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 – challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing commodity prices, supply chains are disrupted by pandemic , 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 -

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.

Low bargaining power of suppliers

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

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.

Learning organization

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

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.

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.

Analytics focus

– South Sea Petroleum 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 Coal 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.

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.

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.

Highly skilled collaborators

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

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.

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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 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.

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.

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.

Slow decision making process

– As mentioned earlier in the report, South Sea Petroleum has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Coal industry over the last five years. South Sea Petroleum 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.

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.

Skills based hiring in Coal industry

– The stress on hiring functional specialists at South Sea Petroleum 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.

Employees’ less understanding of South Sea Petroleum strategy

– From the outside it seems that the employees of South Sea Petroleum 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.

High operating costs

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

Low market penetration in new markets

– Outside its home market of Hong Kong, South Sea Petroleum needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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 -

Developing new processes and practices

– South Sea Petroleum can develop new processes and procedures in Coal 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 South Sea Petroleum 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.

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.

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.

Finding new ways to collaborate

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

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.

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.

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.

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.

Better consumer reach

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

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.

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.

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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 -

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.

Consumer confidence and its impact on South Sea Petroleum 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 Coal industry and other sectors.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for South Sea Petroleum in Coal industry. The Coal 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.

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 South Sea Petroleum 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 South Sea Petroleum.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, South Sea Petroleum may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Coal 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. South Sea Petroleum needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.

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.

Barriers of entry lowering

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

Stagnating economy with rate increase

– South Sea Petroleum 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 Coal industry.

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 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.

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.

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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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