Synnex (SNX) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Synnex (United States)

Based on various researches at Oak Spring University , Synnex is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, geopolitical disruptions, talent flight as more people leaving formal jobs, wage bills are increasing, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Synnex

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

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Strengths of Synnex | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Synnex are -

Ability to recruit top talent

– Synnex is one of the leading players in the Computer Hardware 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.

Ability to lead change in Computer Hardware

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

Diverse revenue streams

– Synnex is present in almost all the verticals within the Computer Hardware industry. This has provided Synnex 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.

Cross disciplinary teams

– Horizontal connected teams at the Synnex 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.

Training and development

– Synnex has one of the best training and development program in Technology 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.

Effective Research and Development (R&D)

– Synnex has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Synnex staying ahead in the Computer Hardware 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 Computer Hardware industry

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

Highly skilled collaborators

– Synnex has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Computer Hardware industry. Secondly the value chain collaborators of Synnex have helped the firm to develop new products and bring them quickly to the marketplace.

Operational resilience

– The operational resilience strategy of Synnex comprises – understanding the underlying the factors in the Computer Hardware 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.

Successful track record of launching new products

– Synnex has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Synnex 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.

Innovation driven organization

– Synnex is one of the most innovative firm in Computer Hardware sector.

Low bargaining power of suppliers

– Suppliers of Synnex in the Technology sector have low bargaining power. Synnex has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Synnex to manage not only supply disruptions but also source products at highly competitive prices.

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Weaknesses of Synnex | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Synnex are -

High cash cycle compare to competitors

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

Ability to respond to the competition

– As the decision making is very deliberative at Synnex, in the dynamic environment of Computer Hardware industry it has struggled to respond to the nimble upstart competition. Synnex has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Employees’ less understanding of Synnex strategy

– From the outside it seems that the employees of Synnex 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.

High operating costs

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

Slow decision making process

– As mentioned earlier in the report, Synnex has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Computer Hardware industry over the last five years. Synnex 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.

Products dominated business model

– Even though Synnex has some of the most successful models in the Computer Hardware industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Synnex should strive to include more intangible value offerings along with its core products and services.

Workers concerns about automation

– As automation is fast increasing in the Computer Hardware industry, Synnex 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.

Slow to harness new channels of communication

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

Need for greater diversity

– Synnex has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Compensation and incentives

– The revenue per employee of Synnex is just above the Computer Hardware industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.

High dependence on Synnex ‘s star products

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

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Synnex Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Synnex are -

Low interest rates

– Even though inflation is raising its head in most developed economies, Synnex 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.

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 Synnex 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.

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. Synnex can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Developing new processes and practices

– Synnex can develop new processes and procedures in Computer Hardware 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Synnex 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 Synnex 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, Synnex can use these opportunities to build new business models that can help the communities that Synnex operates in. Secondly it can use opportunities from government spending in Computer Hardware sector.

Using analytics as competitive advantage

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

Use of Bitcoin and other crypto currencies for transactions in Computer Hardware industry

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

Remote work and new talent hiring opportunities

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

Better consumer reach

– The expansion of the 5G network will help Synnex to increase its market reach. Synnex 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Synnex is facing challenges because of the dominance of functional experts in the organization. Synnex can utilize new technology in the field of Computer Hardware industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Creating value in data economy

– The success of analytics program of Synnex has opened avenues for new revenue streams for the organization in Computer Hardware industry. This can help Synnex to build a more holistic ecosystem for Synnex products in the Computer Hardware industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at Synnex 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 Computer Hardware industry.

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Threats Synnex External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Synnex are -

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Synnex 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 Synnex 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 Synnex.

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 Synnex business can come under increasing regulations regarding data privacy, data security, etc.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Synnex in Computer Hardware industry. The Computer Hardware 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.

Regulatory challenges

– Synnex 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 Computer Hardware industry regulations.

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 Synnex in the Computer Hardware sector and impact the bottomline of the organization.

High dependence on third party suppliers

– Synnex 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.

Consumer confidence and its impact on Synnex 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 Computer Hardware industry and other sectors.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Computer Hardware industry are lowering. It can presents Synnex with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Computer Hardware sector.

Environmental challenges

– Synnex 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. Synnex can take advantage of this fund but it will also bring new competitors in the Computer Hardware industry.

Shortening product life cycle

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

Technology acceleration in Forth Industrial Revolution

– Synnex has witnessed rapid integration of technology during Covid-19 in the Computer Hardware industry. As one of the leading players in the industry, Synnex needs to keep up with the evolution of technology in the Computer Hardware 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.

Increasing wage structure of Synnex

– 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 Synnex.

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Weighted SWOT Analysis of Synnex Template, Example

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

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