LS Telcom AG (LSXG) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for LS Telcom AG (Germany)

Based on various researches at Oak Spring University , LS Telcom AG is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing energy prices, technology disruption, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, etc

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Introduction to SWOT Analysis of LS Telcom AG

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

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

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

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Strengths of LS Telcom AG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of LS Telcom AG are -

High switching costs

– The high switching costs that LS Telcom 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.

Successful track record of launching new products

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

Training and development

– LS Telcom AG has one of the best training and development program in Technology 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.

Digital Transformation in Communications Equipment industry

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

Strong track record of project management in the Communications Equipment industry

– LS Telcom 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.

High brand equity

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

Effective Research and Development (R&D)

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

Sustainable margins compare to other players in Communications Equipment industry

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

Innovation driven organization

– LS Telcom AG is one of the most innovative firm in Communications Equipment sector.

Organizational Resilience of LS Telcom AG

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

Learning organization

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

Analytics focus

– LS Telcom AG 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 Communications Equipment 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.

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Weaknesses of LS Telcom AG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of LS Telcom AG are -

Ability to respond to the competition

– As the decision making is very deliberative at LS Telcom AG, in the dynamic environment of Communications Equipment industry it has struggled to respond to the nimble upstart competition. LS Telcom AG has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Interest costs

– Compare to the competition, LS Telcom 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.

Products dominated business model

– Even though LS Telcom AG has some of the most successful models in the Communications Equipment industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. LS Telcom AG should strive to include more intangible value offerings along with its core products and services.

Slow to strategic competitive environment developments

– As LS Telcom AG is one of the leading players in the Communications Equipment industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Communications Equipment industry in last five years.

Capital Spending Reduction

– Even during the low interest decade, LS Telcom AG 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 Communications Equipment industry using digital technology.

Lack of clear differentiation of LS Telcom AG products

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

Slow decision making process

– As mentioned earlier in the report, LS Telcom 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 Communications Equipment industry over the last five years. LS Telcom 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.

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

High dependence on LS Telcom AG ‘s star products

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

Low market penetration in new markets

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

Skills based hiring in Communications Equipment industry

– The stress on hiring functional specialists at LS Telcom AG 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.

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LS Telcom AG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of LS Telcom AG are -

Developing new processes and practices

– LS Telcom AG can develop new processes and procedures in Communications Equipment 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.

Manufacturing automation

– LS Telcom AG can use the latest technology developments to improve its manufacturing and designing process in Communications Equipment 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.

Using analytics as competitive advantage

– LS Telcom AG has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Communications Equipment sector. This continuous investment in analytics has enabled LS Telcom AG to build a competitive advantage using analytics. The analytics driven competitive advantage can help LS Telcom AG 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, LS Telcom 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.

Use of Bitcoin and other crypto currencies for transactions in Communications Equipment industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for LS Telcom AG in the Communications Equipment industry. Now LS Telcom 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, LS Telcom AG can use these opportunities to build new business models that can help the communities that LS Telcom AG operates in. Secondly it can use opportunities from government spending in Communications Equipment sector.

Lowering marketing communication costs

– 5G expansion will open new opportunities for LS Telcom 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 Communications Equipment industry, and it will provide faster access to the consumers.

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 LS Telcom 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Communications Equipment industry, but it has also influenced the consumer preferences. LS Telcom AG can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Building a culture of innovation

– managers at LS Telcom AG 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 Communications Equipment industry.

Buying journey improvements

– LS Telcom AG can improve the customer journey of consumers in the Communications Equipment 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.

Creating value in data economy

– The success of analytics program of LS Telcom AG has opened avenues for new revenue streams for the organization in Communications Equipment industry. This can help LS Telcom AG to build a more holistic ecosystem for LS Telcom AG products in the Communications Equipment industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Reforming the budgeting process

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

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Threats LS Telcom AG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of LS Telcom AG are -

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Communications Equipment industry are lowering. It can presents LS Telcom AG with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Communications Equipment sector.

Shortening product life cycle

– it is one of the major threat that LS Telcom AG is facing in Communications Equipment sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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 LS Telcom AG.

Technology acceleration in Forth Industrial Revolution

– LS Telcom AG has witnessed rapid integration of technology during Covid-19 in the Communications Equipment industry. As one of the leading players in the industry, LS Telcom AG needs to keep up with the evolution of technology in the Communications Equipment 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. LS Telcom AG needs to understand the core reasons impacting the Communications Equipment industry. This will help it in building a better workplace.

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.

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. LS Telcom 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.

Stagnating economy with rate increase

– LS Telcom 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 Communications Equipment industry.

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 LS Telcom AG in the Communications Equipment sector and impact the bottomline of the organization.

Easy access to finance

– Easy access to finance in Communications Equipment industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. LS Telcom AG can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Environmental challenges

– LS Telcom 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. LS Telcom AG can take advantage of this fund but it will also bring new competitors in the Communications Equipment industry.

High dependence on third party suppliers

– LS Telcom 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.

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.

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Weighted SWOT Analysis of LS Telcom AG Template, Example

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

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