South Sea Petroleum (76) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for South Sea Petroleum (Hong Kong)

Based on various researches at Oak Spring University , South Sea Petroleum is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, supply chains are disrupted by pandemic , increasing commodity prices, etc

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Introduction to SWOT Analysis of South Sea Petroleum

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

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Strengths of South Sea Petroleum | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of South Sea Petroleum are -

Ability to lead change in Coal

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

Operational resilience

– The operational resilience strategy of South Sea Petroleum comprises – understanding the underlying the factors in the Coal 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.

Effective Research and Development (R&D)

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

Organizational Resilience of South Sea Petroleum

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

Superior customer experience

– The customer experience strategy of South Sea Petroleum in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Digital Transformation in Coal industry

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

– The high switching costs that South Sea Petroleum 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.

High brand equity

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

Diverse revenue streams

– South Sea Petroleum is present in almost all the verticals within the Coal industry. This has provided South Sea Petroleum 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 South Sea Petroleum 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.

Sustainable margins compare to other players in Coal industry

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

Successful track record of launching new products

– South Sea Petroleum has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. South Sea Petroleum 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.

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Weaknesses of South Sea Petroleum | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of South Sea Petroleum are -

High bargaining power of channel partners in Coal industry

– because of the regulatory requirements in Hong Kong, South Sea Petroleum 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 Coal industry.

Interest costs

– Compare to the competition, South Sea Petroleum 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.

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

Compensation and incentives

– The revenue per employee of South Sea Petroleum is just above the Coal 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 South Sea Petroleum ‘s star products

– The top 2 products and services of South Sea Petroleum still accounts for major business revenue. This dependence on star products in Coal industry has resulted into insufficient focus on developing new products, even though South Sea Petroleum has relatively successful track record of launching new products.

Products dominated business model

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

High cash cycle compare to competitors

South Sea Petroleum has a high cash cycle compare to other players in the Coal industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Capital Spending Reduction

– Even during the low interest decade, South Sea Petroleum 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 Coal industry using digital technology.

Slow to harness new channels of communication

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

Lack of clear differentiation of South Sea Petroleum products

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

Increasing silos among functional specialists

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

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South Sea Petroleum Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of South Sea Petroleum 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, South Sea Petroleum can use these opportunities to build new business models that can help the communities that South Sea Petroleum operates in. Secondly it can use opportunities from government spending in Coal sector.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Coal industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. South Sea Petroleum 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. South Sea Petroleum 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for South Sea Petroleum in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Coal industry, and it will provide faster access to the consumers.

Low interest rates

– Even though inflation is raising its head in most developed economies, South Sea Petroleum 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.

Leveraging digital technologies

– South Sea Petroleum 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.

Harnessing reconfiguration of the global supply chains

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

Loyalty marketing

– South Sea Petroleum 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.

Remote work and new talent hiring opportunities

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

Reforming the budgeting process

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

Use of Bitcoin and other crypto currencies for transactions in Coal industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for South Sea Petroleum in the Coal industry. Now South Sea Petroleum can target international markets with far fewer capital restrictions requirements than the existing system.

Buying journey improvements

– South Sea Petroleum can improve the customer journey of consumers in the Coal 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.

Building a culture of innovation

– managers at South Sea Petroleum 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 Coal industry.

Using analytics as competitive advantage

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

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Threats South Sea Petroleum External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of South Sea Petroleum are -

Shortening product life cycle

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

Technology acceleration in Forth Industrial Revolution

– South Sea Petroleum has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, South Sea Petroleum needs to keep up with the evolution of technology in the Coal 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.

Regulatory challenges

– South Sea Petroleum 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 Coal industry regulations.

Increasing wage structure of South Sea Petroleum

– 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 South Sea Petroleum.

Easy access to finance

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

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.

High dependence on third party suppliers

– South Sea Petroleum 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.

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.

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 South Sea Petroleum in the Coal sector and impact the bottomline of the organization.

Environmental challenges

– South Sea Petroleum 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. South Sea Petroleum can take advantage of this fund but it will also bring new competitors in the Coal industry.

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. South Sea Petroleum 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, South Sea Petroleum 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 South Sea Petroleum prominent markets.

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 South Sea Petroleum.

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Weighted SWOT Analysis of South Sea Petroleum Template, Example

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

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