SWOT Analysis / TOWS Matrix for Reckitt Benckiser (Germany)
Based on various researches at Oak Spring University , Reckitt Benckiser is operating in a macro-environment that has been destablized by – increasing energy prices, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, wage bills are increasing, supply chains are disrupted by pandemic , increasing commodity prices, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Reckitt Benckiser
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Reckitt Benckiser can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reckitt Benckiser, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reckitt Benckiser 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 Reckitt Benckiser can be done for the following purposes –
1. Strategic planning of Reckitt Benckiser
2. Improving business portfolio management of Reckitt Benckiser
3. Assessing feasibility of the new initiative in Germany
4. Making a Personal & Household Prods. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Reckitt Benckiser
Strengths of Reckitt Benckiser | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reckitt Benckiser are -
High switching costs
– The high switching costs that Reckitt Benckiser 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.
Ability to recruit top talent
– Reckitt Benckiser is one of the leading players in the Personal & Household Prods. industry in Germany. It is in a position to attract the best talent available in Germany. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Reckitt Benckiser has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Reckitt Benckiser 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.
Effective Research and Development (R&D)
– Reckitt Benckiser has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Reckitt Benckiser staying ahead in the Personal & Household Prods. industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Reckitt Benckiser 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 Personal & Household Prods. industry. The technology infrastructure of Germany 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.
Learning organization
- Reckitt Benckiser 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 Reckitt Benckiser is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Reckitt Benckiser emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Personal & Household Prods. industry
– Reckitt Benckiser has clearly differentiated products in the market place. This has enabled Reckitt Benckiser to fetch slight price premium compare to the competitors in the Personal & Household Prods. industry. The sustainable margins have also helped Reckitt Benckiser to invest into research and development (R&D) and innovation.
Digital Transformation in Personal & Household Prods. industry
- digital transformation varies from industry to industry. For Reckitt Benckiser digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Reckitt Benckiser 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.
Diverse revenue streams
– Reckitt Benckiser is present in almost all the verticals within the Personal & Household Prods. industry. This has provided Reckitt Benckiser 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.
Operational resilience
– The operational resilience strategy of Reckitt Benckiser comprises – understanding the underlying the factors in the Personal & Household Prods. 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 Reckitt Benckiser in Personal & Household Prods. industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Reckitt Benckiser in the Consumer/Non-Cyclical sector have low bargaining power. Reckitt Benckiser has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Reckitt Benckiser to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of Reckitt Benckiser | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Reckitt Benckiser are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Reckitt Benckiser is slow explore the new channels of communication. These new channels of communication can help Reckitt Benckiser to provide better information regarding Personal & Household Prods. products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Reckitt Benckiser has a high cash cycle compare to other players in the Personal & Household Prods. industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on Reckitt Benckiser ‘s star products
– The top 2 products and services of Reckitt Benckiser still accounts for major business revenue. This dependence on star products in Personal & Household Prods. industry has resulted into insufficient focus on developing new products, even though Reckitt Benckiser has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that Reckitt Benckiser needs to have more collaboration between its sales team and marketing team. Sales professionals in the Personal & Household Prods. industry have deep experience in developing customer relationships. Marketing department at Reckitt Benckiser can leverage the sales team experience to cultivate customer relationships as Reckitt Benckiser is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Reckitt Benckiser is just above the Personal & Household Prods. 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.
Skills based hiring in Personal & Household Prods. industry
– The stress on hiring functional specialists at Reckitt Benckiser 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.
Low market penetration in new markets
– Outside its home market of Germany, Reckitt Benckiser needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Reckitt Benckiser is dominated by functional specialists. It is not different from other players in the Personal & Household Prods. industry, but Reckitt Benckiser needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Reckitt Benckiser to focus more on services in the Personal & Household Prods. industry rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Reckitt Benckiser has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Personal & Household Prods. industry over the last five years. Reckitt Benckiser 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.
Products dominated business model
– Even though Reckitt Benckiser has some of the most successful models in the Personal & Household Prods. industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Reckitt Benckiser should strive to include more intangible value offerings along with its core products and services.
No frontier risks strategy
– From the 10K / annual statement of Reckitt Benckiser, it seems that company is thinking out the frontier risks that can impact Personal & Household Prods. 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.
Reckitt Benckiser Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Reckitt Benckiser are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Reckitt Benckiser 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.
Learning at scale
– Online learning technologies has now opened space for Reckitt Benckiser 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.
Leveraging digital technologies
– Reckitt Benckiser can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Better consumer reach
– The expansion of the 5G network will help Reckitt Benckiser to increase its market reach. Reckitt Benckiser 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Personal & Household Prods. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Reckitt Benckiser 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. Reckitt Benckiser 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 Reckitt Benckiser 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 Reckitt Benckiser to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Reckitt Benckiser can use the latest technology developments to improve its manufacturing and designing process in Personal & Household Prods. 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.
Use of Bitcoin and other crypto currencies for transactions in Personal & Household Prods. industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Reckitt Benckiser in the Personal & Household Prods. industry. Now Reckitt Benckiser can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Reckitt Benckiser can develop new processes and procedures in Personal & Household Prods. 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 Reckitt Benckiser in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Personal & Household Prods. industry, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Reckitt Benckiser can use these opportunities to build new business models that can help the communities that Reckitt Benckiser operates in. Secondly it can use opportunities from government spending in Personal & Household Prods. sector.
Building a culture of innovation
– managers at Reckitt Benckiser 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 Personal & Household Prods. industry.
Creating value in data economy
– The success of analytics program of Reckitt Benckiser has opened avenues for new revenue streams for the organization in Personal & Household Prods. industry. This can help Reckitt Benckiser to build a more holistic ecosystem for Reckitt Benckiser products in the Personal & Household Prods. industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Reckitt Benckiser External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Reckitt Benckiser are -
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 Reckitt Benckiser.
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.
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 Reckitt Benckiser in the Personal & Household Prods. sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Reckitt Benckiser 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 Personal & Household Prods. industry.
Increasing wage structure of Reckitt Benckiser
– 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 Reckitt Benckiser.
Easy access to finance
– Easy access to finance in Personal & Household Prods. industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Reckitt Benckiser 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 Reckitt Benckiser 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 Personal & Household Prods. industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Personal & Household Prods. industry are lowering. It can presents Reckitt Benckiser with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Personal & Household Prods. 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.
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. Reckitt Benckiser needs to understand the core reasons impacting the Personal & Household Prods. industry. This will help it in building a better workplace.
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. Reckitt Benckiser 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, Reckitt Benckiser may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Personal & Household Prods. sector.
Technology acceleration in Forth Industrial Revolution
– Reckitt Benckiser has witnessed rapid integration of technology during Covid-19 in the Personal & Household Prods. industry. As one of the leading players in the industry, Reckitt Benckiser needs to keep up with the evolution of technology in the Personal & Household Prods. 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.
Weighted SWOT Analysis of Reckitt Benckiser Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Reckitt Benckiser 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 Reckitt Benckiser 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 Reckitt Benckiser 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 Reckitt Benckiser 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 Reckitt Benckiser needs to make to build a sustainable competitive advantage.
