Based on various researches at Oak Spring University , OJSC Polyus Gold is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that OJSC Polyus Gold can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the OJSC Polyus Gold, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which OJSC Polyus Gold 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 OJSC Polyus Gold can be done for the following purposes –
1. Strategic planning of OJSC Polyus Gold
2. Improving business portfolio management of OJSC Polyus Gold
3. Assessing feasibility of the new initiative in United States
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of OJSC Polyus Gold
Strengths of OJSC Polyus Gold | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of OJSC Polyus Gold are -
Cross disciplinary teams
– Horizontal connected teams at the OJSC Polyus Gold 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.
Ability to lead change in
– OJSC Polyus Gold is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled OJSC Polyus Gold in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– OJSC Polyus Gold is one of the leading players in the 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.
Organizational Resilience of OJSC Polyus Gold
– The covid-19 pandemic has put organizational resilience at the centre of everthing OJSC Polyus Gold does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management in the industry
– OJSC Polyus Gold is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of OJSC Polyus Gold comprises – understanding the underlying the factors in the 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 OJSC Polyus Gold 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 industry
– OJSC Polyus Gold has clearly differentiated products in the market place. This has enabled OJSC Polyus Gold to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped OJSC Polyus Gold to invest into research and development (R&D) and innovation.
Innovation driven organization
– OJSC Polyus Gold is one of the most innovative firm in sector.
Analytics focus
– OJSC Polyus Gold 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 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.
Highly skilled collaborators
– OJSC Polyus Gold has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive industry. Secondly the value chain collaborators of OJSC Polyus Gold have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of OJSC Polyus Gold in the sector have low bargaining power. OJSC Polyus Gold has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps OJSC Polyus Gold to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of OJSC Polyus Gold | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of OJSC Polyus Gold are -
Employees’ less understanding of OJSC Polyus Gold strategy
– From the outside it seems that the employees of OJSC Polyus Gold 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.
Workers concerns about automation
– As automation is fast increasing in the industry, OJSC Polyus Gold 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, OJSC Polyus Gold 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 industry using digital technology.
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 OJSC Polyus Gold supply chain. Even after few cautionary changes, OJSC Polyus Gold is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left OJSC Polyus Gold vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of OJSC Polyus Gold is dominated by functional specialists. It is not different from other players in the industry, but OJSC Polyus Gold needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help OJSC Polyus Gold to focus more on services in the industry rather than just following the product oriented approach.
High cash cycle compare to competitors
OJSC Polyus Gold has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, OJSC Polyus Gold has high operating costs in the industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract OJSC Polyus Gold lucrative customers.
Need for greater diversity
– OJSC Polyus Gold 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.
Compensation and incentives
– The revenue per employee of OJSC Polyus Gold is just above the 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.
High dependence on OJSC Polyus Gold ‘s star products
– The top 2 products and services of OJSC Polyus Gold still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though OJSC Polyus Gold has relatively successful track record of launching new products.
Lack of clear differentiation of OJSC Polyus Gold products
– To increase the profitability and margins on the products, OJSC Polyus Gold needs to provide more differentiated products than what it is currently offering in the marketplace.
OJSC Polyus Gold Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of OJSC Polyus Gold are -
Better consumer reach
– The expansion of the 5G network will help OJSC Polyus Gold to increase its market reach. OJSC Polyus Gold 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, OJSC Polyus Gold 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, OJSC Polyus Gold is facing challenges because of the dominance of functional experts in the organization. OJSC Polyus Gold can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. OJSC Polyus Gold can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– OJSC Polyus Gold can improve the customer journey of consumers in the 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. OJSC Polyus Gold 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. OJSC Polyus Gold 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.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for OJSC Polyus Gold in the industry. Now OJSC Polyus Gold 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 OJSC Polyus Gold can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of OJSC Polyus Gold has opened avenues for new revenue streams for the organization in industry. This can help OJSC Polyus Gold to build a more holistic ecosystem for OJSC Polyus Gold products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– OJSC Polyus Gold can develop new processes and procedures in 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.
Using analytics as competitive advantage
– OJSC Polyus Gold has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled OJSC Polyus Gold to build a competitive advantage using analytics. The analytics driven competitive advantage can help OJSC Polyus Gold to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– OJSC Polyus Gold 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.
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 OJSC Polyus Gold 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.
Threats OJSC Polyus Gold External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of OJSC Polyus Gold are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, OJSC Polyus Gold may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of sector.
High dependence on third party suppliers
– OJSC Polyus Gold 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
– OJSC Polyus Gold 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. OJSC Polyus Gold can take advantage of this fund but it will also bring new competitors in the industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, OJSC Polyus Gold 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 OJSC Polyus Gold prominent markets.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. OJSC Polyus Gold can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of OJSC Polyus Gold
– 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 OJSC Polyus Gold.
Stagnating economy with rate increase
– OJSC Polyus Gold 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 industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents OJSC Polyus Gold with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the 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. OJSC Polyus Gold 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for OJSC Polyus Gold in industry. The 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.
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.
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 OJSC Polyus Gold in the sector and impact the bottomline of the organization.
Weighted SWOT Analysis of OJSC Polyus Gold Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at OJSC Polyus Gold 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 OJSC Polyus Gold 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 OJSC Polyus Gold 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 OJSC Polyus Gold 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 OJSC Polyus Gold needs to make to build a sustainable competitive advantage.