O Luxe Holdings (860) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for O Luxe Holdings (Hong Kong)

Based on various researches at Oak Spring University , O Luxe Holdings is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, central banks are concerned over increasing inflation, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, etc

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Introduction to SWOT Analysis of O Luxe Holdings

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that O Luxe Holdings can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the O Luxe Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which O Luxe Holdings 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 O Luxe Holdings can be done for the following purposes –
1. Strategic planning of O Luxe Holdings
2. Improving business portfolio management of O Luxe Holdings
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Jewelry & Silverware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of O Luxe Holdings

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Strengths of O Luxe Holdings | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of O Luxe Holdings are -

Analytics focus

– O Luxe Holdings 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 Jewelry & Silverware 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.

Learning organization

- O Luxe Holdings 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 O Luxe Holdings is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at O Luxe Holdings emphasize – knowledge, initiative, and innovation.

Cross disciplinary teams

– Horizontal connected teams at the O Luxe Holdings 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 Jewelry & Silverware industry

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

Highly skilled collaborators

– O Luxe Holdings has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Jewelry & Silverware industry. Secondly the value chain collaborators of O Luxe Holdings have helped the firm to develop new products and bring them quickly to the marketplace.

High switching costs

– The high switching costs that O Luxe Holdings 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.

Training and development

– O Luxe Holdings has one of the best training and development program in Consumer Cyclical 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.

Ability to lead change in Jewelry & Silverware

– O Luxe Holdings is one of the leading players in the Jewelry & Silverware industry in Hong Kong. Over the years it has not only transformed the business landscape in the Jewelry & Silverware industry in Hong Kong but also across the existing markets. The ability to lead change has enabled O Luxe Holdings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Operational resilience

– The operational resilience strategy of O Luxe Holdings comprises – understanding the underlying the factors in the Jewelry & Silverware 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.

Sustainable margins compare to other players in Jewelry & Silverware industry

– O Luxe Holdings has clearly differentiated products in the market place. This has enabled O Luxe Holdings to fetch slight price premium compare to the competitors in the Jewelry & Silverware industry. The sustainable margins have also helped O Luxe Holdings to invest into research and development (R&D) and innovation.

Low bargaining power of suppliers

– Suppliers of O Luxe Holdings in the Consumer Cyclical sector have low bargaining power. O Luxe Holdings has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps O Luxe Holdings to manage not only supply disruptions but also source products at highly competitive prices.

Innovation driven organization

– O Luxe Holdings is one of the most innovative firm in Jewelry & Silverware sector.

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Weaknesses of O Luxe Holdings | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of O Luxe Holdings are -

Slow decision making process

– As mentioned earlier in the report, O Luxe Holdings has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Jewelry & Silverware industry over the last five years. O Luxe Holdings 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.

Compensation and incentives

– The revenue per employee of O Luxe Holdings is just above the Jewelry & Silverware 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.

Employees’ less understanding of O Luxe Holdings strategy

– From the outside it seems that the employees of O Luxe Holdings 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.

Aligning sales with marketing

– From the outside it seems that O Luxe Holdings needs to have more collaboration between its sales team and marketing team. Sales professionals in the Jewelry & Silverware industry have deep experience in developing customer relationships. Marketing department at O Luxe Holdings can leverage the sales team experience to cultivate customer relationships as O Luxe Holdings is planning to shift buying processes online.

Ability to respond to the competition

– As the decision making is very deliberative at O Luxe Holdings, in the dynamic environment of Jewelry & Silverware industry it has struggled to respond to the nimble upstart competition. O Luxe Holdings has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Skills based hiring in Jewelry & Silverware industry

– The stress on hiring functional specialists at O Luxe Holdings 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.

Capital Spending Reduction

– Even during the low interest decade, O Luxe Holdings 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 Jewelry & Silverware industry using digital technology.

High cash cycle compare to competitors

O Luxe Holdings has a high cash cycle compare to other players in the Jewelry & Silverware industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Increasing silos among functional specialists

– The organizational structure of O Luxe Holdings is dominated by functional specialists. It is not different from other players in the Jewelry & Silverware industry, but O Luxe Holdings needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help O Luxe Holdings to focus more on services in the Jewelry & Silverware industry rather than just following the product oriented approach.

High operating costs

– Compare to the competitors, O Luxe Holdings has high operating costs in the Jewelry & Silverware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract O Luxe Holdings lucrative customers.

High dependence on O Luxe Holdings ‘s star products

– The top 2 products and services of O Luxe Holdings still accounts for major business revenue. This dependence on star products in Jewelry & Silverware industry has resulted into insufficient focus on developing new products, even though O Luxe Holdings has relatively successful track record of launching new products.

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O Luxe Holdings Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of O Luxe Holdings are -

Manufacturing automation

– O Luxe Holdings can use the latest technology developments to improve its manufacturing and designing process in Jewelry & Silverware 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.

Buying journey improvements

– O Luxe Holdings can improve the customer journey of consumers in the Jewelry & Silverware 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.

Leveraging digital technologies

– O Luxe Holdings 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.

Better consumer reach

– The expansion of the 5G network will help O Luxe Holdings to increase its market reach. O Luxe Holdings 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.

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. O Luxe Holdings can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, O Luxe Holdings can use these opportunities to build new business models that can help the communities that O Luxe Holdings operates in. Secondly it can use opportunities from government spending in Jewelry & Silverware sector.

Low interest rates

– Even though inflation is raising its head in most developed economies, O Luxe Holdings 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Jewelry & Silverware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. O Luxe Holdings 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. O Luxe Holdings 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.

Building a culture of innovation

– managers at O Luxe Holdings 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 Jewelry & Silverware industry.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for O Luxe Holdings 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 O Luxe Holdings to hire the very best people irrespective of their geographical location.

Reforming the budgeting process

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

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 O Luxe Holdings 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.

Creating value in data economy

– The success of analytics program of O Luxe Holdings has opened avenues for new revenue streams for the organization in Jewelry & Silverware industry. This can help O Luxe Holdings to build a more holistic ecosystem for O Luxe Holdings products in the Jewelry & Silverware industry by providing – data insight services, data privacy related products, data based consulting services, etc.

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Threats O Luxe Holdings External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of O Luxe Holdings are -

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Jewelry & Silverware industry are lowering. It can presents O Luxe Holdings with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Jewelry & Silverware 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. O Luxe Holdings 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.

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 O Luxe Holdings business can come under increasing regulations regarding data privacy, data security, etc.

Easy access to finance

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

Regulatory challenges

– O Luxe Holdings 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 Jewelry & Silverware industry regulations.

Shortening product life cycle

– it is one of the major threat that O Luxe Holdings is facing in Jewelry & Silverware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Consumer confidence and its impact on O Luxe Holdings 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 Jewelry & Silverware industry and other sectors.

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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, O Luxe Holdings may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Jewelry & Silverware sector.

Technology acceleration in Forth Industrial Revolution

– O Luxe Holdings has witnessed rapid integration of technology during Covid-19 in the Jewelry & Silverware industry. As one of the leading players in the industry, O Luxe Holdings needs to keep up with the evolution of technology in the Jewelry & Silverware 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.

Stagnating economy with rate increase

– O Luxe Holdings 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 Jewelry & Silverware industry.

High dependence on third party suppliers

– O Luxe Holdings 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.

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Weighted SWOT Analysis of O Luxe Holdings Template, Example

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

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