Xpo Logistics Europe (XPO) SWOT Analysis / TOWS Matrix / MBA Resources
Trucking
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Xpo Logistics Europe (France)
Based on various researches at Oak Spring University , Xpo Logistics Europe is operating in a macro-environment that has been destablized by – technology disruption, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
increasing transportation and logistics costs, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Xpo Logistics Europe
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Xpo Logistics Europe can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xpo Logistics Europe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xpo Logistics Europe 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 Xpo Logistics Europe can be done for the following purposes –
1. Strategic planning of Xpo Logistics Europe
2. Improving business portfolio management of Xpo Logistics Europe
3. Assessing feasibility of the new initiative in France
4. Making a Trucking sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xpo Logistics Europe
Strengths of Xpo Logistics Europe | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xpo Logistics Europe are -
Strong track record of project management in the Trucking industry
– Xpo Logistics Europe is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Xpo Logistics Europe has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Xpo Logistics Europe 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
– Xpo Logistics Europe is one of the most innovative firm in Trucking sector.
Low bargaining power of suppliers
– Suppliers of Xpo Logistics Europe in the Transportation sector have low bargaining power. Xpo Logistics Europe has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xpo Logistics Europe to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Xpo Logistics Europe has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xpo Logistics Europe to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Trucking industry
- digital transformation varies from industry to industry. For Xpo Logistics Europe digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xpo Logistics Europe 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 Xpo Logistics Europe in Trucking industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Xpo Logistics Europe has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Trucking industry. Secondly the value chain collaborators of Xpo Logistics Europe have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Trucking
– Xpo Logistics Europe is one of the leading players in the Trucking industry in France. Over the years it has not only transformed the business landscape in the Trucking industry in France but also across the existing markets. The ability to lead change has enabled Xpo Logistics Europe in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Xpo Logistics Europe 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
– Xpo Logistics Europe 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 Trucking industry. The technology infrastructure of France 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.
Training and development
– Xpo Logistics Europe has one of the best training and development program in Transportation 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.
Weaknesses of Xpo Logistics Europe | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xpo Logistics Europe are -
High dependence on Xpo Logistics Europe ‘s star products
– The top 2 products and services of Xpo Logistics Europe still accounts for major business revenue. This dependence on star products in Trucking industry has resulted into insufficient focus on developing new products, even though Xpo Logistics Europe has relatively successful track record of launching new products.
Need for greater diversity
– Xpo Logistics Europe 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.
Interest costs
– Compare to the competition, Xpo Logistics Europe 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.
Employees’ less understanding of Xpo Logistics Europe strategy
– From the outside it seems that the employees of Xpo Logistics Europe 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.
Increasing silos among functional specialists
– The organizational structure of Xpo Logistics Europe is dominated by functional specialists. It is not different from other players in the Trucking industry, but Xpo Logistics Europe needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xpo Logistics Europe to focus more on services in the Trucking industry rather than just following the product oriented approach.
Lack of clear differentiation of Xpo Logistics Europe products
– To increase the profitability and margins on the products, Xpo Logistics Europe needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Xpo Logistics Europe supply chain. Even after few cautionary changes, Xpo Logistics Europe is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xpo Logistics Europe vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xpo Logistics Europe is slow explore the new channels of communication. These new channels of communication can help Xpo Logistics Europe to provide better information regarding Trucking products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Xpo Logistics Europe has a high cash cycle compare to other players in the Trucking 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 Xpo Logistics Europe, in the dynamic environment of Trucking industry it has struggled to respond to the nimble upstart competition. Xpo Logistics Europe has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Trucking industry, Xpo Logistics Europe 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.
Xpo Logistics Europe Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Xpo Logistics Europe are -
Developing new processes and practices
– Xpo Logistics Europe can develop new processes and procedures in Trucking 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xpo Logistics Europe in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Trucking industry, and it will provide faster access to the consumers.
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 Xpo Logistics Europe 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xpo Logistics Europe 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 Xpo Logistics Europe 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, Xpo Logistics Europe can use these opportunities to build new business models that can help the communities that Xpo Logistics Europe operates in. Secondly it can use opportunities from government spending in Trucking sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xpo Logistics Europe 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 Xpo Logistics Europe to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Xpo Logistics Europe to increase its market reach. Xpo Logistics Europe 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 Trucking industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Xpo Logistics Europe in the Trucking industry. Now Xpo Logistics Europe can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Trucking industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xpo Logistics Europe 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. Xpo Logistics Europe 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.
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. Xpo Logistics Europe can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Xpo Logistics Europe can improve the customer journey of consumers in the Trucking 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.
Manufacturing automation
– Xpo Logistics Europe can use the latest technology developments to improve its manufacturing and designing process in Trucking sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Xpo Logistics Europe 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.
Threats Xpo Logistics Europe External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Xpo Logistics Europe are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Xpo Logistics Europe 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 Xpo Logistics Europe 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 Xpo Logistics Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Trucking industry are lowering. It can presents Xpo Logistics Europe with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Trucking sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xpo Logistics Europe in Trucking industry. The Trucking 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.
Stagnating economy with rate increase
– Xpo Logistics Europe 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 Trucking industry.
Easy access to finance
– Easy access to finance in Trucking industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Xpo Logistics Europe can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Xpo Logistics Europe needs to understand the core reasons impacting the Trucking industry. This will help it in building a better workplace.
Regulatory challenges
– Xpo Logistics Europe 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 Trucking industry regulations.
High dependence on third party suppliers
– Xpo Logistics Europe 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.
Environmental challenges
– Xpo Logistics Europe 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. Xpo Logistics Europe can take advantage of this fund but it will also bring new competitors in the Trucking industry.
Increasing wage structure of Xpo Logistics Europe
– 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 Xpo Logistics Europe.
Technology acceleration in Forth Industrial Revolution
– Xpo Logistics Europe has witnessed rapid integration of technology during Covid-19 in the Trucking industry. As one of the leading players in the industry, Xpo Logistics Europe needs to keep up with the evolution of technology in the Trucking 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.
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. Xpo Logistics Europe 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.
Weighted SWOT Analysis of Xpo Logistics Europe Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Xpo Logistics Europe 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 Xpo Logistics Europe 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 Xpo Logistics Europe 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 Xpo Logistics Europe 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 Xpo Logistics Europe needs to make to build a sustainable competitive advantage.
