SWOT Analysis / TOWS Matrix for Kuehne & Nagel (Germany)
Based on various researches at Oak Spring University , Kuehne & Nagel is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion,
increasing transportation and logistics costs, geopolitical disruptions, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kuehne & Nagel can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kuehne & Nagel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kuehne & Nagel 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 Kuehne & Nagel can be done for the following purposes –
1. Strategic planning of Kuehne & Nagel
2. Improving business portfolio management of Kuehne & Nagel
3. Assessing feasibility of the new initiative in Germany
4. Making a Water Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kuehne & Nagel
Strengths of Kuehne & Nagel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kuehne & Nagel are -
Innovation driven organization
– Kuehne & Nagel is one of the most innovative firm in Water Transportation sector.
Strong track record of project management in the Water Transportation industry
– Kuehne & Nagel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Kuehne & Nagel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kuehne & Nagel 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.
High brand equity
– Kuehne & Nagel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kuehne & Nagel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of Kuehne & Nagel comprises – understanding the underlying the factors in the Water Transportation 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.
Low bargaining power of suppliers
– Suppliers of Kuehne & Nagel in the Transportation sector have low bargaining power. Kuehne & Nagel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kuehne & Nagel to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Kuehne & Nagel has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kuehne & Nagel staying ahead in the Water Transportation industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Kuehne & Nagel is one of the leading players in the Water Transportation 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.
Ability to lead change in Water Transportation
– Kuehne & Nagel is one of the leading players in the Water Transportation industry in Germany. Over the years it has not only transformed the business landscape in the Water Transportation industry in Germany but also across the existing markets. The ability to lead change has enabled Kuehne & Nagel 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 Kuehne & Nagel in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Kuehne & Nagel 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.
Organizational Resilience of Kuehne & Nagel
– The covid-19 pandemic has put organizational resilience at the centre of everthing Kuehne & Nagel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Kuehne & Nagel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kuehne & Nagel are -
Products dominated business model
– Even though Kuehne & Nagel has some of the most successful models in the Water Transportation industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Kuehne & Nagel should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Water Transportation industry, Kuehne & Nagel 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.
Lack of clear differentiation of Kuehne & Nagel products
– To increase the profitability and margins on the products, Kuehne & Nagel needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Kuehne & Nagel 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.
Need for greater diversity
– Kuehne & Nagel 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.
No frontier risks strategy
– From the 10K / annual statement of Kuehne & Nagel, it seems that company is thinking out the frontier risks that can impact Water Transportation 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 bargaining power of channel partners in Water Transportation industry
– because of the regulatory requirements in Germany, Kuehne & Nagel 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 Water Transportation industry.
High dependence on Kuehne & Nagel ‘s star products
– The top 2 products and services of Kuehne & Nagel still accounts for major business revenue. This dependence on star products in Water Transportation industry has resulted into insufficient focus on developing new products, even though Kuehne & Nagel has relatively successful track record of launching new products.
Employees’ less understanding of Kuehne & Nagel strategy
– From the outside it seems that the employees of Kuehne & Nagel 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 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 Kuehne & Nagel supply chain. Even after few cautionary changes, Kuehne & Nagel is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kuehne & Nagel vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Kuehne & Nagel is one of the leading players in the Water Transportation industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Water Transportation industry in last five years.
Kuehne & Nagel Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kuehne & Nagel are -
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 Kuehne & Nagel 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.
Learning at scale
– Online learning technologies has now opened space for Kuehne & Nagel 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.
Creating value in data economy
– The success of analytics program of Kuehne & Nagel has opened avenues for new revenue streams for the organization in Water Transportation industry. This can help Kuehne & Nagel to build a more holistic ecosystem for Kuehne & Nagel products in the Water Transportation industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Kuehne & Nagel 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.
Use of Bitcoin and other crypto currencies for transactions in Water Transportation industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kuehne & Nagel in the Water Transportation industry. Now Kuehne & Nagel can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Kuehne & Nagel has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Water Transportation sector. This continuous investment in analytics has enabled Kuehne & Nagel to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kuehne & Nagel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Kuehne & Nagel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Kuehne & Nagel 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 Water Transportation industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Water Transportation industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kuehne & Nagel 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. Kuehne & Nagel 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.
Loyalty marketing
– Kuehne & Nagel 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kuehne & Nagel 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kuehne & Nagel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Water Transportation 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, Kuehne & Nagel can use these opportunities to build new business models that can help the communities that Kuehne & Nagel operates in. Secondly it can use opportunities from government spending in Water Transportation sector.
Threats Kuehne & Nagel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kuehne & Nagel are -
Easy access to finance
– Easy access to finance in Water Transportation industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kuehne & Nagel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Kuehne & Nagel is facing in Water Transportation sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Kuehne & Nagel has witnessed rapid integration of technology during Covid-19 in the Water Transportation industry. As one of the leading players in the industry, Kuehne & Nagel needs to keep up with the evolution of technology in the Water Transportation 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.
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 Kuehne & Nagel in the Water Transportation sector and impact the bottomline of the organization.
Increasing wage structure of Kuehne & Nagel
– 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 Kuehne & Nagel.
Consumer confidence and its impact on Kuehne & Nagel 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 Water Transportation industry and other sectors.
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 Kuehne & Nagel.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kuehne & Nagel 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 Kuehne & Nagel prominent markets.
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 Kuehne & Nagel business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Kuehne & Nagel 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 Water Transportation industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Water Transportation industry are lowering. It can presents Kuehne & Nagel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Transportation sector.
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. Kuehne & Nagel needs to understand the core reasons impacting the Water Transportation industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kuehne & Nagel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Water Transportation sector.
Weighted SWOT Analysis of Kuehne & Nagel Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel 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 Kuehne & Nagel needs to make to build a sustainable competitive advantage.