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 – challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, increasing energy prices, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies,
competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, 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 -
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Hapag Lloyd AG 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.
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.
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.
Learning organization
- Hapag Lloyd AG 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 Hapag Lloyd AG is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Hapag Lloyd AG emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Hapag Lloyd AG 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.
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.
Digital Transformation in Water Transportation industry
- digital transformation varies from industry to industry. For Hapag Lloyd AG digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hapag Lloyd AG 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.
Innovation driven organization
– Hapag Lloyd AG is one of the most innovative firm in Water Transportation sector.
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.
Organizational Resilience of Hapag Lloyd AG
– The covid-19 pandemic has put organizational resilience at the centre of everthing Hapag Lloyd AG does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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 -
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Hapag Lloyd AG is dominated by functional specialists. It is not different from other players in the Water Transportation industry, but Hapag Lloyd AG needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hapag Lloyd AG to focus more on services in the Water Transportation industry rather than just following the product oriented approach.
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.
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.
No frontier risks strategy
– From the 10K / annual statement of Hapag Lloyd AG, 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.
Interest costs
– Compare to the competition, Hapag Lloyd AG 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.
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.
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 Hapag Lloyd AG supply chain. Even after few cautionary changes, Hapag Lloyd AG is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hapag Lloyd AG vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Hapag Lloyd AG has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Water Transportation industry over the last five years. Hapag Lloyd AG 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.
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 -
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.
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.
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.
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.
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 Hapag Lloyd AG 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.
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.
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. Hapag Lloyd AG can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Hapag Lloyd AG to increase its market reach. Hapag Lloyd AG 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.
Leveraging digital technologies
– Hapag Lloyd AG 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.
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.
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.
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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hapag Lloyd AG in Water Transportation industry. The Water Transportation 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.
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.
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.
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.
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.
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.
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.
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. Hapag Lloyd AG 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 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.
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. Hapag Lloyd AG 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.
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.
Technology acceleration in Forth Industrial Revolution
– Hapag Lloyd AG has witnessed rapid integration of technology during Covid-19 in the Water Transportation industry. As one of the leading players in the industry, Hapag Lloyd AG 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.
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.
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.