
Loyalty marketing
– Nexstar 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.
Creating value in data economy
– The success of analytics program of Nexstar has opened avenues for new revenue streams for the organization in Broadcasting & Cable TV industry. This can help Nexstar to build a more holistic ecosystem for Nexstar products in the Broadcasting & Cable TV industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nexstar 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.
Buying journey improvements
– Nexstar can improve the customer journey of consumers in the Broadcasting & Cable TV 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nexstar is facing challenges because of the dominance of functional experts in the organization. Nexstar can utilize new technology in the field of Broadcasting & Cable TV industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Nexstar to increase its market reach. Nexstar 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.
Learning at scale
– Online learning technologies has now opened space for Nexstar 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nexstar 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 Nexstar 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. Nexstar can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Broadcasting & Cable TV industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nexstar 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. Nexstar 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.
Threats Nexstar External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nexstar are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nexstar 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 Nexstar prominent markets.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nexstar may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Broadcasting & Cable TV sector.
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. Nexstar needs to understand the core reasons impacting the Broadcasting & Cable TV industry. This will help it in building a better workplace.
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 Nexstar in the Broadcasting & Cable TV 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. Nexstar 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.
Stagnating economy with rate increase
– Nexstar 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 Broadcasting & Cable TV industry.
Increasing wage structure of Nexstar
– 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 Nexstar.
Easy access to finance
– Easy access to finance in Broadcasting & Cable TV industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nexstar can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Broadcasting & Cable TV industry are lowering. It can presents Nexstar with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Broadcasting & Cable TV sector.
High dependence on third party suppliers
– Nexstar 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.
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
– Nexstar 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. Nexstar can take advantage of this fund but it will also bring new competitors in the Broadcasting & Cable TV industry.
Weighted SWOT Analysis of Nexstar Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nexstar 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 Nexstar 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 Nexstar 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 Nexstar 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 Nexstar needs to make to build a sustainable competitive advantage.