Based on various researches at Oak Spring University , Ritchie Bros Auctioneers is operating in a macro-environment that has been destablized by – increasing commodity prices, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy,
banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Ritchie Bros Auctioneers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Ritchie Bros Auctioneers can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ritchie Bros Auctioneers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers can be done for the following purposes –
1. Strategic planning of Ritchie Bros Auctioneers
2. Improving business portfolio management of Ritchie Bros Auctioneers
3. Assessing feasibility of the new initiative in United States
4. Making a Misc. Capital Goods sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ritchie Bros Auctioneers
Strengths of Ritchie Bros Auctioneers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ritchie Bros Auctioneers are -
High switching costs
– The high switching costs that Ritchie Bros Auctioneers 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.
Analytics focus
– Ritchie Bros Auctioneers 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 Misc. Capital Goods 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.
Diverse revenue streams
– Ritchie Bros Auctioneers is present in almost all the verticals within the Misc. Capital Goods industry. This has provided Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers
– The covid-19 pandemic has put organizational resilience at the centre of everthing Ritchie Bros Auctioneers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Ritchie Bros Auctioneers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ritchie Bros Auctioneers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Misc. Capital Goods industry
– Ritchie Bros Auctioneers has clearly differentiated products in the market place. This has enabled Ritchie Bros Auctioneers to fetch slight price premium compare to the competitors in the Misc. Capital Goods industry. The sustainable margins have also helped Ritchie Bros Auctioneers to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Ritchie Bros Auctioneers has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ritchie Bros Auctioneers 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.
Effective Research and Development (R&D)
– Ritchie Bros Auctioneers has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Ritchie Bros Auctioneers staying ahead in the Misc. Capital Goods industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Ritchie Bros Auctioneers 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.
Learning organization
- Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Ritchie Bros Auctioneers emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Misc. Capital Goods industry
– Ritchie Bros Auctioneers is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Misc. Capital Goods industry
- digital transformation varies from industry to industry. For Ritchie Bros Auctioneers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Ritchie Bros Auctioneers 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.
Weaknesses of Ritchie Bros Auctioneers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ritchie Bros Auctioneers are -
Increasing silos among functional specialists
– The organizational structure of Ritchie Bros Auctioneers is dominated by functional specialists. It is not different from other players in the Misc. Capital Goods industry, but Ritchie Bros Auctioneers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ritchie Bros Auctioneers to focus more on services in the Misc. Capital Goods industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Ritchie Bros Auctioneers has a high cash cycle compare to other players in the Misc. Capital Goods industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of Ritchie Bros Auctioneers strategy
– From the outside it seems that the employees of Ritchie Bros Auctioneers 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 Misc. Capital Goods industry, Ritchie Bros Auctioneers 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.
Low market penetration in new markets
– Outside its home market of United States, Ritchie Bros Auctioneers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– From the outside it seems that Ritchie Bros Auctioneers needs to have more collaboration between its sales team and marketing team. Sales professionals in the Misc. Capital Goods industry have deep experience in developing customer relationships. Marketing department at Ritchie Bros Auctioneers can leverage the sales team experience to cultivate customer relationships as Ritchie Bros Auctioneers is planning to shift buying processes online.
Lack of clear differentiation of Ritchie Bros Auctioneers products
– To increase the profitability and margins on the products, Ritchie Bros Auctioneers needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Ritchie Bros Auctioneers has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Misc. Capital Goods industry over the last five years. Ritchie Bros Auctioneers 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.
Need for greater diversity
– Ritchie Bros Auctioneers 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ritchie Bros Auctioneers is slow explore the new channels of communication. These new channels of communication can help Ritchie Bros Auctioneers to provide better information regarding Misc. Capital Goods products and services. It can also build an online community to further reach out to potential customers.
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 Ritchie Bros Auctioneers supply chain. Even after few cautionary changes, Ritchie Bros Auctioneers is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Ritchie Bros Auctioneers vulnerable to further global disruptions in South East Asia.
Ritchie Bros Auctioneers Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Ritchie Bros Auctioneers are -
Buying journey improvements
– Ritchie Bros Auctioneers can improve the customer journey of consumers in the Misc. Capital Goods 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ritchie Bros Auctioneers can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Ritchie Bros Auctioneers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Ritchie Bros Auctioneers 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.
Better consumer reach
– The expansion of the 5G network will help Ritchie Bros Auctioneers to increase its market reach. Ritchie Bros Auctioneers 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.
Use of Bitcoin and other crypto currencies for transactions in Misc. Capital Goods industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ritchie Bros Auctioneers in the Misc. Capital Goods industry. Now Ritchie Bros Auctioneers can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Ritchie Bros Auctioneers has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Capital Goods sector. This continuous investment in analytics has enabled Ritchie Bros Auctioneers to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ritchie Bros Auctioneers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Ritchie Bros Auctioneers has opened avenues for new revenue streams for the organization in Misc. Capital Goods industry. This can help Ritchie Bros Auctioneers to build a more holistic ecosystem for Ritchie Bros Auctioneers products in the Misc. Capital Goods industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Capital Goods industry, but it has also influenced the consumer preferences. Ritchie Bros Auctioneers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ritchie Bros Auctioneers is facing challenges because of the dominance of functional experts in the organization. Ritchie Bros Auctioneers can utilize new technology in the field of Misc. Capital Goods industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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, Ritchie Bros Auctioneers can use these opportunities to build new business models that can help the communities that Ritchie Bros Auctioneers operates in. Secondly it can use opportunities from government spending in Misc. Capital Goods sector.
Building a culture of innovation
– managers at Ritchie Bros Auctioneers 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 Misc. Capital Goods industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers to hire the very best people irrespective of their geographical location.
Threats Ritchie Bros Auctioneers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Ritchie Bros Auctioneers are -
Technology acceleration in Forth Industrial Revolution
– Ritchie Bros Auctioneers has witnessed rapid integration of technology during Covid-19 in the Misc. Capital Goods industry. As one of the leading players in the industry, Ritchie Bros Auctioneers needs to keep up with the evolution of technology in the Misc. Capital Goods 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 Ritchie Bros Auctioneers in the Misc. Capital Goods sector and impact the bottomline of the organization.
Increasing wage structure of Ritchie Bros Auctioneers
– 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 Ritchie Bros Auctioneers.
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 Ritchie Bros Auctioneers.
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 Ritchie Bros Auctioneers business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Ritchie Bros Auctioneers 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.
Shortening product life cycle
– it is one of the major threat that Ritchie Bros Auctioneers is facing in Misc. Capital Goods sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers prominent markets.
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. Ritchie Bros Auctioneers 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.
Regulatory challenges
– Ritchie Bros Auctioneers 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 Misc. Capital Goods industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Ritchie Bros Auctioneers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Capital Goods sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ritchie Bros Auctioneers in Misc. Capital Goods industry. The Misc. Capital Goods 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.
Weighted SWOT Analysis of Ritchie Bros Auctioneers Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers 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 Ritchie Bros Auctioneers needs to make to build a sustainable competitive advantage.