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 – geopolitical disruptions, increasing transportation and logistics costs, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, there is backlash against globalization, central banks are concerned over increasing inflation,
increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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.
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.
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.
Training and development
– Heckler & Koch Beteiligungs AG has one of the best training and development program in 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.
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.
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.
Innovation driven organization
– Heckler & Koch Beteiligungs AG is one of the most innovative firm in sector.
Ability to recruit top talent
– Heckler & Koch Beteiligungs AG is one of the leading players in the 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.
Ability to lead change in
– Heckler & Koch Beteiligungs AG is one of the leading players in the industry in France. Over the years it has not only transformed the business landscape in the industry in France but also across the existing markets. The ability to lead change has enabled Heckler & Koch Beteiligungs AG in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Heckler & Koch Beteiligungs AG emphasize – knowledge, initiative, and innovation.
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.
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.
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 -
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.
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.
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.
Ability to respond to the competition
– As the decision making is very deliberative at Heckler & Koch Beteiligungs AG, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. Heckler & Koch Beteiligungs AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
Lack of clear differentiation of Heckler & Koch Beteiligungs AG products
– To increase the profitability and margins on the products, Heckler & Koch Beteiligungs AG needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Heckler & Koch Beteiligungs AG has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– From the 10K / annual statement of Heckler & Koch Beteiligungs AG, it seems that company is thinking out the frontier risks that can impact 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Heckler & Koch Beteiligungs AG is slow explore the new channels of communication. These new channels of communication can help Heckler & Koch Beteiligungs AG to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring in industry
– The stress on hiring functional specialists at Heckler & Koch Beteiligungs AG 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.
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 -
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.
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.
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.
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. Heckler & Koch Beteiligungs AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
Loyalty marketing
– Heckler & Koch Beteiligungs AG 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.
Developing new processes and practices
– Heckler & Koch Beteiligungs AG can develop new processes and procedures in 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.
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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Heckler & Koch Beteiligungs AG 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. Heckler & Koch Beteiligungs AG 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Heckler & Koch Beteiligungs AG 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 Heckler & Koch Beteiligungs AG to hire the very best people irrespective of their geographical location.
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.
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 -
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.
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. Heckler & Koch Beteiligungs AG 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.
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.
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.
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.
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 Heckler & Koch Beteiligungs AG.
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 Heckler & Koch Beteiligungs AG in the sector and impact the bottomline of the organization.
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.
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.
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.
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.
Environmental challenges
– Heckler & Koch Beteiligungs AG 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. Heckler & Koch Beteiligungs AG can take advantage of this fund but it will also bring new competitors in the industry.
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.
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.