SWOT Analysis / TOWS Matrix for Shenhua Intl (Australia)
Based on various researches at Oak Spring University , Shenhua Intl is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shenhua Intl can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shenhua Intl, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shenhua Intl 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 Shenhua Intl can be done for the following purposes –
1. Strategic planning of Shenhua Intl
2. Improving business portfolio management of Shenhua Intl
3. Assessing feasibility of the new initiative in Australia
4. Making a Textiles - Non Apparel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shenhua Intl
Strengths of Shenhua Intl | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shenhua Intl are -
Learning organization
- Shenhua Intl 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 Shenhua Intl is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shenhua Intl emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Textiles - Non Apparel industry
– Shenhua Intl is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Shenhua Intl
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shenhua Intl does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Shenhua Intl has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shenhua Intl to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Shenhua Intl is one of the most innovative firm in Textiles - Non Apparel sector.
Diverse revenue streams
– Shenhua Intl is present in almost all the verticals within the Textiles - Non Apparel industry. This has provided Shenhua Intl 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.
Superior customer experience
– The customer experience strategy of Shenhua Intl in Textiles - Non Apparel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Shenhua Intl has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Textiles - Non Apparel industry. Secondly the value chain collaborators of Shenhua Intl have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Textiles - Non Apparel
– Shenhua Intl is one of the leading players in the Textiles - Non Apparel industry in Australia. Over the years it has not only transformed the business landscape in the Textiles - Non Apparel industry in Australia but also across the existing markets. The ability to lead change has enabled Shenhua Intl in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Shenhua Intl 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.
Sustainable margins compare to other players in Textiles - Non Apparel industry
– Shenhua Intl has clearly differentiated products in the market place. This has enabled Shenhua Intl to fetch slight price premium compare to the competitors in the Textiles - Non Apparel industry. The sustainable margins have also helped Shenhua Intl to invest into research and development (R&D) and innovation.
Digital Transformation in Textiles - Non Apparel industry
- digital transformation varies from industry to industry. For Shenhua Intl digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shenhua Intl 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.
Weaknesses of Shenhua Intl | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shenhua Intl are -
Slow decision making process
– As mentioned earlier in the report, Shenhua Intl has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Textiles - Non Apparel industry over the last five years. Shenhua Intl 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.
Products dominated business model
– Even though Shenhua Intl has some of the most successful models in the Textiles - Non Apparel industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Shenhua Intl should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Shenhua Intl products
– To increase the profitability and margins on the products, Shenhua Intl needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Shenhua Intl has high operating costs in the Textiles - Non Apparel industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shenhua Intl lucrative customers.
Low market penetration in new markets
– Outside its home market of Australia, Shenhua Intl needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Shenhua Intl has a high cash cycle compare to other players in the Textiles - Non Apparel industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shenhua Intl is slow explore the new channels of communication. These new channels of communication can help Shenhua Intl to provide better information regarding Textiles - Non Apparel products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that Shenhua Intl needs to have more collaboration between its sales team and marketing team. Sales professionals in the Textiles - Non Apparel industry have deep experience in developing customer relationships. Marketing department at Shenhua Intl can leverage the sales team experience to cultivate customer relationships as Shenhua Intl is planning to shift buying processes online.
High dependence on Shenhua Intl ‘s star products
– The top 2 products and services of Shenhua Intl still accounts for major business revenue. This dependence on star products in Textiles - Non Apparel industry has resulted into insufficient focus on developing new products, even though Shenhua Intl has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Shenhua Intl 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 Textiles - Non Apparel industry using digital technology.
Compensation and incentives
– The revenue per employee of Shenhua Intl is just above the Textiles - Non Apparel 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.
Shenhua Intl Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shenhua Intl are -
Building a culture of innovation
– managers at Shenhua Intl 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 Textiles - Non Apparel industry.
Using analytics as competitive advantage
– Shenhua Intl has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Textiles - Non Apparel sector. This continuous investment in analytics has enabled Shenhua Intl to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shenhua Intl to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Shenhua Intl 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.
Developing new processes and practices
– Shenhua Intl can develop new processes and procedures in Textiles - Non Apparel 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.
Loyalty marketing
– Shenhua Intl 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.
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. Shenhua Intl can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Shenhua Intl can improve the customer journey of consumers in the Textiles - Non Apparel 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shenhua Intl 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 Shenhua Intl to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Shenhua Intl can use the latest technology developments to improve its manufacturing and designing process in Textiles - Non Apparel 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shenhua Intl can use these opportunities to build new business models that can help the communities that Shenhua Intl operates in. Secondly it can use opportunities from government spending in Textiles - Non Apparel sector.
Use of Bitcoin and other crypto currencies for transactions in Textiles - Non Apparel industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shenhua Intl in the Textiles - Non Apparel industry. Now Shenhua Intl can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Shenhua Intl has opened avenues for new revenue streams for the organization in Textiles - Non Apparel industry. This can help Shenhua Intl to build a more holistic ecosystem for Shenhua Intl products in the Textiles - Non Apparel industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Textiles - Non Apparel industry, but it has also influenced the consumer preferences. Shenhua Intl can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Shenhua Intl External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shenhua Intl are -
Stagnating economy with rate increase
– Shenhua Intl 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 Textiles - Non Apparel industry.
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 Shenhua Intl.
Consumer confidence and its impact on Shenhua Intl 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 Textiles - Non Apparel industry and other sectors.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shenhua Intl 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 Shenhua Intl prominent markets.
Increasing wage structure of Shenhua Intl
– 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 Shenhua Intl.
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.
Shortening product life cycle
– it is one of the major threat that Shenhua Intl is facing in Textiles - Non Apparel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Shenhua Intl 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Textiles - Non Apparel industry are lowering. It can presents Shenhua Intl with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Textiles - Non Apparel sector.
Regulatory challenges
– Shenhua Intl 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 Textiles - Non Apparel industry regulations.
High dependence on third party suppliers
– Shenhua Intl 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shenhua Intl in Textiles - Non Apparel industry. The Textiles - Non Apparel 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.
Weighted SWOT Analysis of Shenhua Intl Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shenhua Intl 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 Shenhua Intl 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 Shenhua Intl 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 Shenhua Intl 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 Shenhua Intl needs to make to build a sustainable competitive advantage.
