Heckler & Koch Beteiligungs AG (MLHK) SWOT Analysis / TOWS Matrix / MBA Resources
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Heckler & Koch Beteiligungs AG (France)
Based on various researches at Oak Spring University , Heckler & Koch Beteiligungs AG is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Heckler & Koch Beteiligungs AG
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Heckler & Koch Beteiligungs AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Heckler & Koch Beteiligungs AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG can be done for the following purposes –
1. Strategic planning of Heckler & Koch Beteiligungs AG
2. Improving business portfolio management of Heckler & Koch Beteiligungs AG
3. Assessing feasibility of the new initiative in France
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Heckler & Koch Beteiligungs AG
Strengths of Heckler & Koch Beteiligungs AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Heckler & Koch Beteiligungs AG are -
Diverse revenue streams
– Heckler & Koch Beteiligungs AG is present in almost all the verticals within the industry. This has provided Heckler & Koch Beteiligungs AG 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.
High switching costs
– The high switching costs that Heckler & Koch Beteiligungs AG 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.
Successful track record of launching new products
– Heckler & Koch Beteiligungs AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Heckler & Koch Beteiligungs AG 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.
Operational resilience
– The operational resilience strategy of Heckler & Koch Beteiligungs AG comprises – understanding the underlying the factors in the 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.
Superior customer experience
– The customer experience strategy of Heckler & Koch Beteiligungs AG in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Heckler & Koch Beteiligungs AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Heckler & Koch Beteiligungs AG staying ahead in the 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 industry
– Heckler & Koch Beteiligungs AG is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Heckler & Koch Beteiligungs AG
– The covid-19 pandemic has put organizational resilience at the centre of everthing Heckler & Koch Beteiligungs AG does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Heckler & Koch Beteiligungs AG digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Heckler & Koch Beteiligungs AG 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.
Cross disciplinary teams
– Horizontal connected teams at the Heckler & Koch Beteiligungs AG 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.
Low bargaining power of suppliers
– Suppliers of Heckler & Koch Beteiligungs AG in the sector have low bargaining power. Heckler & Koch Beteiligungs AG has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Heckler & Koch Beteiligungs AG to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in industry
– Heckler & Koch Beteiligungs AG has clearly differentiated products in the market place. This has enabled Heckler & Koch Beteiligungs AG to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Heckler & Koch Beteiligungs AG to invest into research and development (R&D) and innovation.
Weaknesses of Heckler & Koch Beteiligungs AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Heckler & Koch Beteiligungs AG are -
Employees’ less understanding of Heckler & Koch Beteiligungs AG strategy
– From the outside it seems that the employees of Heckler & Koch Beteiligungs AG 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 dependence on Heckler & Koch Beteiligungs AG ‘s star products
– The top 2 products and services of Heckler & Koch Beteiligungs AG still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Heckler & Koch Beteiligungs AG has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the industry, Heckler & Koch Beteiligungs AG 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.
Need for greater diversity
– Heckler & Koch Beteiligungs AG 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.
Slow decision making process
– As mentioned earlier in the report, Heckler & Koch Beteiligungs AG has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Heckler & Koch Beteiligungs AG 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.
Interest costs
– Compare to the competition, Heckler & Koch Beteiligungs AG 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.
Compensation and incentives
– The revenue per employee of Heckler & Koch Beteiligungs AG is just above the 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.
Aligning sales with marketing
– From the outside it seems that Heckler & Koch Beteiligungs AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department at Heckler & Koch Beteiligungs AG can leverage the sales team experience to cultivate customer relationships as Heckler & Koch Beteiligungs AG is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of France, Heckler & Koch Beteiligungs AG needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in industry
– because of the regulatory requirements in France, Heckler & Koch Beteiligungs AG 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 industry.
Increasing silos among functional specialists
– The organizational structure of Heckler & Koch Beteiligungs AG is dominated by functional specialists. It is not different from other players in the industry, but Heckler & Koch Beteiligungs AG needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Heckler & Koch Beteiligungs AG to focus more on services in the industry rather than just following the product oriented approach.
Heckler & Koch Beteiligungs AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Heckler & Koch Beteiligungs AG are -
Learning at scale
– Online learning technologies has now opened space for Heckler & Koch Beteiligungs AG 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Heckler & Koch Beteiligungs AG can use these opportunities to build new business models that can help the communities that Heckler & Koch Beteiligungs AG operates in. Secondly it can use opportunities from government spending in sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Heckler & Koch Beteiligungs AG can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Heckler & Koch Beteiligungs AG is facing challenges because of the dominance of functional experts in the organization. Heckler & Koch Beteiligungs AG can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Heckler & Koch Beteiligungs AG in the industry. Now Heckler & Koch Beteiligungs AG can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Heckler & Koch Beteiligungs AG can use the latest technology developments to improve its manufacturing and designing process in 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.
Buying journey improvements
– Heckler & Koch Beteiligungs AG can improve the customer journey of consumers in the 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.
Using analytics as competitive advantage
– Heckler & Koch Beteiligungs AG has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled Heckler & Koch Beteiligungs AG to build a competitive advantage using analytics. The analytics driven competitive advantage can help Heckler & Koch Beteiligungs AG to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Heckler & Koch Beteiligungs AG in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the 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 Heckler & Koch Beteiligungs AG 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.
Better consumer reach
– The expansion of the 5G network will help Heckler & Koch Beteiligungs AG to increase its market reach. Heckler & Koch Beteiligungs AG 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.
Building a culture of innovation
– managers at Heckler & Koch Beteiligungs AG 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 industry.
Threats Heckler & Koch Beteiligungs AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Heckler & Koch Beteiligungs AG are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Heckler & Koch Beteiligungs AG in industry. The 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.
Shortening product life cycle
– it is one of the major threat that Heckler & Koch Beteiligungs AG is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG prominent markets.
Technology acceleration in Forth Industrial Revolution
– Heckler & Koch Beteiligungs AG has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Heckler & Koch Beteiligungs AG needs to keep up with the evolution of technology in the 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Heckler & Koch Beteiligungs AG may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of sector.
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 Heckler & Koch Beteiligungs AG business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Heckler & Koch Beteiligungs AG can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Heckler & Koch Beteiligungs AG 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 industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Heckler & Koch Beteiligungs AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 wage structure of Heckler & Koch Beteiligungs AG
– 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 Heckler & Koch Beteiligungs AG.
Regulatory challenges
– Heckler & Koch Beteiligungs AG 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 industry regulations.
Weighted SWOT Analysis of Heckler & Koch Beteiligungs AG Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG needs to make to build a sustainable competitive advantage.