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 – there is backlash against globalization, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion,
geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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.
Sustainable margins compare to other players in Conglomerates industry
– SkyNet has clearly differentiated products in the market place. This has enabled SkyNet to fetch slight price premium compare to the competitors in the Conglomerates industry. The sustainable margins have also helped SkyNet to invest into research and development (R&D) and innovation.
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.
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.
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.
Innovation driven organization
– SkyNet is one of the most innovative firm in Conglomerates sector.
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.
Superior customer experience
– The customer experience strategy of SkyNet in Conglomerates industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– SkyNet has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. SkyNet 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.
Effective Research and Development (R&D)
– SkyNet has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – SkyNet staying ahead in the Conglomerates industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– SkyNet is present in almost all the verticals within the Conglomerates industry. This has provided SkyNet 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.
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.
Weaknesses of SkyNet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SkyNet are -
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.
Increasing silos among functional specialists
– The organizational structure of SkyNet is dominated by functional specialists. It is not different from other players in the Conglomerates industry, but SkyNet needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help SkyNet to focus more on services in the Conglomerates industry rather than just following the product oriented approach.
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.
Ability to respond to the competition
– As the decision making is very deliberative at SkyNet, in the dynamic environment of Conglomerates industry it has struggled to respond to the nimble upstart competition. SkyNet has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, SkyNet is slow explore the new channels of communication. These new channels of communication can help SkyNet to provide better information regarding Conglomerates products and services. It can also build an online community to further reach out to potential customers.
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.
Interest costs
– Compare to the competition, SkyNet 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.
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 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.
High operating costs
– Compare to the competitors, SkyNet has high operating costs in the Conglomerates industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract SkyNet lucrative customers.
Slow to strategic competitive environment developments
– As SkyNet is one of the leading players in the Conglomerates industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Conglomerates industry in last five years.
SkyNet Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SkyNet are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects SkyNet can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at SkyNet 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 Conglomerates industry.
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.
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.
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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, SkyNet 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 SkyNet to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– SkyNet can use the latest technology developments to improve its manufacturing and designing process in Conglomerates 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.
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.
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.
Loyalty marketing
– SkyNet 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 SkyNet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SkyNet are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Conglomerates industry are lowering. It can presents SkyNet with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Conglomerates sector.
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for SkyNet in Conglomerates industry. The Conglomerates 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.
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 SkyNet in the Conglomerates sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, SkyNet 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 SkyNet prominent markets.
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.
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.
Stagnating economy with rate increase
– SkyNet 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 Conglomerates industry.
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.
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.
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.
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.
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.
