SWOT Analysis / TOWS Matrix for Kyungdong Pharm (South Korea)
Based on various researches at Oak Spring University , Kyungdong Pharm is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, geopolitical disruptions, increasing government debt because of Covid-19 spendings, wage bills are increasing,
technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kyungdong Pharm can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kyungdong Pharm, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kyungdong Pharm 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 Kyungdong Pharm can be done for the following purposes –
1. Strategic planning of Kyungdong Pharm
2. Improving business portfolio management of Kyungdong Pharm
3. Assessing feasibility of the new initiative in South Korea
4. Making a Major Drugs sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kyungdong Pharm
Strengths of Kyungdong Pharm | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kyungdong Pharm are -
Effective Research and Development (R&D)
– Kyungdong Pharm has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kyungdong Pharm staying ahead in the Major Drugs industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Major Drugs industry
- digital transformation varies from industry to industry. For Kyungdong Pharm digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kyungdong Pharm 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.
Cross disciplinary teams
– Horizontal connected teams at the Kyungdong Pharm 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.
Innovation driven organization
– Kyungdong Pharm is one of the most innovative firm in Major Drugs sector.
High brand equity
– Kyungdong Pharm has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kyungdong Pharm to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Kyungdong Pharm
– The covid-19 pandemic has put organizational resilience at the centre of everthing Kyungdong Pharm does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Major Drugs industry
– Kyungdong Pharm has clearly differentiated products in the market place. This has enabled Kyungdong Pharm to fetch slight price premium compare to the competitors in the Major Drugs industry. The sustainable margins have also helped Kyungdong Pharm to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Kyungdong Pharm is one of the leading players in the Major Drugs industry in South Korea. It is in a position to attract the best talent available in South Korea. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Kyungdong Pharm has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Major Drugs industry. Secondly the value chain collaborators of Kyungdong Pharm have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy of Kyungdong Pharm comprises – understanding the underlying the factors in the Major Drugs 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.
Successful track record of launching new products
– Kyungdong Pharm has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kyungdong Pharm 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.
Strong track record of project management in the Major Drugs industry
– Kyungdong Pharm is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Kyungdong Pharm | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kyungdong Pharm are -
Workers concerns about automation
– As automation is fast increasing in the Major Drugs industry, Kyungdong Pharm 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.
Employees’ less understanding of Kyungdong Pharm strategy
– From the outside it seems that the employees of Kyungdong Pharm 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 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 Kyungdong Pharm supply chain. Even after few cautionary changes, Kyungdong Pharm is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kyungdong Pharm vulnerable to further global disruptions in South East Asia.
High dependence on Kyungdong Pharm ‘s star products
– The top 2 products and services of Kyungdong Pharm still accounts for major business revenue. This dependence on star products in Major Drugs industry has resulted into insufficient focus on developing new products, even though Kyungdong Pharm has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative at Kyungdong Pharm, in the dynamic environment of Major Drugs industry it has struggled to respond to the nimble upstart competition. Kyungdong Pharm has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Kyungdong Pharm has a high cash cycle compare to other players in the Major Drugs 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 Major Drugs industry
– because of the regulatory requirements in South Korea, Kyungdong Pharm 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 Major Drugs industry.
Low market penetration in new markets
– Outside its home market of South Korea, Kyungdong Pharm needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– From the 10K / annual statement of Kyungdong Pharm, it seems that company is thinking out the frontier risks that can impact Major Drugs industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Kyungdong Pharm products
– To increase the profitability and margins on the products, Kyungdong Pharm needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Kyungdong Pharm is one of the leading players in the Major Drugs industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Major Drugs industry in last five years.
Kyungdong Pharm Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kyungdong Pharm are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kyungdong Pharm 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 Kyungdong Pharm to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Kyungdong Pharm has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Major Drugs sector. This continuous investment in analytics has enabled Kyungdong Pharm to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kyungdong Pharm to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Major Drugs industry, but it has also influenced the consumer preferences. Kyungdong Pharm can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Kyungdong Pharm to increase its market reach. Kyungdong Pharm 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.
Use of Bitcoin and other crypto currencies for transactions in Major Drugs industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kyungdong Pharm in the Major Drugs industry. Now Kyungdong Pharm can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Kyungdong Pharm 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 Major Drugs industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Major Drugs industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kyungdong Pharm 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. Kyungdong Pharm 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kyungdong Pharm is facing challenges because of the dominance of functional experts in the organization. Kyungdong Pharm can utilize new technology in the field of Major Drugs industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Kyungdong Pharm has opened avenues for new revenue streams for the organization in Major Drugs industry. This can help Kyungdong Pharm to build a more holistic ecosystem for Kyungdong Pharm products in the Major Drugs industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kyungdong Pharm 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 Kyungdong Pharm to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kyungdong Pharm can use these opportunities to build new business models that can help the communities that Kyungdong Pharm operates in. Secondly it can use opportunities from government spending in Major Drugs sector.
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. Kyungdong Pharm can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Kyungdong Pharm 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.
Threats Kyungdong Pharm External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kyungdong Pharm are -
Regulatory challenges
– Kyungdong Pharm 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 Major Drugs industry regulations.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kyungdong Pharm may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Major Drugs 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. Kyungdong Pharm needs to understand the core reasons impacting the Major Drugs industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Major Drugs industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kyungdong Pharm can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Kyungdong Pharm 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. Kyungdong Pharm can take advantage of this fund but it will also bring new competitors in the Major Drugs industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kyungdong Pharm in Major Drugs industry. The Major Drugs 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.
Increasing wage structure of Kyungdong Pharm
– 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 Kyungdong Pharm.
Stagnating economy with rate increase
– Kyungdong Pharm 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 Major Drugs industry.
Shortening product life cycle
– it is one of the major threat that Kyungdong Pharm is facing in Major Drugs sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Kyungdong Pharm business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Major Drugs industry are lowering. It can presents Kyungdong Pharm with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Major Drugs sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kyungdong Pharm 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 Kyungdong Pharm prominent markets.
Weighted SWOT Analysis of Kyungdong Pharm Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kyungdong Pharm 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 Kyungdong Pharm 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 Kyungdong Pharm 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 Kyungdong Pharm 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 Kyungdong Pharm needs to make to build a sustainable competitive advantage.