SWOT Analysis / TOWS Matrix for Heng Sheng Holding (South Korea)
Based on various researches at Oak Spring University , Heng Sheng Holding is operating in a macro-environment that has been destablized by – technology disruption, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing energy prices, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, wage bills are increasing, etc
Introduction to SWOT Analysis of Heng Sheng Holding
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Heng Sheng Holding can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Heng Sheng Holding, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Heng Sheng Holding 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 Heng Sheng Holding can be done for the following purposes –
1. Strategic planning of Heng Sheng Holding
2. Improving business portfolio management of Heng Sheng Holding
3. Assessing feasibility of the new initiative in South Korea
4. Making a Recreational Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Heng Sheng Holding
Strengths of Heng Sheng Holding | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Heng Sheng Holding are -
High switching costs
– The high switching costs that Heng Sheng Holding 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.
Organizational Resilience of Heng Sheng Holding
– The covid-19 pandemic has put organizational resilience at the centre of everthing Heng Sheng Holding does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Heng Sheng Holding is one of the most innovative firm in Recreational Products sector.
Training and development
– Heng Sheng Holding has one of the best training and development program in Consumer Cyclical 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.
Superior customer experience
– The customer experience strategy of Heng Sheng Holding in Recreational Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Heng Sheng Holding is present in almost all the verticals within the Recreational Products industry. This has provided Heng Sheng Holding 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.
Highly skilled collaborators
– Heng Sheng Holding has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Recreational Products industry. Secondly the value chain collaborators of Heng Sheng Holding have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Heng Sheng Holding 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.
Effective Research and Development (R&D)
– Heng Sheng Holding has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Heng Sheng Holding staying ahead in the Recreational Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Recreational Products industry
- digital transformation varies from industry to industry. For Heng Sheng Holding digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Heng Sheng Holding 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 brand equity
– Heng Sheng Holding has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Heng Sheng Holding to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Recreational Products
– Heng Sheng Holding is one of the leading players in the Recreational Products industry in South Korea. Over the years it has not only transformed the business landscape in the Recreational Products industry in South Korea but also across the existing markets. The ability to lead change has enabled Heng Sheng Holding in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Heng Sheng Holding | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Heng Sheng Holding are -
Slow to strategic competitive environment developments
– As Heng Sheng Holding is one of the leading players in the Recreational Products industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Recreational Products industry in last five years.
Employees’ less understanding of Heng Sheng Holding strategy
– From the outside it seems that the employees of Heng Sheng Holding 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 bargaining power of channel partners in Recreational Products industry
– because of the regulatory requirements in South Korea, Heng Sheng Holding 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 Recreational Products industry.
High dependence on Heng Sheng Holding ‘s star products
– The top 2 products and services of Heng Sheng Holding still accounts for major business revenue. This dependence on star products in Recreational Products industry has resulted into insufficient focus on developing new products, even though Heng Sheng Holding has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the Recreational Products industry, Heng Sheng Holding 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.
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 Heng Sheng Holding supply chain. Even after few cautionary changes, Heng Sheng Holding is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Heng Sheng Holding vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Heng Sheng Holding 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.
Ability to respond to the competition
– As the decision making is very deliberative at Heng Sheng Holding, in the dynamic environment of Recreational Products industry it has struggled to respond to the nimble upstart competition. Heng Sheng Holding 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 Recreational Products industry
– The stress on hiring functional specialists at Heng Sheng Holding 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.
Lack of clear differentiation of Heng Sheng Holding products
– To increase the profitability and margins on the products, Heng Sheng Holding needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Heng Sheng Holding has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Recreational Products industry over the last five years. Heng Sheng Holding 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.
Heng Sheng Holding Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Heng Sheng Holding are -
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 Heng Sheng Holding 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.
Use of Bitcoin and other crypto currencies for transactions in Recreational Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Heng Sheng Holding in the Recreational Products industry. Now Heng Sheng Holding can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Recreational Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Heng Sheng Holding 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. Heng Sheng Holding 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Heng Sheng Holding 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Heng Sheng Holding 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 Heng Sheng Holding to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Heng Sheng Holding can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Heng Sheng Holding can develop new processes and procedures in Recreational Products 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.
Better consumer reach
– The expansion of the 5G network will help Heng Sheng Holding to increase its market reach. Heng Sheng Holding 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.
Building a culture of innovation
– managers at Heng Sheng Holding 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 Recreational Products industry.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Heng Sheng Holding in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Recreational Products industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Heng Sheng Holding has opened avenues for new revenue streams for the organization in Recreational Products industry. This can help Heng Sheng Holding to build a more holistic ecosystem for Heng Sheng Holding products in the Recreational Products 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 Heng Sheng Holding 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 Heng Sheng Holding to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Heng Sheng Holding can use the latest technology developments to improve its manufacturing and designing process in Recreational Products 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.
Threats Heng Sheng Holding External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Heng Sheng Holding are -
Regulatory challenges
– Heng Sheng Holding 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 Recreational Products industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Heng Sheng Holding in Recreational Products industry. The Recreational Products 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Heng Sheng Holding may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Recreational Products sector.
Increasing wage structure of Heng Sheng Holding
– 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 Heng Sheng Holding.
Shortening product life cycle
– it is one of the major threat that Heng Sheng Holding is facing in Recreational Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Recreational Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Heng Sheng Holding can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Heng Sheng Holding has witnessed rapid integration of technology during Covid-19 in the Recreational Products industry. As one of the leading players in the industry, Heng Sheng Holding needs to keep up with the evolution of technology in the Recreational Products 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.
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 Heng Sheng Holding.
Consumer confidence and its impact on Heng Sheng Holding 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 Recreational Products industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Recreational Products industry are lowering. It can presents Heng Sheng Holding with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Recreational Products sector.
High dependence on third party suppliers
– Heng Sheng Holding 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Heng Sheng Holding 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 Heng Sheng Holding prominent markets.
Weighted SWOT Analysis of Heng Sheng Holding Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Heng Sheng Holding 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 Heng Sheng Holding 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 Heng Sheng Holding 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 Heng Sheng Holding 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 Heng Sheng Holding needs to make to build a sustainable competitive advantage.