SkyNet (8176) SWOT Analysis / TOWS Matrix / MBA Resources
Conglomerates
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for SkyNet (Hong Kong)
Based on various researches at Oak Spring University , SkyNet is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that SkyNet can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the SkyNet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which SkyNet 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 SkyNet can be done for the following purposes –
1. Strategic planning of SkyNet
2. Improving business portfolio management of SkyNet
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Conglomerates sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of SkyNet
Strengths of SkyNet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of SkyNet are -
Cross disciplinary teams
– Horizontal connected teams at the SkyNet 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.
Digital Transformation in Conglomerates industry
- digital transformation varies from industry to industry. For SkyNet digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. SkyNet 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.
High brand equity
– SkyNet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled SkyNet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– SkyNet is one of the leading players in the Conglomerates industry in Hong Kong. It is in a position to attract the best talent available in Hong Kong. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management in the Conglomerates industry
– SkyNet is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– SkyNet 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 Conglomerates industry. The technology infrastructure of Hong Kong 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.
Training and development
– SkyNet has one of the best training and development program in Conglomerates 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.
High switching costs
– The high switching costs that SkyNet 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.
Learning organization
- SkyNet 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 SkyNet is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at SkyNet emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of SkyNet comprises – understanding the underlying the factors in the Conglomerates 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 SkyNet in the Conglomerates sector have low bargaining power. SkyNet has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps SkyNet to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– SkyNet is one of the most innovative firm in Conglomerates sector.
Weaknesses of SkyNet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SkyNet are -
Slow decision making process
– As mentioned earlier in the report, SkyNet has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Conglomerates industry over the last five years. SkyNet 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 SkyNet supply chain. Even after few cautionary changes, SkyNet is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SkyNet vulnerable to further global disruptions in South East Asia.
High dependence on SkyNet ‘s star products
– The top 2 products and services of SkyNet still accounts for major business revenue. This dependence on star products in Conglomerates industry has resulted into insufficient focus on developing new products, even though SkyNet has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that SkyNet needs to have more collaboration between its sales team and marketing team. Sales professionals in the Conglomerates industry have deep experience in developing customer relationships. Marketing department at SkyNet can leverage the sales team experience to cultivate customer relationships as SkyNet is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Hong Kong, SkyNet needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ less understanding of SkyNet strategy
– From the outside it seems that the employees of SkyNet 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.
Lack of clear differentiation of SkyNet products
– To increase the profitability and margins on the products, SkyNet needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though SkyNet has some of the most successful models in the Conglomerates industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. SkyNet should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
SkyNet has a high cash cycle compare to other players in the Conglomerates industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– SkyNet 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.
High bargaining power of channel partners in Conglomerates industry
– because of the regulatory requirements in Hong Kong, SkyNet 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 Conglomerates industry.
SkyNet Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SkyNet are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, SkyNet is facing challenges because of the dominance of functional experts in the organization. SkyNet can utilize new technology in the field of Conglomerates industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. SkyNet can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Use of Bitcoin and other crypto currencies for transactions in Conglomerates industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for SkyNet in the Conglomerates industry. Now SkyNet can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– SkyNet has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Conglomerates sector. This continuous investment in analytics has enabled SkyNet to build a competitive advantage using analytics. The analytics driven competitive advantage can help SkyNet to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help SkyNet to increase its market reach. SkyNet 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Conglomerates industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. SkyNet 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. SkyNet 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, SkyNet 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.
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 SkyNet 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, SkyNet can use these opportunities to build new business models that can help the communities that SkyNet operates in. Secondly it can use opportunities from government spending in Conglomerates sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for SkyNet 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 SkyNet to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of SkyNet has opened avenues for new revenue streams for the organization in Conglomerates industry. This can help SkyNet to build a more holistic ecosystem for SkyNet products in the Conglomerates industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– SkyNet can develop new processes and procedures in Conglomerates 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.
Leveraging digital technologies
– SkyNet 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.
Threats SkyNet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SkyNet are -
Increasing wage structure of SkyNet
– 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 SkyNet.
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 SkyNet business can come under increasing regulations regarding data privacy, data security, etc.
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.
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. SkyNet needs to understand the core reasons impacting the Conglomerates industry. This will help it in building a better workplace.
Regulatory challenges
– SkyNet 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 Conglomerates industry regulations.
Consumer confidence and its impact on SkyNet 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 Conglomerates industry and other sectors.
Environmental challenges
– SkyNet 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. SkyNet can take advantage of this fund but it will also bring new competitors in the Conglomerates industry.
Shortening product life cycle
– it is one of the major threat that SkyNet is facing in Conglomerates sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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, SkyNet may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Conglomerates sector.
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. SkyNet 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.
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 SkyNet.
High dependence on third party suppliers
– SkyNet 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.
Weighted SWOT Analysis of SkyNet Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at SkyNet 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 SkyNet 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 SkyNet 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 SkyNet 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 SkyNet needs to make to build a sustainable competitive advantage.