VALE (VALED3) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for VALE (France)

Based on various researches at Oak Spring University , VALE is operating in a macro-environment that has been destablized by – technology disruption, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, wage bills are increasing, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, geopolitical disruptions, increasing commodity prices, etc

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Introduction to SWOT Analysis of VALE

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

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

The strengths of VALE are -

Superior customer experience

– The customer experience strategy of VALE in Metal Mining industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

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

Learning organization

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

Organizational Resilience of VALE

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

Digital Transformation in Metal Mining industry

- digital transformation varies from industry to industry. For VALE digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. VALE 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.

Ability to recruit top talent

– VALE is one of the leading players in the Metal Mining industry in France. It is in a position to attract the best talent available in France. The firm has a robust talent identification program that helps in identifying the brightest.

Operational resilience

– The operational resilience strategy of VALE comprises – understanding the underlying the factors in the Metal Mining industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

Sustainable margins compare to other players in Metal Mining industry

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

Effective Research and Development (R&D)

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

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

Training and development

– VALE has one of the best training and development program in Basic Materials industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

High brand equity

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

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

The weaknesses of VALE are -

Increasing silos among functional specialists

– The organizational structure of VALE is dominated by functional specialists. It is not different from other players in the Metal Mining industry, but VALE needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help VALE to focus more on services in the Metal Mining industry rather than just following the product oriented approach.

Employees’ less understanding of VALE strategy

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

Lack of clear differentiation of VALE products

– To increase the profitability and margins on the products, VALE needs to provide more differentiated products than what it is currently offering in the marketplace.

Low market penetration in new markets

– Outside its home market of France, VALE needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High cash cycle compare to competitors

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

Aligning sales with marketing

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

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

Compensation and incentives

– The revenue per employee of VALE is just above the Metal Mining 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 bargaining power of channel partners in Metal Mining industry

– because of the regulatory requirements in France, VALE 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 Metal Mining industry.

High dependence on VALE ‘s star products

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

Workers concerns about automation

– As automation is fast increasing in the Metal Mining industry, VALE 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.

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

The opportunities of VALE are -

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, VALE 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 VALE 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

– VALE can improve the customer journey of consumers in the Metal Mining 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.

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

Leveraging digital technologies

– VALE 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.

Loyalty marketing

– VALE 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.

Remote work and new talent hiring opportunities

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

Learning at scale

– Online learning technologies has now opened space for VALE 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.

Reforming the budgeting process

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

Building a culture of innovation

– managers at VALE 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 Metal Mining industry.

Redefining models of collaboration and team work

– As explained in the weaknesses section, VALE is facing challenges because of the dominance of functional experts in the organization. VALE can utilize new technology in the field of Metal Mining 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, VALE can use these opportunities to build new business models that can help the communities that VALE operates in. Secondly it can use opportunities from government spending in Metal Mining sector.

Low interest rates

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

Creating value in data economy

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

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

The threats of VALE are -

Technology acceleration in Forth Industrial Revolution

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

Shortening product life cycle

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

Regulatory challenges

– VALE 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 Metal Mining industry regulations.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for VALE in Metal Mining industry. The Metal Mining 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

– VALE 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. VALE can take advantage of this fund but it will also bring new competitors in the Metal Mining industry.

Stagnating economy with rate increase

– VALE 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 Metal Mining 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. VALE 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.

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 VALE 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.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. VALE needs to understand the core reasons impacting the Metal Mining industry. This will help it in building a better workplace.

High dependence on third party suppliers

– VALE 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 VALE 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 Metal Mining industry and other sectors.

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Weighted SWOT Analysis of VALE Template, Example

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

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