Based on various researches at Oak Spring University , Phillips 66 Partners LP is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, there is backlash against globalization, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , technology disruption, digital marketing is dominated by two big players Facebook and Google,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, etc
Introduction to SWOT Analysis of Phillips 66 Partners LP
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Phillips 66 Partners LP can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Phillips 66 Partners LP, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Phillips 66 Partners LP 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 Phillips 66 Partners LP can be done for the following purposes –
1. Strategic planning of Phillips 66 Partners LP
2. Improving business portfolio management of Phillips 66 Partners LP
3. Assessing feasibility of the new initiative in United States
4. Making a Oil Well Services & Equipment sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Phillips 66 Partners LP
Strengths of Phillips 66 Partners LP | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Phillips 66 Partners LP are -
Digital Transformation in Oil Well Services & Equipment industry
- digital transformation varies from industry to industry. For Phillips 66 Partners LP digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Phillips 66 Partners LP 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.
Low bargaining power of suppliers
– Suppliers of Phillips 66 Partners LP in the Energy sector have low bargaining power. Phillips 66 Partners LP has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Phillips 66 Partners LP to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Phillips 66 Partners LP
– The covid-19 pandemic has put organizational resilience at the centre of everthing Phillips 66 Partners LP does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Phillips 66 Partners LP has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Phillips 66 Partners LP staying ahead in the Oil Well Services & Equipment industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the Oil Well Services & Equipment industry
– Phillips 66 Partners LP is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Phillips 66 Partners LP 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 Phillips 66 Partners LP is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Phillips 66 Partners LP emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Phillips 66 Partners LP 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.
Superior customer experience
– The customer experience strategy of Phillips 66 Partners LP in Oil Well Services & Equipment industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Phillips 66 Partners LP is one of the most innovative firm in Oil Well Services & Equipment sector.
Cross disciplinary teams
– Horizontal connected teams at the Phillips 66 Partners LP 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 recruit top talent
– Phillips 66 Partners LP is one of the leading players in the Oil Well Services & Equipment 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.
Highly skilled collaborators
– Phillips 66 Partners LP has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Oil Well Services & Equipment industry. Secondly the value chain collaborators of Phillips 66 Partners LP have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Phillips 66 Partners LP | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Phillips 66 Partners LP are -
Increasing silos among functional specialists
– The organizational structure of Phillips 66 Partners LP is dominated by functional specialists. It is not different from other players in the Oil Well Services & Equipment industry, but Phillips 66 Partners LP needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Phillips 66 Partners LP to focus more on services in the Oil Well Services & Equipment industry rather than just following the product oriented approach.
High dependence on Phillips 66 Partners LP ‘s star products
– The top 2 products and services of Phillips 66 Partners LP still accounts for major business revenue. This dependence on star products in Oil Well Services & Equipment industry has resulted into insufficient focus on developing new products, even though Phillips 66 Partners LP has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the Oil Well Services & Equipment industry, Phillips 66 Partners LP 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, Phillips 66 Partners LP 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 Oil Well Services & Equipment industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative at Phillips 66 Partners LP, in the dynamic environment of Oil Well Services & Equipment industry it has struggled to respond to the nimble upstart competition. Phillips 66 Partners LP has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Phillips 66 Partners LP is one of the leading players in the Oil Well Services & Equipment industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Oil Well Services & Equipment industry in last five years.
High cash cycle compare to competitors
Phillips 66 Partners LP has a high cash cycle compare to other players in the Oil Well Services & Equipment industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Interest costs
– Compare to the competition, Phillips 66 Partners LP 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.
Aligning sales with marketing
– From the outside it seems that Phillips 66 Partners LP needs to have more collaboration between its sales team and marketing team. Sales professionals in the Oil Well Services & Equipment industry have deep experience in developing customer relationships. Marketing department at Phillips 66 Partners LP can leverage the sales team experience to cultivate customer relationships as Phillips 66 Partners LP is planning to shift buying processes online.
High bargaining power of channel partners in Oil Well Services & Equipment industry
– because of the regulatory requirements in United States, Phillips 66 Partners LP 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 Oil Well Services & Equipment industry.
Products dominated business model
– Even though Phillips 66 Partners LP has some of the most successful models in the Oil Well Services & Equipment industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Phillips 66 Partners LP should strive to include more intangible value offerings along with its core products and services.
Phillips 66 Partners LP Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Phillips 66 Partners LP are -
Developing new processes and practices
– Phillips 66 Partners LP can develop new processes and procedures in Oil Well Services & Equipment 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.
Creating value in data economy
– The success of analytics program of Phillips 66 Partners LP has opened avenues for new revenue streams for the organization in Oil Well Services & Equipment industry. This can help Phillips 66 Partners LP to build a more holistic ecosystem for Phillips 66 Partners LP products in the Oil Well Services & Equipment industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Phillips 66 Partners LP 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 Phillips 66 Partners LP 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, Phillips 66 Partners LP can use these opportunities to build new business models that can help the communities that Phillips 66 Partners LP operates in. Secondly it can use opportunities from government spending in Oil Well Services & Equipment sector.
Using analytics as competitive advantage
– Phillips 66 Partners LP has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Oil Well Services & Equipment sector. This continuous investment in analytics has enabled Phillips 66 Partners LP to build a competitive advantage using analytics. The analytics driven competitive advantage can help Phillips 66 Partners LP 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 Phillips 66 Partners LP 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 Oil Well Services & Equipment industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Phillips 66 Partners LP is facing challenges because of the dominance of functional experts in the organization. Phillips 66 Partners LP can utilize new technology in the field of Oil Well Services & Equipment industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Phillips 66 Partners LP can improve the customer journey of consumers in the Oil Well Services & Equipment 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.
Loyalty marketing
– Phillips 66 Partners LP 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Phillips 66 Partners LP in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Oil Well Services & Equipment industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Phillips 66 Partners LP 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Phillips 66 Partners LP 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 Phillips 66 Partners LP to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Phillips 66 Partners LP to increase its market reach. Phillips 66 Partners LP 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 Phillips 66 Partners LP External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Phillips 66 Partners LP are -
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 Phillips 66 Partners LP in the Oil Well Services & Equipment sector and impact the bottomline of the organization.
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.
Regulatory challenges
– Phillips 66 Partners LP 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 Oil Well Services & Equipment industry regulations.
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. Phillips 66 Partners LP needs to understand the core reasons impacting the Oil Well Services & Equipment industry. This will help it in building a better workplace.
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. Phillips 66 Partners LP 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.
Increasing wage structure of Phillips 66 Partners LP
– 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 Phillips 66 Partners LP.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Phillips 66 Partners LP 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 Phillips 66 Partners LP prominent markets.
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 Phillips 66 Partners LP.
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 Phillips 66 Partners LP business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Phillips 66 Partners LP has witnessed rapid integration of technology during Covid-19 in the Oil Well Services & Equipment industry. As one of the leading players in the industry, Phillips 66 Partners LP needs to keep up with the evolution of technology in the Oil Well Services & Equipment 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Phillips 66 Partners LP in Oil Well Services & Equipment industry. The Oil Well Services & Equipment 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.
Consumer confidence and its impact on Phillips 66 Partners LP 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 Oil Well Services & Equipment industry and other sectors.
Environmental challenges
– Phillips 66 Partners LP 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. Phillips 66 Partners LP can take advantage of this fund but it will also bring new competitors in the Oil Well Services & Equipment industry.
Weighted SWOT Analysis of Phillips 66 Partners LP Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Phillips 66 Partners LP 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 Phillips 66 Partners LP 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 Phillips 66 Partners LP 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 Phillips 66 Partners LP 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 Phillips 66 Partners LP needs to make to build a sustainable competitive advantage.