Based on various researches at Oak Spring University , Charoen Pokphand Foods plc is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , increasing energy prices, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Charoen Pokphand Foods plc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Charoen Pokphand Foods plc can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Charoen Pokphand Foods plc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc can be done for the following purposes –
1. Strategic planning of Charoen Pokphand Foods plc
2. Improving business portfolio management of Charoen Pokphand Foods plc
3. Assessing feasibility of the new initiative in United States
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Charoen Pokphand Foods plc
Strengths of Charoen Pokphand Foods plc | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Charoen Pokphand Foods plc are -
Strong track record of project management in the industry
– Charoen Pokphand Foods plc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to lead change in
– Charoen Pokphand Foods plc is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled Charoen Pokphand Foods plc in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Charoen Pokphand Foods plc is one of the most innovative firm in sector.
Diverse revenue streams
– Charoen Pokphand Foods plc is present in almost all the verticals within the industry. This has provided Charoen Pokphand Foods plc 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.
High brand equity
– Charoen Pokphand Foods plc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Charoen Pokphand Foods plc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Charoen Pokphand Foods plc
– The covid-19 pandemic has put organizational resilience at the centre of everthing Charoen Pokphand Foods plc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Charoen Pokphand Foods plc 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.
Low bargaining power of suppliers
– Suppliers of Charoen Pokphand Foods plc in the sector have low bargaining power. Charoen Pokphand Foods plc has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Charoen Pokphand Foods plc to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Charoen Pokphand Foods plc has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Charoen Pokphand Foods plc staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in industry
– Charoen Pokphand Foods plc has clearly differentiated products in the market place. This has enabled Charoen Pokphand Foods plc to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Charoen Pokphand Foods plc to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Charoen Pokphand Foods plc is one of the leading players in the industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Charoen Pokphand Foods plc in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of Charoen Pokphand Foods plc | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Charoen Pokphand Foods plc are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Charoen Pokphand Foods plc is slow explore the new channels of communication. These new channels of communication can help Charoen Pokphand Foods plc to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Charoen Pokphand Foods plc strategy
– From the outside it seems that the employees of Charoen Pokphand Foods plc 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 cash cycle compare to competitors
Charoen Pokphand Foods plc has a high cash cycle compare to other players in the 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 decision making process
– As mentioned earlier in the report, Charoen Pokphand Foods plc has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Charoen Pokphand Foods plc 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.
No frontier risks strategy
– From the 10K / annual statement of Charoen Pokphand Foods plc, it seems that company is thinking out the frontier risks that can impact 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.
Products dominated business model
– Even though Charoen Pokphand Foods plc has some of the most successful models in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Charoen Pokphand Foods plc should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Charoen Pokphand Foods plc products
– To increase the profitability and margins on the products, Charoen Pokphand Foods plc needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that Charoen Pokphand Foods plc needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department at Charoen Pokphand Foods plc can leverage the sales team experience to cultivate customer relationships as Charoen Pokphand Foods plc is planning to shift buying processes online.
High dependence on Charoen Pokphand Foods plc ‘s star products
– The top 2 products and services of Charoen Pokphand Foods plc still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Charoen Pokphand Foods plc has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Charoen Pokphand Foods plc is dominated by functional specialists. It is not different from other players in the industry, but Charoen Pokphand Foods plc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Charoen Pokphand Foods plc to focus more on services in the industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Charoen Pokphand Foods plc is just above the 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.
Charoen Pokphand Foods plc Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Charoen Pokphand Foods plc are -
Developing new processes and practices
– Charoen Pokphand Foods plc can develop new processes and procedures in 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Charoen Pokphand Foods plc can use these opportunities to build new business models that can help the communities that Charoen Pokphand Foods plc operates in. Secondly it can use opportunities from government spending in sector.
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 Charoen Pokphand Foods plc 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Charoen Pokphand Foods plc is facing challenges because of the dominance of functional experts in the organization. Charoen Pokphand Foods plc can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Charoen Pokphand Foods plc 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.
Building a culture of innovation
– managers at Charoen Pokphand Foods plc 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 industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Charoen Pokphand Foods plc 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Charoen Pokphand Foods plc has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled Charoen Pokphand Foods plc to build a competitive advantage using analytics. The analytics driven competitive advantage can help Charoen Pokphand Foods plc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Charoen Pokphand Foods plc can use the latest technology developments to improve its manufacturing and designing process in 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Charoen Pokphand Foods plc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Charoen Pokphand Foods plc to increase its market reach. Charoen Pokphand Foods plc 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Charoen Pokphand Foods plc External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Charoen Pokphand Foods plc are -
Environmental challenges
– Charoen Pokphand Foods plc 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. Charoen Pokphand Foods plc can take advantage of this fund but it will also bring new competitors in the industry.
Consumer confidence and its impact on Charoen Pokphand Foods plc 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 industry and other sectors.
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 Charoen Pokphand Foods plc in the sector and impact the bottomline of the organization.
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. Charoen Pokphand Foods plc needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc prominent markets.
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 Charoen Pokphand Foods plc business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Charoen Pokphand Foods plc in industry. The 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.
Stagnating economy with rate increase
– Charoen Pokphand Foods plc 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 industry.
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
– Charoen Pokphand Foods plc 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.
Regulatory challenges
– Charoen Pokphand Foods plc 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 industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Charoen Pokphand Foods plc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Charoen Pokphand Foods plc
– 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 Charoen Pokphand Foods plc.
Weighted SWOT Analysis of Charoen Pokphand Foods plc Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc 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 Charoen Pokphand Foods plc needs to make to build a sustainable competitive advantage.
