Hapag Lloyd AG (HLAG) SWOT Analysis / TOWS Matrix / MBA Resources
Water Transportation
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Hapag Lloyd AG (Germany)
Based on various researches at Oak Spring University , Hapag Lloyd AG is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, wage bills are increasing, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google,
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 Hapag Lloyd AG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hapag Lloyd AG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hapag Lloyd 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 Hapag Lloyd AG can be done for the following purposes –
1. Strategic planning of Hapag Lloyd AG
2. Improving business portfolio management of Hapag Lloyd AG
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 Hapag Lloyd AG
Strengths of Hapag Lloyd AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hapag Lloyd AG are -
High brand equity
– Hapag Lloyd AG has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hapag Lloyd AG to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of Hapag Lloyd AG 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.
Innovation driven organization
– Hapag Lloyd AG is one of the most innovative firm in Water Transportation sector.
Strong track record of project management in the Water Transportation industry
– Hapag Lloyd AG is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Hapag Lloyd AG in the Transportation sector have low bargaining power. Hapag Lloyd AG has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hapag Lloyd AG to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Water Transportation industry
– Hapag Lloyd AG has clearly differentiated products in the market place. This has enabled Hapag Lloyd AG to fetch slight price premium compare to the competitors in the Water Transportation industry. The sustainable margins have also helped Hapag Lloyd AG to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Hapag Lloyd AG has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Transportation industry. Secondly the value chain collaborators of Hapag Lloyd AG have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Hapag Lloyd AG has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hapag Lloyd AG 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.
Superior customer experience
– The customer experience strategy of Hapag Lloyd AG in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Hapag Lloyd AG is present in almost all the verticals within the Water Transportation industry. This has provided Hapag Lloyd 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.
Ability to lead change in Water Transportation
– Hapag Lloyd AG 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 Hapag Lloyd AG 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)
– Hapag Lloyd AG has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hapag Lloyd AG 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.
Weaknesses of Hapag Lloyd AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hapag Lloyd AG are -
Aligning sales with marketing
– From the outside it seems that Hapag Lloyd AG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Water Transportation industry have deep experience in developing customer relationships. Marketing department at Hapag Lloyd AG can leverage the sales team experience to cultivate customer relationships as Hapag Lloyd AG is planning to shift buying processes online.
High cash cycle compare to competitors
Hapag Lloyd AG has a high cash cycle compare to other players in the Water Transportation industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Hapag Lloyd AG 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. Hapag Lloyd AG should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee of Hapag Lloyd AG is just above the Water Transportation 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.
Lack of clear differentiation of Hapag Lloyd AG products
– To increase the profitability and margins on the products, Hapag Lloyd AG needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at Hapag Lloyd AG, in the dynamic environment of Water Transportation industry it has struggled to respond to the nimble upstart competition. Hapag Lloyd AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Hapag Lloyd AG ‘s star products
– The top 2 products and services of Hapag Lloyd AG 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 Hapag Lloyd AG has relatively successful track record of launching new products.
High bargaining power of channel partners in Water Transportation industry
– because of the regulatory requirements in Germany, Hapag Lloyd 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 Water Transportation industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hapag Lloyd AG is slow explore the new channels of communication. These new channels of communication can help Hapag Lloyd AG to provide better information regarding Water Transportation products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Hapag Lloyd AG strategy
– From the outside it seems that the employees of Hapag Lloyd AG 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.
Need for greater diversity
– Hapag Lloyd AG 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.
Hapag Lloyd AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Hapag Lloyd AG are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hapag Lloyd AG is facing challenges because of the dominance of functional experts in the organization. Hapag Lloyd AG can utilize new technology in the field of Water Transportation industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hapag Lloyd 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 Hapag Lloyd AG to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Hapag Lloyd AG 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 Hapag Lloyd AG to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hapag Lloyd AG to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Hapag Lloyd AG in the Water Transportation industry. Now Hapag Lloyd AG can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hapag Lloyd AG can use these opportunities to build new business models that can help the communities that Hapag Lloyd AG operates in. Secondly it can use opportunities from government spending in Water Transportation sector.
Developing new processes and practices
– Hapag Lloyd AG can develop new processes and procedures in Water Transportation 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hapag Lloyd AG 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 Hapag Lloyd 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 Water Transportation industry, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hapag Lloyd AG can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Hapag Lloyd AG can improve the customer journey of consumers in the Water Transportation 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.
Manufacturing automation
– Hapag Lloyd AG can use the latest technology developments to improve its manufacturing and designing process in Water Transportation 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.
Creating value in data economy
– The success of analytics program of Hapag Lloyd AG has opened avenues for new revenue streams for the organization in Water Transportation industry. This can help Hapag Lloyd AG to build a more holistic ecosystem for Hapag Lloyd AG products in the Water Transportation industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Hapag Lloyd 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.
Threats Hapag Lloyd AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Hapag Lloyd AG are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Water Transportation industry are lowering. It can presents Hapag Lloyd AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Transportation sector.
Shortening product life cycle
– it is one of the major threat that Hapag Lloyd AG is facing in Water Transportation sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Hapag Lloyd AG in the Water Transportation sector and impact the bottomline of the organization.
Consumer confidence and its impact on Hapag Lloyd 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 Water Transportation industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hapag Lloyd 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 Hapag Lloyd AG prominent markets.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Hapag Lloyd 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 Water Transportation 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 Hapag Lloyd AG business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Hapag Lloyd AG high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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 Hapag Lloyd AG.
Regulatory challenges
– Hapag Lloyd 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 Water Transportation industry regulations.
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. Hapag Lloyd AG needs to understand the core reasons impacting the Water Transportation industry. This will help it in building a better workplace.
Environmental challenges
– Hapag Lloyd 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. Hapag Lloyd AG can take advantage of this fund but it will also bring new competitors in the Water Transportation industry.
Stagnating economy with rate increase
– Hapag Lloyd AG 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.
Weighted SWOT Analysis of Hapag Lloyd AG Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hapag Lloyd 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 Hapag Lloyd 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 Hapag Lloyd 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 Hapag Lloyd 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 Hapag Lloyd AG needs to make to build a sustainable competitive advantage.