Next Digital (282) SWOT Analysis / TOWS Matrix / MBA Resources
Printing & Publishing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Next Digital (Hong Kong)
Based on various researches at Oak Spring University , Next Digital is operating in a macro-environment that has been destablized by – increasing energy prices, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models,
geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Next Digital can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Next Digital, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Next Digital 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 Next Digital can be done for the following purposes –
1. Strategic planning of Next Digital
2. Improving business portfolio management of Next Digital
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Printing & Publishing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Next Digital
Strengths of Next Digital | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Next Digital are -
Sustainable margins compare to other players in Printing & Publishing industry
– Next Digital has clearly differentiated products in the market place. This has enabled Next Digital to fetch slight price premium compare to the competitors in the Printing & Publishing industry. The sustainable margins have also helped Next Digital to invest into research and development (R&D) and innovation.
Ability to lead change in Printing & Publishing
– Next Digital is one of the leading players in the Printing & Publishing industry in Hong Kong. Over the years it has not only transformed the business landscape in the Printing & Publishing industry in Hong Kong but also across the existing markets. The ability to lead change has enabled Next Digital in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Next Digital is one of the most innovative firm in Printing & Publishing sector.
Ability to recruit top talent
– Next Digital is one of the leading players in the Printing & Publishing 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.
Successful track record of launching new products
– Next Digital has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Next Digital 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.
Highly skilled collaborators
– Next Digital has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Printing & Publishing industry. Secondly the value chain collaborators of Next Digital have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Next Digital has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Next Digital to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Next Digital in the Services sector have low bargaining power. Next Digital has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Next Digital to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Next Digital is present in almost all the verticals within the Printing & Publishing industry. This has provided Next Digital 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.
Cross disciplinary teams
– Horizontal connected teams at the Next Digital 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.
Organizational Resilience of Next Digital
– The covid-19 pandemic has put organizational resilience at the centre of everthing Next Digital does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy of Next Digital comprises – understanding the underlying the factors in the Printing & Publishing 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.
Weaknesses of Next Digital | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Next Digital are -
Interest costs
– Compare to the competition, Next Digital 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Next Digital is slow explore the new channels of communication. These new channels of communication can help Next Digital to provide better information regarding Printing & Publishing products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Next Digital 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 Printing & Publishing industry using digital technology.
Aligning sales with marketing
– From the outside it seems that Next Digital needs to have more collaboration between its sales team and marketing team. Sales professionals in the Printing & Publishing industry have deep experience in developing customer relationships. Marketing department at Next Digital can leverage the sales team experience to cultivate customer relationships as Next Digital is planning to shift buying processes online.
High cash cycle compare to competitors
Next Digital has a high cash cycle compare to other players in the Printing & Publishing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Printing & Publishing industry
– The stress on hiring functional specialists at Next Digital 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.
Employees’ less understanding of Next Digital strategy
– From the outside it seems that the employees of Next Digital 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 Printing & Publishing industry
– because of the regulatory requirements in Hong Kong, Next Digital 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 Printing & Publishing industry.
Slow to strategic competitive environment developments
– As Next Digital is one of the leading players in the Printing & Publishing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Printing & Publishing industry in last five years.
No frontier risks strategy
– From the 10K / annual statement of Next Digital, it seems that company is thinking out the frontier risks that can impact Printing & Publishing 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.
High dependence on Next Digital ‘s star products
– The top 2 products and services of Next Digital still accounts for major business revenue. This dependence on star products in Printing & Publishing industry has resulted into insufficient focus on developing new products, even though Next Digital has relatively successful track record of launching new products.
Next Digital Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Next Digital are -
Learning at scale
– Online learning technologies has now opened space for Next Digital to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Next Digital has opened avenues for new revenue streams for the organization in Printing & Publishing industry. This can help Next Digital to build a more holistic ecosystem for Next Digital products in the Printing & Publishing industry by providing – data insight services, data privacy related products, data based consulting services, 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 Next Digital 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Printing & Publishing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Next Digital 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. Next Digital 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.
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. Next Digital can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Next Digital can develop new processes and procedures in Printing & Publishing 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Next Digital 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 Next Digital to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Next Digital can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Next Digital 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.
Use of Bitcoin and other crypto currencies for transactions in Printing & Publishing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Next Digital in the Printing & Publishing industry. Now Next Digital can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Next Digital 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 Next Digital to increase its market reach. Next Digital 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Printing & Publishing industry, but it has also influenced the consumer preferences. Next Digital can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Next Digital External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Next Digital are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Printing & Publishing industry are lowering. It can presents Next Digital with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Printing & Publishing 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.
High dependence on third party suppliers
– Next Digital 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.
Consumer confidence and its impact on Next Digital 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 Printing & Publishing 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.
Regulatory challenges
– Next Digital 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 Printing & Publishing industry regulations.
Easy access to finance
– Easy access to finance in Printing & Publishing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Next Digital can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Next Digital
– 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 Next Digital.
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 Next Digital.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Next Digital may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Printing & Publishing sector.
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 Next Digital in the Printing & Publishing sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Next Digital is facing in Printing & Publishing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Next Digital 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. Next Digital can take advantage of this fund but it will also bring new competitors in the Printing & Publishing industry.
Weighted SWOT Analysis of Next Digital Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Next Digital 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 Next Digital 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 Next Digital 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 Next Digital 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 Next Digital needs to make to build a sustainable competitive advantage.
