SDM (8363) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for SDM (Hong Kong)

Based on various researches at Oak Spring University , SDM is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, increasing transportation and logistics costs, technology disruption, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, etc

---

---

---

---

Introduction to SWOT Analysis of SDM

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

---

Strengths of SDM | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of SDM are -

Innovation driven organization

– SDM is one of the most innovative firm in Recreational Activities sector.

High switching costs

– The high switching costs that SDM 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.

Cross disciplinary teams

– Horizontal connected teams at the SDM 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.

Superior customer experience

– The customer experience strategy of SDM in Recreational Activities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Learning organization

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

Diverse revenue streams

– SDM is present in almost all the verticals within the Recreational Activities industry. This has provided SDM 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.

Analytics focus

– SDM 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 Recreational Activities 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.

Ability to lead change in Recreational Activities

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

Digital Transformation in Recreational Activities industry

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

High brand equity

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

Sustainable margins compare to other players in Recreational Activities industry

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

Highly skilled collaborators

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

---

---

Weaknesses of SDM | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of SDM are -

Capital Spending Reduction

– Even during the low interest decade, SDM 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 Recreational Activities industry using digital technology.

Slow to strategic competitive environment developments

– As SDM is one of the leading players in the Recreational Activities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Recreational Activities industry in last five years.

Compensation and incentives

– The revenue per employee of SDM is just above the Recreational Activities 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.

High cash cycle compare to competitors

SDM has a high cash cycle compare to other players in the Recreational Activities 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 Recreational Activities industry

– The stress on hiring functional specialists at SDM 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.

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 SDM supply chain. Even after few cautionary changes, SDM is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SDM vulnerable to further global disruptions in South East Asia.

High operating costs

– Compare to the competitors, SDM has high operating costs in the Recreational Activities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract SDM lucrative customers.

Lack of clear differentiation of SDM products

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

High bargaining power of channel partners in Recreational Activities industry

– because of the regulatory requirements in Hong Kong, SDM 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 Recreational Activities industry.

Need for greater diversity

– SDM 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.

Slow to harness new channels of communication

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

---

SDM Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of SDM are -

Creating value in data economy

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

Low interest rates

– Even though inflation is raising its head in most developed economies, SDM 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.

Redefining models of collaboration and team work

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

Using analytics as competitive advantage

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

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. SDM can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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 SDM 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Recreational Activities industry, but it has also influenced the consumer preferences. SDM can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Increase in government spending

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

Manufacturing automation

– SDM can use the latest technology developments to improve its manufacturing and designing process in Recreational Activities 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.

Loyalty marketing

– SDM 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.

Harnessing reconfiguration of the global supply chains

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

Building a culture of innovation

– managers at SDM 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 Recreational Activities industry.

Better consumer reach

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

---

Threats SDM External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of SDM are -

Consumer confidence and its impact on SDM 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 Recreational Activities industry and other sectors.

High dependence on third party suppliers

– SDM 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.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. SDM needs to understand the core reasons impacting the Recreational Activities industry. This will help it in building a better workplace.

Stagnating economy with rate increase

– SDM 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 Recreational Activities industry.

Technology acceleration in Forth Industrial Revolution

– SDM has witnessed rapid integration of technology during Covid-19 in the Recreational Activities industry. As one of the leading players in the industry, SDM needs to keep up with the evolution of technology in the Recreational Activities 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.

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 SDM business can come under increasing regulations regarding data privacy, data security, etc.

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 SDM.

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. SDM 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.

Easy access to finance

– Easy access to finance in Recreational Activities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. SDM 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, SDM may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Recreational Activities sector.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for SDM in Recreational Activities industry. The Recreational Activities 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.

Shortening product life cycle

– it is one of the major threat that SDM is facing in Recreational Activities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

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

---

Weighted SWOT Analysis of SDM Template, Example

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

--- ---