Swatch I (UHR) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Swatch I (Germany)

Based on various researches at Oak Spring University , Swatch I is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, etc

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Introduction to SWOT Analysis of Swatch I

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Swatch I can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Swatch I, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Swatch I 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 Swatch I can be done for the following purposes –
1. Strategic planning of Swatch I
2. Improving business portfolio management of Swatch I
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 Swatch I

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

The strengths of Swatch I are -

Learning organization

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

Organizational Resilience of Swatch I

– The covid-19 pandemic has put organizational resilience at the centre of everthing Swatch I does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Operational resilience

– The operational resilience strategy of Swatch I 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.

High switching costs

– The high switching costs that Swatch I 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.

Analytics focus

– Swatch I 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.

Sustainable margins compare to other players in Jewelry & Silverware industry

– Swatch I has clearly differentiated products in the market place. This has enabled Swatch I to fetch slight price premium compare to the competitors in the Jewelry & Silverware industry. The sustainable margins have also helped Swatch I to invest into research and development (R&D) and innovation.

Innovation driven organization

– Swatch I is one of the most innovative firm in Jewelry & Silverware sector.

Digital Transformation in Jewelry & Silverware industry

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

Ability to lead change in Jewelry & Silverware

– Swatch I 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 Swatch I in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Effective Research and Development (R&D)

– Swatch I has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Swatch I 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.

Low bargaining power of suppliers

– Suppliers of Swatch I in the Consumer Cyclical sector have low bargaining power. Swatch I has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Swatch I to manage not only supply disruptions but also source products at highly competitive prices.

Successful track record of launching new products

– Swatch I has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Swatch I 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.

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

The weaknesses of Swatch I are -

Interest costs

– Compare to the competition, Swatch I 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.

Ability to respond to the competition

– As the decision making is very deliberative at Swatch I, in the dynamic environment of Jewelry & Silverware industry it has struggled to respond to the nimble upstart competition. Swatch I has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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

Workers concerns about automation

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

High cash cycle compare to competitors

Swatch I 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.

Employees’ less understanding of Swatch I strategy

– From the outside it seems that the employees of Swatch I 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.

Compensation and incentives

– The revenue per employee of Swatch I is just above the Jewelry & Silverware 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 Jewelry & Silverware industry

– The stress on hiring functional specialists at Swatch I 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.

Capital Spending Reduction

– Even during the low interest decade, Swatch I has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Jewelry & Silverware industry using digital technology.

Lack of clear differentiation of Swatch I products

– To increase the profitability and margins on the products, Swatch I needs to provide more differentiated products than what it is currently offering in the marketplace.

Low market penetration in new markets

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

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

The opportunities of Swatch I are -

Better consumer reach

– The expansion of the 5G network will help Swatch I to increase its market reach. Swatch I 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Swatch I 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 Swatch I to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Increase in government spending

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

Creating value in data economy

– The success of analytics program of Swatch I has opened avenues for new revenue streams for the organization in Jewelry & Silverware industry. This can help Swatch I to build a more holistic ecosystem for Swatch I products in the Jewelry & Silverware industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Jewelry & Silverware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Swatch I 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. Swatch I 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.

Using analytics as competitive advantage

– Swatch I 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 Swatch I to build a competitive advantage using analytics. The analytics driven competitive advantage can help Swatch I to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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 Swatch I 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Swatch I 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.

Loyalty marketing

– Swatch I 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.

Learning at scale

– Online learning technologies has now opened space for Swatch I 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.

Low interest rates

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

Redefining models of collaboration and team work

– As explained in the weaknesses section, Swatch I is facing challenges because of the dominance of functional experts in the organization. Swatch I can utilize new technology in the field of Jewelry & Silverware industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Developing new processes and practices

– Swatch I 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 Swatch I External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Swatch I are -

Environmental challenges

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

Technology acceleration in Forth Industrial Revolution

– Swatch I has witnessed rapid integration of technology during Covid-19 in the Jewelry & Silverware industry. As one of the leading players in the industry, Swatch I 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.

Consumer confidence and its impact on Swatch I 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.

Stagnating economy with rate increase

– Swatch I 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.

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. Swatch I 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.

Increasing wage structure of Swatch I

– 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 Swatch I.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Swatch I 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.

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 Swatch I.

Shortening product life cycle

– it is one of the major threat that Swatch I is facing in Jewelry & Silverware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

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

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Swatch I business can come under increasing regulations regarding data privacy, data security, etc.

Regulatory challenges

– Swatch I 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.

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Weighted SWOT Analysis of Swatch I Template, Example

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

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