Richemont (RITN) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Richemont (Germany)

Based on various researches at Oak Spring University , Richemont is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, there is increasing trade war between United States & China, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, etc

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Introduction to SWOT Analysis of Richemont

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Richemont can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Richemont, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Richemont operates in.

According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Richemont can be done for the following purposes –
1. Strategic planning of Richemont
2. Improving business portfolio management of Richemont
3. Assessing feasibility of the new initiative in Germany
4. Making a Jewelry & Silverware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Richemont

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

The strengths of Richemont are -

Digital Transformation in Jewelry & Silverware industry

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

Training and development

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

High switching costs

– The high switching costs that Richemont 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.

High brand equity

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

Diverse revenue streams

– Richemont is present in almost all the verticals within the Jewelry & Silverware industry. This has provided Richemont 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 Richemont comprises – understanding the underlying the factors in the Jewelry & Silverware 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.

Ability to recruit top talent

– Richemont is one of the leading players in the Jewelry & Silverware 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.

Analytics focus

– Richemont 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 Jewelry & Silverware 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.

Ability to lead change in Jewelry & Silverware

– Richemont is one of the leading players in the Jewelry & Silverware industry in Germany. Over the years it has not only transformed the business landscape in the Jewelry & Silverware industry in Germany but also across the existing markets. The ability to lead change has enabled Richemont in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Superior customer experience

– The customer experience strategy of Richemont in Jewelry & Silverware industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Effective Research and Development (R&D)

– Richemont has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Richemont staying ahead in the Jewelry & Silverware industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Learning organization

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

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

The weaknesses of Richemont are -

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

High cash cycle compare to competitors

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

Need for greater diversity

– Richemont 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.

Workers concerns about automation

– As automation is fast increasing in the Jewelry & Silverware industry, Richemont 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.

No frontier risks strategy

– From the 10K / annual statement of Richemont, it seems that company is thinking out the frontier risks that can impact Jewelry & Silverware 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.

High dependence on Richemont ‘s star products

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

Increasing silos among functional specialists

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

Low market penetration in new markets

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

Aligning sales with marketing

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

High operating costs

– Compare to the competitors, Richemont has high operating costs in the Jewelry & Silverware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Richemont lucrative customers.

Interest costs

– Compare to the competition, Richemont 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.

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

The opportunities of Richemont are -

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

Manufacturing automation

– Richemont can use the latest technology developments to improve its manufacturing and designing process in Jewelry & Silverware 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Richemont in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Jewelry & Silverware industry, and it will provide faster access to the consumers.

Use of Bitcoin and other crypto currencies for transactions in Jewelry & Silverware industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Richemont in the Jewelry & Silverware industry. Now Richemont can target international markets with far fewer capital restrictions requirements than the existing system.

Building a culture of innovation

– managers at Richemont 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 Jewelry & Silverware industry.

Using analytics as competitive advantage

– Richemont has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Jewelry & Silverware sector. This continuous investment in analytics has enabled Richemont to build a competitive advantage using analytics. The analytics driven competitive advantage can help Richemont to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Low interest rates

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

Loyalty marketing

– Richemont 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.

Buying journey improvements

– Richemont can improve the customer journey of consumers in the Jewelry & Silverware 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.

Reforming the budgeting process

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

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 Richemont 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Richemont can use these opportunities to build new business models that can help the communities that Richemont operates in. Secondly it can use opportunities from government spending in Jewelry & Silverware sector.

Developing new processes and practices

– Richemont can develop new processes and procedures in Jewelry & Silverware 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.

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

The threats of Richemont are -

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Richemont in Jewelry & Silverware industry. The Jewelry & Silverware 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.

Easy access to finance

– Easy access to finance in Jewelry & Silverware industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Richemont 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 Richemont 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 Jewelry & Silverware industry and other sectors.

Environmental challenges

– Richemont 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. Richemont can take advantage of this fund but it will also bring new competitors in the Jewelry & Silverware industry.

Technology acceleration in Forth Industrial Revolution

– Richemont has witnessed rapid integration of technology during Covid-19 in the Jewelry & Silverware industry. As one of the leading players in the industry, Richemont needs to keep up with the evolution of technology in the Jewelry & Silverware 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. Richemont 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.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

High level of anxiety and lack of motivation

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

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 Richemont business can come under increasing regulations regarding data privacy, data security, etc.

Regulatory challenges

– Richemont 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 Jewelry & Silverware industry regulations.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Jewelry & Silverware industry are lowering. It can presents Richemont with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Jewelry & Silverware 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.

Stagnating economy with rate increase

– Richemont 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 Jewelry & Silverware industry.

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Weighted SWOT Analysis of Richemont Template, Example

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

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