Based on various researches at Oak Spring University , Steel Partners Holdings LP is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, there is backlash against globalization, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic , wage bills are increasing, cloud computing is disrupting traditional business models,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of Steel Partners Holdings LP
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Steel Partners Holdings LP can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Steel Partners Holdings LP, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Steel Partners Holdings LP operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Steel Partners Holdings LP can be done for the following purposes –
1. Strategic planning of Steel Partners Holdings LP
2. Improving business portfolio management of Steel Partners Holdings LP
3. Assessing feasibility of the new initiative in United States
4. Making a Misc. Fabricated Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Steel Partners Holdings LP
Strengths of Steel Partners Holdings LP | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Steel Partners Holdings LP are -
Ability to recruit top talent
– Steel Partners Holdings LP is one of the leading players in the Misc. Fabricated Products 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.
Effective Research and Development (R&D)
– Steel Partners Holdings LP has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Steel Partners Holdings LP staying ahead in the Misc. Fabricated Products 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 Misc. Fabricated Products
– Steel Partners Holdings LP is one of the leading players in the Misc. Fabricated Products industry in United States. Over the years it has not only transformed the business landscape in the Misc. Fabricated Products industry in United States but also across the existing markets. The ability to lead change has enabled Steel Partners Holdings LP in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Misc. Fabricated Products industry
– Steel Partners Holdings LP has clearly differentiated products in the market place. This has enabled Steel Partners Holdings LP to fetch slight price premium compare to the competitors in the Misc. Fabricated Products industry. The sustainable margins have also helped Steel Partners Holdings LP to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Steel Partners Holdings LP is present in almost all the verticals within the Misc. Fabricated Products industry. This has provided Steel Partners Holdings LP 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 Steel Partners Holdings LP
– The covid-19 pandemic has put organizational resilience at the centre of everthing Steel Partners Holdings LP 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 Steel Partners Holdings LP in the Basic Materials sector have low bargaining power. Steel Partners Holdings LP has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Steel Partners Holdings LP to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Steel Partners Holdings LP is one of the most innovative firm in Misc. Fabricated Products sector.
Digital Transformation in Misc. Fabricated Products industry
- digital transformation varies from industry to industry. For Steel Partners Holdings LP digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Steel Partners Holdings LP has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Steel Partners Holdings LP in Misc. Fabricated Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Steel Partners Holdings LP has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Steel Partners Holdings LP to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Steel Partners Holdings LP has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses of Steel Partners Holdings LP | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Steel Partners Holdings LP are -
Aligning sales with marketing
– From the outside it seems that Steel Partners Holdings LP needs to have more collaboration between its sales team and marketing team. Sales professionals in the Misc. Fabricated Products industry have deep experience in developing customer relationships. Marketing department at Steel Partners Holdings LP can leverage the sales team experience to cultivate customer relationships as Steel Partners Holdings LP is planning to shift buying processes online.
Skills based hiring in Misc. Fabricated Products industry
– The stress on hiring functional specialists at Steel Partners Holdings LP 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.
Employees’ less understanding of Steel Partners Holdings LP strategy
– From the outside it seems that the employees of Steel Partners Holdings LP 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.
Interest costs
– Compare to the competition, Steel Partners Holdings LP has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High cash cycle compare to competitors
Steel Partners Holdings LP has a high cash cycle compare to other players in the Misc. Fabricated Products industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Steel Partners Holdings LP is dominated by functional specialists. It is not different from other players in the Misc. Fabricated Products industry, but Steel Partners Holdings LP needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Steel Partners Holdings LP to focus more on services in the Misc. Fabricated Products industry rather than just following the product oriented approach.
High bargaining power of channel partners in Misc. Fabricated Products industry
– because of the regulatory requirements in United States, Steel Partners Holdings LP is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Misc. Fabricated Products industry.
Need for greater diversity
– Steel Partners Holdings LP 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.
No frontier risks strategy
– From the 10K / annual statement of Steel Partners Holdings LP, it seems that company is thinking out the frontier risks that can impact Misc. Fabricated Products 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.
Lack of clear differentiation of Steel Partners Holdings LP products
– To increase the profitability and margins on the products, Steel Partners Holdings LP 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, Steel Partners Holdings LP 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. Fabricated Products industry over the last five years. Steel Partners Holdings LP 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.
Steel Partners Holdings LP Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Steel Partners Holdings LP are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Steel Partners Holdings LP to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Steel Partners Holdings LP to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Steel Partners Holdings LP in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Fabricated Products industry, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Steel Partners Holdings LP can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Misc. Fabricated Products industry.
Leveraging digital technologies
– Steel Partners Holdings LP 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.
Better consumer reach
– The expansion of the 5G network will help Steel Partners Holdings LP to increase its market reach. Steel Partners Holdings LP will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Steel Partners Holdings LP can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Steel Partners Holdings LP to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Steel Partners Holdings LP can improve the customer journey of consumers in the Misc. Fabricated Products 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.
Developing new processes and practices
– Steel Partners Holdings LP can develop new processes and procedures in Misc. Fabricated Products 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.
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 Steel Partners Holdings LP 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 Misc. Fabricated Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Steel Partners Holdings LP 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. Steel Partners Holdings LP 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.
Creating value in data economy
– The success of analytics program of Steel Partners Holdings LP has opened avenues for new revenue streams for the organization in Misc. Fabricated Products industry. This can help Steel Partners Holdings LP to build a more holistic ecosystem for Steel Partners Holdings LP products in the Misc. Fabricated Products industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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. Steel Partners Holdings LP can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Steel Partners Holdings LP has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Steel Partners Holdings LP External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Steel Partners Holdings LP are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Steel Partners Holdings LP in Misc. Fabricated Products industry. The Misc. Fabricated Products 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.
Environmental challenges
– Steel Partners Holdings LP needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Steel Partners Holdings LP can take advantage of this fund but it will also bring new competitors in the Misc. Fabricated Products industry.
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.
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 Steel Partners Holdings LP 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.
Increasing wage structure of Steel Partners Holdings LP
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Steel Partners Holdings LP.
Consumer confidence and its impact on Steel Partners Holdings LP demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Misc. Fabricated Products industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Steel Partners Holdings LP can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate Steel Partners Holdings LP prominent markets.
Stagnating economy with rate increase
– Steel Partners Holdings LP 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 Misc. Fabricated Products industry.
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. Steel Partners Holdings LP will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– Steel Partners Holdings LP 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 Steel Partners Holdings LP in the Misc. Fabricated Products sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Steel Partners Holdings LP is facing in Misc. Fabricated Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Steel Partners Holdings LP Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Steel Partners Holdings LP needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Steel Partners Holdings LP is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Steel Partners Holdings LP is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Steel Partners Holdings LP to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Steel Partners Holdings LP needs to make to build a sustainable competitive advantage.
