Publicis Groupe SA (PUBGY) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Publicis Groupe SA (United States)

Based on various researches at Oak Spring University , Publicis Groupe SA is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, etc

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Introduction to SWOT Analysis of Publicis Groupe SA

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Publicis Groupe SA can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Publicis Groupe SA, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Publicis Groupe SA 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 Publicis Groupe SA can be done for the following purposes –
1. Strategic planning of Publicis Groupe SA
2. Improving business portfolio management of Publicis Groupe SA
3. Assessing feasibility of the new initiative in United States
4. Making a Advertising sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Publicis Groupe SA

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Strengths of Publicis Groupe SA | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Publicis Groupe SA are -

Ability to lead change in Advertising

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

Training and development

– Publicis Groupe SA 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.

High brand equity

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

Operational resilience

– The operational resilience strategy of Publicis Groupe SA comprises – understanding the underlying the factors in the Advertising 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.

Sustainable margins compare to other players in Advertising industry

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

Diverse revenue streams

– Publicis Groupe SA is present in almost all the verticals within the Advertising industry. This has provided Publicis Groupe SA 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 Publicis Groupe SA

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

Effective Research and Development (R&D)

– Publicis Groupe SA has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Publicis Groupe SA staying ahead in the Advertising industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Learning organization

- Publicis Groupe SA 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 Publicis Groupe SA is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Publicis Groupe SA emphasize – knowledge, initiative, and innovation.

Strong track record of project management in the Advertising industry

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

High switching costs

– The high switching costs that Publicis Groupe SA 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 Publicis Groupe SA in Advertising industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Publicis Groupe SA | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Publicis Groupe SA are -

High dependence on Publicis Groupe SA ‘s star products

– The top 2 products and services of Publicis Groupe SA still accounts for major business revenue. This dependence on star products in Advertising industry has resulted into insufficient focus on developing new products, even though Publicis Groupe SA has relatively successful track record of launching new products.

High operating costs

– Compare to the competitors, Publicis Groupe SA has high operating costs in the Advertising industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Publicis Groupe SA lucrative customers.

Slow to strategic competitive environment developments

– As Publicis Groupe SA is one of the leading players in the Advertising industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Advertising industry in last five years.

Interest costs

– Compare to the competition, Publicis Groupe SA 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 Publicis Groupe SA has some of the most successful models in the Advertising industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Publicis Groupe SA should strive to include more intangible value offerings along with its core products and services.

Aligning sales with marketing

– From the outside it seems that Publicis Groupe SA needs to have more collaboration between its sales team and marketing team. Sales professionals in the Advertising industry have deep experience in developing customer relationships. Marketing department at Publicis Groupe SA can leverage the sales team experience to cultivate customer relationships as Publicis Groupe SA is planning to shift buying processes online.

Need for greater diversity

– Publicis Groupe SA 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.

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 Publicis Groupe SA supply chain. Even after few cautionary changes, Publicis Groupe SA is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Publicis Groupe SA vulnerable to further global disruptions in South East Asia.

High cash cycle compare to competitors

Publicis Groupe SA has a high cash cycle compare to other players in the Advertising industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Capital Spending Reduction

– Even during the low interest decade, Publicis Groupe SA 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 Advertising industry using digital technology.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Publicis Groupe SA is slow explore the new channels of communication. These new channels of communication can help Publicis Groupe SA to provide better information regarding Advertising products and services. It can also build an online community to further reach out to potential customers.

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Publicis Groupe SA Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Publicis Groupe SA are -

Harnessing reconfiguration of the global supply chains

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

Reforming the budgeting process

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

Manufacturing automation

– Publicis Groupe SA can use the latest technology developments to improve its manufacturing and designing process in Advertising 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Publicis Groupe SA in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Advertising industry, and it will provide faster access to the consumers.

Use of Bitcoin and other crypto currencies for transactions in Advertising industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Publicis Groupe SA in the Advertising industry. Now Publicis Groupe SA can target international markets with far fewer capital restrictions requirements than the existing system.

Using analytics as competitive advantage

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

Redefining models of collaboration and team work

– As explained in the weaknesses section, Publicis Groupe SA is facing challenges because of the dominance of functional experts in the organization. Publicis Groupe SA can utilize new technology in the field of Advertising 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 Publicis Groupe SA 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 Advertising industry.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Advertising industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Publicis Groupe SA 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. Publicis Groupe SA 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.

Leveraging digital technologies

– Publicis Groupe SA 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.

Increase in government spending

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

Remote work and new talent hiring opportunities

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

Developing new processes and practices

– Publicis Groupe SA can develop new processes and procedures in Advertising 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.

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Threats Publicis Groupe SA External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Publicis Groupe SA are -

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. Publicis Groupe SA 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.

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.

Consumer confidence and its impact on Publicis Groupe SA 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 Advertising industry and other sectors.

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 Publicis Groupe SA in the Advertising sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Publicis Groupe SA has witnessed rapid integration of technology during Covid-19 in the Advertising industry. As one of the leading players in the industry, Publicis Groupe SA needs to keep up with the evolution of technology in the Advertising 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.

High dependence on third party suppliers

– Publicis Groupe SA 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Publicis Groupe SA in Advertising industry. The Advertising 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.

Shortening product life cycle

– it is one of the major threat that Publicis Groupe SA is facing in Advertising sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Easy access to finance

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

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 Publicis Groupe SA business can come under increasing regulations regarding data privacy, data security, etc.

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.

Regulatory challenges

– Publicis Groupe SA 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 Advertising industry regulations.

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 Publicis Groupe SA.

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Weighted SWOT Analysis of Publicis Groupe SA Template, Example

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

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