Owens-Illinois (OI) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Owens-Illinois (United States)

Based on various researches at Oak Spring University , Owens-Illinois is operating in a macro-environment that has been destablized by – increasing commodity prices, wage bills are increasing, increasing energy prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, geopolitical disruptions, etc

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Introduction to SWOT Analysis of Owens-Illinois

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Owens-Illinois can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Owens-Illinois, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Owens-Illinois 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Owens-Illinois can be done for the following purposes –
1. Strategic planning of Owens-Illinois
2. Improving business portfolio management of Owens-Illinois
3. Assessing feasibility of the new initiative in United States
4. Making a Containers & Packaging sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Owens-Illinois

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Strengths of Owens-Illinois | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Owens-Illinois are -

Diverse revenue streams

– Owens-Illinois is present in almost all the verticals within the Containers & Packaging industry. This has provided Owens-Illinois 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.

Organizational Resilience of Owens-Illinois

– The covid-19 pandemic has put organizational resilience at the centre of everthing Owens-Illinois does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Superior customer experience

– The customer experience strategy of Owens-Illinois in Containers & Packaging industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to lead change in Containers & Packaging

– Owens-Illinois is one of the leading players in the Containers & Packaging industry in United States. Over the years it has not only transformed the business landscape in the Containers & Packaging industry in United States but also across the existing markets. The ability to lead change has enabled Owens-Illinois in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Innovation driven organization

– Owens-Illinois is one of the most innovative firm in Containers & Packaging sector.

High switching costs

– The high switching costs that Owens-Illinois 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.

Operational resilience

– The operational resilience strategy of Owens-Illinois comprises – understanding the underlying the factors in the Containers & Packaging 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 Containers & Packaging industry

– Owens-Illinois is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Highly skilled collaborators

– Owens-Illinois has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Containers & Packaging industry. Secondly the value chain collaborators of Owens-Illinois have helped the firm to develop new products and bring them quickly to the marketplace.

Sustainable margins compare to other players in Containers & Packaging industry

– Owens-Illinois has clearly differentiated products in the market place. This has enabled Owens-Illinois to fetch slight price premium compare to the competitors in the Containers & Packaging industry. The sustainable margins have also helped Owens-Illinois to invest into research and development (R&D) and innovation.

Low bargaining power of suppliers

– Suppliers of Owens-Illinois in the Basic Materials sector have low bargaining power. Owens-Illinois has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Owens-Illinois to manage not only supply disruptions but also source products at highly competitive prices.

High brand equity

– Owens-Illinois has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Owens-Illinois to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

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Weaknesses of Owens-Illinois | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Owens-Illinois are -

Capital Spending Reduction

– Even during the low interest decade, Owens-Illinois 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 Containers & Packaging industry using digital technology.

Employees’ less understanding of Owens-Illinois strategy

– From the outside it seems that the employees of Owens-Illinois 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.

Slow to strategic competitive environment developments

– As Owens-Illinois is one of the leading players in the Containers & Packaging industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Containers & Packaging industry in last five years.

Need for greater diversity

– Owens-Illinois 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.

Interest costs

– Compare to the competition, Owens-Illinois 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.

Products dominated business model

– Even though Owens-Illinois has some of the most successful models in the Containers & Packaging industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Owens-Illinois should strive to include more intangible value offerings along with its core products and services.

Low market penetration in new markets

– Outside its home market of United States, Owens-Illinois needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High bargaining power of channel partners in Containers & Packaging industry

– because of the regulatory requirements in United States, Owens-Illinois 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 Containers & Packaging industry.

Ability to respond to the competition

– As the decision making is very deliberative at Owens-Illinois, in the dynamic environment of Containers & Packaging industry it has struggled to respond to the nimble upstart competition. Owens-Illinois has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Slow decision making process

– As mentioned earlier in the report, Owens-Illinois has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Containers & Packaging industry over the last five years. Owens-Illinois 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.

Lack of clear differentiation of Owens-Illinois products

– To increase the profitability and margins on the products, Owens-Illinois needs to provide more differentiated products than what it is currently offering in the marketplace.

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Owens-Illinois Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Owens-Illinois are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Owens-Illinois can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Owens-Illinois is facing challenges because of the dominance of functional experts in the organization. Owens-Illinois can utilize new technology in the field of Containers & Packaging industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Building a culture of innovation

– managers at Owens-Illinois 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 Containers & Packaging industry.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Owens-Illinois 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 Owens-Illinois to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Owens-Illinois can use these opportunities to build new business models that can help the communities that Owens-Illinois operates in. Secondly it can use opportunities from government spending in Containers & Packaging sector.

Low interest rates

– Even though inflation is raising its head in most developed economies, Owens-Illinois 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.

Using analytics as competitive advantage

– Owens-Illinois has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Containers & Packaging sector. This continuous investment in analytics has enabled Owens-Illinois to build a competitive advantage using analytics. The analytics driven competitive advantage can help Owens-Illinois to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Manufacturing automation

– Owens-Illinois can use the latest technology developments to improve its manufacturing and designing process in Containers & Packaging 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.

Leveraging digital technologies

– Owens-Illinois 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.

Creating value in data economy

– The success of analytics program of Owens-Illinois has opened avenues for new revenue streams for the organization in Containers & Packaging industry. This can help Owens-Illinois to build a more holistic ecosystem for Owens-Illinois products in the Containers & Packaging industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Loyalty marketing

– Owens-Illinois 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.

Developing new processes and practices

– Owens-Illinois can develop new processes and procedures in Containers & Packaging 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Owens-Illinois 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 Owens-Illinois to hire the very best people irrespective of their geographical location.

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Threats Owens-Illinois External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Owens-Illinois are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Owens-Illinois in Containers & Packaging industry. The Containers & Packaging 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 Containers & Packaging industry are lowering. It can presents Owens-Illinois with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Containers & Packaging sector.

Increasing wage structure of Owens-Illinois

– 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 Owens-Illinois.

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 Owens-Illinois business can come under increasing regulations regarding data privacy, data security, etc.

Easy access to finance

– Easy access to finance in Containers & Packaging industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Owens-Illinois can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on Owens-Illinois demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Containers & Packaging industry and other sectors.

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 Owens-Illinois.

Technology acceleration in Forth Industrial Revolution

– Owens-Illinois has witnessed rapid integration of technology during Covid-19 in the Containers & Packaging industry. As one of the leading players in the industry, Owens-Illinois needs to keep up with the evolution of technology in the Containers & Packaging 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 Owens-Illinois in the Containers & Packaging sector and impact the bottomline of the organization.

Shortening product life cycle

– it is one of the major threat that Owens-Illinois is facing in Containers & Packaging sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– Owens-Illinois 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 Containers & Packaging industry.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Owens-Illinois may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Containers & Packaging sector.

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. Owens-Illinois 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.

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Weighted SWOT Analysis of Owens-Illinois Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Owens-Illinois 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 Owens-Illinois 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 Owens-Illinois 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 Owens-Illinois 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 Owens-Illinois needs to make to build a sustainable competitive advantage.

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