Tak Lee Machinery (8142) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Tak Lee Machinery (Hong Kong)

Based on various researches at Oak Spring University , Tak Lee Machinery is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing transportation and logistics costs, technology disruption, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, increasing energy prices, etc

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Introduction to SWOT Analysis of Tak Lee Machinery

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

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Strengths of Tak Lee Machinery | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Tak Lee Machinery are -

Cross disciplinary teams

– Horizontal connected teams at the Tak Lee Machinery 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.

Low bargaining power of suppliers

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

Superior customer experience

– The customer experience strategy of Tak Lee Machinery in Rental & Leasing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Learning organization

- Tak Lee Machinery 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 Tak Lee Machinery is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Tak Lee Machinery emphasize – knowledge, initiative, and innovation.

Analytics focus

– Tak Lee Machinery 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 Rental & Leasing 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.

Innovation driven organization

– Tak Lee Machinery is one of the most innovative firm in Rental & Leasing sector.

Ability to recruit top talent

– Tak Lee Machinery is one of the leading players in the Rental & Leasing 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.

Sustainable margins compare to other players in Rental & Leasing industry

– Tak Lee Machinery has clearly differentiated products in the market place. This has enabled Tak Lee Machinery to fetch slight price premium compare to the competitors in the Rental & Leasing industry. The sustainable margins have also helped Tak Lee Machinery to invest into research and development (R&D) and innovation.

Effective Research and Development (R&D)

– Tak Lee Machinery has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Tak Lee Machinery staying ahead in the Rental & Leasing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Organizational Resilience of Tak Lee Machinery

– The covid-19 pandemic has put organizational resilience at the centre of everthing Tak Lee Machinery does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

High brand equity

– Tak Lee Machinery has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tak Lee Machinery to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Digital Transformation in Rental & Leasing industry

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

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Weaknesses of Tak Lee Machinery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Tak Lee Machinery are -

High dependence on Tak Lee Machinery ‘s star products

– The top 2 products and services of Tak Lee Machinery still accounts for major business revenue. This dependence on star products in Rental & Leasing industry has resulted into insufficient focus on developing new products, even though Tak Lee Machinery has relatively successful track record of launching new products.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tak Lee Machinery is slow explore the new channels of communication. These new channels of communication can help Tak Lee Machinery to provide better information regarding Rental & Leasing products and services. It can also build an online community to further reach out to potential customers.

Need for greater diversity

– Tak Lee Machinery 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 Rental & Leasing industry

– because of the regulatory requirements in Hong Kong, Tak Lee Machinery 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 Rental & Leasing industry.

Capital Spending Reduction

– Even during the low interest decade, Tak Lee Machinery 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 Rental & Leasing industry using digital technology.

Ability to respond to the competition

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

Lack of clear differentiation of Tak Lee Machinery products

– To increase the profitability and margins on the products, Tak Lee Machinery needs to provide more differentiated products than what it is currently offering in the marketplace.

Workers concerns about automation

– As automation is fast increasing in the Rental & Leasing industry, Tak Lee Machinery needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

Slow decision making process

– As mentioned earlier in the report, Tak Lee Machinery has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Rental & Leasing industry over the last five years. Tak Lee Machinery 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 Tak Lee Machinery supply chain. Even after few cautionary changes, Tak Lee Machinery is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tak Lee Machinery vulnerable to further global disruptions in South East Asia.

Products dominated business model

– Even though Tak Lee Machinery has some of the most successful models in the Rental & Leasing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Tak Lee Machinery should strive to include more intangible value offerings along with its core products and services.

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Tak Lee Machinery Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Tak Lee Machinery are -

Increase in government spending

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

Redefining models of collaboration and team work

– As explained in the weaknesses section, Tak Lee Machinery is facing challenges because of the dominance of functional experts in the organization. Tak Lee Machinery can utilize new technology in the field of Rental & Leasing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Buying journey improvements

– Tak Lee Machinery can improve the customer journey of consumers in the Rental & Leasing 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.

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. Tak Lee Machinery can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Building a culture of innovation

– managers at Tak Lee Machinery 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 Rental & Leasing industry.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Tak Lee Machinery 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 Tak Lee Machinery to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Remote work and new talent hiring opportunities

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

Using analytics as competitive advantage

– Tak Lee Machinery has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Rental & Leasing sector. This continuous investment in analytics has enabled Tak Lee Machinery to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tak Lee Machinery to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Manufacturing automation

– Tak Lee Machinery can use the latest technology developments to improve its manufacturing and designing process in Rental & Leasing 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.

Developing new processes and practices

– Tak Lee Machinery can develop new processes and procedures in Rental & Leasing 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.

Learning at scale

– Online learning technologies has now opened space for Tak Lee Machinery 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.

Reforming the budgeting process

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

Better consumer reach

– The expansion of the 5G network will help Tak Lee Machinery to increase its market reach. Tak Lee Machinery 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.

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Threats Tak Lee Machinery External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Tak Lee Machinery are -

Technology acceleration in Forth Industrial Revolution

– Tak Lee Machinery has witnessed rapid integration of technology during Covid-19 in the Rental & Leasing industry. As one of the leading players in the industry, Tak Lee Machinery needs to keep up with the evolution of technology in the Rental & Leasing 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.

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.

Shortening product life cycle

– it is one of the major threat that Tak Lee Machinery is facing in Rental & Leasing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– Tak Lee Machinery 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 Rental & Leasing industry.

Environmental challenges

– Tak Lee Machinery 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. Tak Lee Machinery can take advantage of this fund but it will also bring new competitors in the Rental & Leasing industry.

Consumer confidence and its impact on Tak Lee Machinery 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 Rental & Leasing industry and other sectors.

Easy access to finance

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

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Tak Lee Machinery may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Rental & Leasing sector.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Rental & Leasing industry are lowering. It can presents Tak Lee Machinery with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Rental & Leasing sector.

High dependence on third party suppliers

– Tak Lee Machinery 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.

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.

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 Tak Lee Machinery business can come under increasing regulations regarding data privacy, data security, etc.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Tak Lee Machinery 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 Tak Lee Machinery prominent markets.

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Weighted SWOT Analysis of Tak Lee Machinery Template, Example

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

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