HMV Digital China (8078) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for HMV Digital China (Hong Kong)

Based on various researches at Oak Spring University , HMV Digital China is operating in a macro-environment that has been destablized by – increasing energy prices, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, etc

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Introduction to SWOT Analysis of HMV Digital China

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

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Strengths of HMV Digital China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of HMV Digital China are -

Training and development

– HMV Digital China has one of the best training and development program in Services 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 recruit top talent

– HMV Digital China is one of the leading players in the Motion Pictures 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.

Organizational Resilience of HMV Digital China

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

Digital Transformation in Motion Pictures industry

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

Successful track record of launching new products

– HMV Digital China has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. HMV Digital China 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.

Sustainable margins compare to other players in Motion Pictures industry

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

Superior customer experience

– The customer experience strategy of HMV Digital China in Motion Pictures industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Strong track record of project management in the Motion Pictures industry

– HMV Digital China is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Ability to lead change in Motion Pictures

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

Cross disciplinary teams

– Horizontal connected teams at the HMV Digital China 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 HMV Digital China in the Services sector have low bargaining power. HMV Digital China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps HMV Digital China to manage not only supply disruptions but also source products at highly competitive prices.

Effective Research and Development (R&D)

– HMV Digital China has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – HMV Digital China staying ahead in the Motion Pictures industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

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Weaknesses of HMV Digital China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of HMV Digital China are -

Slow to strategic competitive environment developments

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

Ability to respond to the competition

– As the decision making is very deliberative at HMV Digital China, in the dynamic environment of Motion Pictures industry it has struggled to respond to the nimble upstart competition. HMV Digital China 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 Motion Pictures industry

– The stress on hiring functional specialists at HMV Digital China 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.

Low market penetration in new markets

– Outside its home market of Hong Kong, HMV Digital China needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Slow decision making process

– As mentioned earlier in the report, HMV Digital China has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Motion Pictures industry over the last five years. HMV Digital China 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.

Increasing silos among functional specialists

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

Workers concerns about automation

– As automation is fast increasing in the Motion Pictures industry, HMV Digital China 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.

Capital Spending Reduction

– Even during the low interest decade, HMV Digital China 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 Motion Pictures industry using digital technology.

Compensation and incentives

– The revenue per employee of HMV Digital China is just above the Motion Pictures 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 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 HMV Digital China supply chain. Even after few cautionary changes, HMV Digital China is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left HMV Digital China vulnerable to further global disruptions in South East Asia.

Employees’ less understanding of HMV Digital China strategy

– From the outside it seems that the employees of HMV Digital China 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.

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HMV Digital China Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of HMV Digital China are -

Finding new ways to collaborate

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

Remote work and new talent hiring opportunities

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

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 HMV Digital China 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.

Increase in government spending

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

Building a culture of innovation

– managers at HMV Digital China 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 Motion Pictures industry.

Developing new processes and practices

– HMV Digital China can develop new processes and procedures in Motion Pictures 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.

Leveraging digital technologies

– HMV Digital China 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 HMV Digital China to increase its market reach. HMV Digital China 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.

Using analytics as competitive advantage

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

Creating value in data economy

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

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Motion Pictures industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. HMV Digital China 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. HMV Digital China 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. HMV Digital China can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Loyalty marketing

– HMV Digital China 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.

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Threats HMV Digital China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of HMV Digital China are -

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.

Technology acceleration in Forth Industrial Revolution

– HMV Digital China has witnessed rapid integration of technology during Covid-19 in the Motion Pictures industry. As one of the leading players in the industry, HMV Digital China needs to keep up with the evolution of technology in the Motion Pictures 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.

Barriers of entry lowering

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

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.

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 HMV Digital China.

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 HMV Digital China in the Motion Pictures sector and impact the bottomline of the organization.

High dependence on third party suppliers

– HMV Digital China 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.

Stagnating economy with rate increase

– HMV Digital China 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 Motion Pictures industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, HMV Digital China 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 HMV Digital China prominent markets.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, HMV Digital China may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Motion Pictures sector.

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. HMV Digital China needs to understand the core reasons impacting the Motion Pictures industry. This will help it in building a better workplace.

Increasing wage structure of HMV Digital China

– 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 HMV Digital China.

Consumer confidence and its impact on HMV Digital China 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 Motion Pictures industry and other sectors.

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Weighted SWOT Analysis of HMV Digital China Template, Example

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

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