SWOT Analysis / TOWS Matrix for SMC Corp (United States)
Based on various researches at Oak Spring University , SMC Corp is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that SMC Corp can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the SMC Corp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which SMC Corp 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 SMC Corp can be done for the following purposes –
1. Strategic planning of SMC Corp
2. Improving business portfolio management of SMC Corp
3. Assessing feasibility of the new initiative in United States
4. Making a Scientific & Technical Instr. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of SMC Corp
Strengths of SMC Corp | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of SMC Corp are -
Effective Research and Development (R&D)
– SMC Corp has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – SMC Corp staying ahead in the Scientific & Technical Instr. industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Scientific & Technical Instr.
– SMC Corp is one of the leading players in the Scientific & Technical Instr. industry in United States. Over the years it has not only transformed the business landscape in the Scientific & Technical Instr. industry in United States but also across the existing markets. The ability to lead change has enabled SMC Corp in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of SMC Corp comprises – understanding the underlying the factors in the Scientific & Technical Instr. 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 SMC Corp 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.
Highly skilled collaborators
– SMC Corp has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Scientific & Technical Instr. industry. Secondly the value chain collaborators of SMC Corp have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– SMC Corp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled SMC Corp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the SMC Corp 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.
Analytics focus
– SMC Corp 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 Scientific & Technical Instr. 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.
Superior customer experience
– The customer experience strategy of SMC Corp in Scientific & Technical Instr. industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Scientific & Technical Instr. industry
– SMC Corp has clearly differentiated products in the market place. This has enabled SMC Corp to fetch slight price premium compare to the competitors in the Scientific & Technical Instr. industry. The sustainable margins have also helped SMC Corp to invest into research and development (R&D) and innovation.
Organizational Resilience of SMC Corp
– The covid-19 pandemic has put organizational resilience at the centre of everthing SMC Corp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of SMC Corp in the Technology sector have low bargaining power. SMC Corp has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps SMC Corp to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of SMC Corp | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SMC Corp are -
Need for greater diversity
– SMC Corp 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 SMC Corp supply chain. Even after few cautionary changes, SMC Corp is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SMC Corp vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As SMC Corp is one of the leading players in the Scientific & Technical Instr. industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Scientific & Technical Instr. industry in last five years.
Lack of clear differentiation of SMC Corp products
– To increase the profitability and margins on the products, SMC Corp needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that SMC Corp needs to have more collaboration between its sales team and marketing team. Sales professionals in the Scientific & Technical Instr. industry have deep experience in developing customer relationships. Marketing department at SMC Corp can leverage the sales team experience to cultivate customer relationships as SMC Corp is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of SMC Corp is just above the Scientific & Technical Instr. 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.
Skills based hiring in Scientific & Technical Instr. industry
– The stress on hiring functional specialists at SMC Corp has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, SMC Corp is slow explore the new channels of communication. These new channels of communication can help SMC Corp to provide better information regarding Scientific & Technical Instr. products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, SMC Corp 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.
High dependence on SMC Corp ‘s star products
– The top 2 products and services of SMC Corp still accounts for major business revenue. This dependence on star products in Scientific & Technical Instr. industry has resulted into insufficient focus on developing new products, even though SMC Corp has relatively successful track record of launching new products.
No frontier risks strategy
– From the 10K / annual statement of SMC Corp, it seems that company is thinking out the frontier risks that can impact Scientific & Technical Instr. industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
SMC Corp Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SMC Corp are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, SMC Corp can use these opportunities to build new business models that can help the communities that SMC Corp operates in. Secondly it can use opportunities from government spending in Scientific & Technical Instr. sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, SMC Corp is facing challenges because of the dominance of functional experts in the organization. SMC Corp can utilize new technology in the field of Scientific & Technical Instr. industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– SMC Corp can develop new processes and procedures in Scientific & Technical Instr. 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.
Building a culture of innovation
– managers at SMC Corp 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 Scientific & Technical Instr. industry.
Learning at scale
– Online learning technologies has now opened space for SMC Corp 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.
Better consumer reach
– The expansion of the 5G network will help SMC Corp to increase its market reach. SMC Corp 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.
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. SMC Corp can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of SMC Corp has opened avenues for new revenue streams for the organization in Scientific & Technical Instr. industry. This can help SMC Corp to build a more holistic ecosystem for SMC Corp products in the Scientific & Technical Instr. industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, SMC Corp can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– SMC Corp has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Scientific & Technical Instr. sector. This continuous investment in analytics has enabled SMC Corp to build a competitive advantage using analytics. The analytics driven competitive advantage can help SMC Corp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 SMC Corp 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Scientific & Technical Instr. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. SMC Corp 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. SMC Corp 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.
Buying journey improvements
– SMC Corp can improve the customer journey of consumers in the Scientific & Technical Instr. 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.
Threats SMC Corp External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SMC Corp are -
Stagnating economy with rate increase
– SMC Corp 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 Scientific & Technical Instr. industry.
Easy access to finance
– Easy access to finance in Scientific & Technical Instr. industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. SMC Corp can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, SMC Corp 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 SMC Corp prominent markets.
High dependence on third party suppliers
– SMC Corp 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.
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 SMC Corp in the Scientific & Technical Instr. sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for SMC Corp in Scientific & Technical Instr. industry. The Scientific & Technical Instr. 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.
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. SMC Corp 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.
Consumer confidence and its impact on SMC Corp 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 Scientific & Technical Instr. industry and other sectors.
Shortening product life cycle
– it is one of the major threat that SMC Corp is facing in Scientific & Technical Instr. sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 SMC Corp business can come under increasing regulations regarding data privacy, data security, 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.
Environmental challenges
– SMC Corp 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. SMC Corp can take advantage of this fund but it will also bring new competitors in the Scientific & Technical Instr. industry.
Weighted SWOT Analysis of SMC Corp Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at SMC Corp 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 SMC Corp 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 SMC Corp 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 SMC Corp 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 SMC Corp needs to make to build a sustainable competitive advantage.