The automotive industry is an ever-growing market that frequently changes due to new technologies and customer demands. Since global technological development contributes to constant shifts in business strategies, products, and operational models, companies in the automotive industry have to assess the current situation and deliver the best possible services. Magna International is among the organizations that operate within this industry and manages to maintain high positions and satisfy customers with what they produce. However, in order for the company to keep improving in terms of innovation and successful business practices, it is crucial to examine both the internal and external environment of the corporation. This paper will present the SWOT analysis method to assess all the strengths, weaknesses, opportunities, and threats that Magna is subjected to due to either internal or outside factors.
Magna International is relatively experienced in operating within the automotive industry. The company was established more than half a century ago and received the name by which is it recognized by customers in 1973 (Anastakis, 2018). The Canadian corporation currently collaborates with top-tier automotive manufacturers from all over the world. Magna is known for producing automobile parts, systems, and components that are then supplied to car manufacturers from all over the world. On Magna’s website, it is stated that the corporation currently has more than 340 manufacturing facilities and centers in almost 30 countries globally (Magna International, 2021). Such high numbers suggest that the organization has a significant international influence in the domain where it operates and multiple partners that are willing to invest in its products. Moreover, a company that has been successful on a competitive market for such a long time is undoubtedly focused on maintaining sustainability, economic growth, and innovative solutions to possible challenges.
A swot analysis will help analyze Magna’s internal strengths and weaknesses as well as the external opportunities and possible threats that can compromise organizational outcomes. Magna is inevitably a company prone to both positive and negative implications due to the fact that it is an international supplier of car parts. While some of the factors highlight the organization’s successful planning and decision-making processes, there are several adverse aspects that can be addressed for future improvement. These implications are linked to both the industry and the customer demand as well as the overall organizational structure of the corporation.
It is certain that such an experienced and well-established company has various strengths that illustrate a favorable internal environment. First, it is essential to mention the extensive range of products that the corporation specializes in, including multiple types of car parts and systems used by car manufacturers (Figure 1). Moreover, as mentioned prior, a country operating globally inevitably has a significant market share. Magna’s official website states that the organization is the leading global supplier in the field, which is evidence of the major worldwide influence of the corporation (Magna International, 2021). It is also vital to refer to the company’s employment policies. Osornio Olmos (2018) refers to the inclusive policy when it comes to hiring new workers. Magna makes a point to give equal opportunities to all potential team members. This is an essential strength due to the possibility of creating an innovative and contrasting team with different points of view and ideas. Researchers point out that employers have to acknowledge the various prospective within the workforce as it is a driving factor for organizational advancement (Gitman et al., 2018). Thus, Magna has a strong vision and strategy towards improving human resources and the overall internal environment.
While the internal environment can be described as favorable, certain weaknesses can compromise its success. First, it is essential to highlight that the automotive industry is relatively challenging in terms of employment. There is a requirement for frequent training and constant improvement to give employees new knowledge on the latest trends in the industry. These needs can be costly for the employer as the expenses grow due to the fact that technology changes and workers have to keep up. Such financial loses can be damaging for the organization and cause economic challenges. While the weakness exists, the company cannot mitigate the risk due to the need for highly skilled employees (Pamplin College of Business & Virginia Tech Libraries, 2020). Moreover, as mentioned before, Magna specializes in automobile parts and does not have an additional segment where it operates. Such a narrow domain of specialization is a weakness in terms of the lost opportunities for more profit and the covering of other industries. These two limitations may impose difficulties in the corporation’s internal environment, future development, and profitability.
As the industry changes, the corporation has excellent opportunities to be a part of the automotive revolution. It is certain that currently, more customers worldwide are interested in having more sustainable and environmentally friendly cars. Magna is currently focused on creating lightweight, autonomous, and electric mobility (Heintzel et al., 2019). Since the industry is moving towards this particular direction, Magna has the opportunity to become one of the most succesful suppliers of car parts and automatic systems for current and future electric automobiles. The trend is yet to reach its full potential, and Magna has the opportunity to be an active part of it.
Another opportunity is using the increasing demand as a chance to invest in innovation. The global economy has been damaged due to the recent lockdowns, and now it is becoming more stable. Consumers are willing to invest in new technologies to make their cars more comfortable and safe. The current economic growth allows the organization to take advantage of the consumers’ potential for spending. An example of how Magna externalizes such objectives is the recent manufacturing of doors that weigh almost 50% less than regular car doors (Skszek, 2017). Another opportunity is the governmental support of ethical business practices aimed to contribute to sustainability. Most countries are interested in protecting the environment through tax cuts and other benefits for businesses engaging in such activities. Thus, Magna’s current sustainability agenda will allow the corporation to benefit from various governmental policies.
Magna is a Canadian company that operates on the global arena. However, there are several other corporations within the same domain that provide similar products and are major risks for Magna in regards to competitiveness. Researchers mention Linamar, Martinrea, and Woodbridge as direct industrial rivals (Yates & Holmes, 2019). Having competitors with the same resources to technology and excellent potential is a major threat that may lead to the organization’s loss of its market share and profitability. Moreover, it is vital to refer to the challenges that occur due to the differences between the national guidelines of various countries. The current trend for sustainability is not widely spread all over the world. While some governments support this idea, others are not yet preoccupied with the subject of environmental change. The same challenge is present among consumers. Thus, since Magna invests in sustainable practices, there is the threat that these investments will not be cost-effective all over the world. Such dissonance may lead to financial losses for the company and significant challenges in the long-term agenda that the organization is trying to fulfill.
Magna is a global corporation that collaborates with some of the biggest car manufacturers worldwide. Due to such a large market share, the organization has a complex internal environment and an interest in mitigating external threats and maximining opportunities. The SWOT analysis has illustrated that the company’s strengths are the large market share, the wide range of products it specializes in, and the inclusion policy regarding hiring new specialists. However, such weaknesses as a lack of a multitude of business segments it operates in and a need for expensive training of the workforce creates specific adverse outcomes.
In terms of the external environment, the corporation benefits from the global trend for innovation, which Magna has always been known for and is able to keep up with the market. Moreover, the customer demand for sustainability and governmental benefits for environmentally friendly companies fit Magna’s current and future agenda. However, it is essential to mention that differences in national guidelines and high competition are factors that can be described as organizational threats. It is inevitable that a global corporation is prone to difficulties and challenges on all levels. However, the SWOT analysis highlights the current strengths and opportunities that can help Magna maintain high positions on the mobility technology market.
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Gitman, L. J., McDaniel, C., Shah, A., Reece, M., Koffel, L., Talsma, B., & Hyatt, J. (2018). Introduction to business. OpenStax.
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Osornio Olmos, J. L. (2018). Employment practices of Magna International Inc. Comparative study between the multinational company and its subsidiary San Luis Metal Forming: Inclusion and comparable innovation?. Revista De Alimentación Contemporánea y Desarrollo Regional, 28(52). Web.
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