Inner Mongolia Yili (600887) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Inner Mongolia Yili (China)

Based on various researches at Oak Spring University , Inner Mongolia Yili is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, etc

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Introduction to SWOT Analysis of Inner Mongolia Yili

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Inner Mongolia Yili can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inner Mongolia Yili, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inner Mongolia Yili 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 Inner Mongolia Yili can be done for the following purposes –
1. Strategic planning of Inner Mongolia Yili
2. Improving business portfolio management of Inner Mongolia Yili
3. Assessing feasibility of the new initiative in China
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Inner Mongolia Yili

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Strengths of Inner Mongolia Yili | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Inner Mongolia Yili are -

Innovation driven organization

– Inner Mongolia Yili is one of the most innovative firm in Food Processing sector.

Cross disciplinary teams

– Horizontal connected teams at the Inner Mongolia Yili 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)

– Inner Mongolia Yili has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Inner Mongolia Yili staying ahead in the Food Processing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

High brand equity

– Inner Mongolia Yili has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Inner Mongolia Yili to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Sustainable margins compare to other players in Food Processing industry

– Inner Mongolia Yili has clearly differentiated products in the market place. This has enabled Inner Mongolia Yili to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped Inner Mongolia Yili to invest into research and development (R&D) and innovation.

Highly skilled collaborators

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

Successful track record of launching new products

– Inner Mongolia Yili has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Inner Mongolia Yili 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.

Ability to lead change in Food Processing

– Inner Mongolia Yili is one of the leading players in the Food Processing industry in China. Over the years it has not only transformed the business landscape in the Food Processing industry in China but also across the existing markets. The ability to lead change has enabled Inner Mongolia Yili in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Ability to recruit top talent

– Inner Mongolia Yili is one of the leading players in the Food Processing industry in China. It is in a position to attract the best talent available in China. The firm has a robust talent identification program that helps in identifying the brightest.

Low bargaining power of suppliers

– Suppliers of Inner Mongolia Yili in the Consumer/Non-Cyclical sector have low bargaining power. Inner Mongolia Yili has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inner Mongolia Yili to manage not only supply disruptions but also source products at highly competitive prices.

Operational resilience

– The operational resilience strategy of Inner Mongolia Yili comprises – understanding the underlying the factors in the Food Processing 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.

Superior customer experience

– The customer experience strategy of Inner Mongolia Yili in Food Processing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Inner Mongolia Yili | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Inner Mongolia Yili are -

High cash cycle compare to competitors

Inner Mongolia Yili has a high cash cycle compare to other players in the Food Processing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Workers concerns about automation

– As automation is fast increasing in the Food Processing industry, Inner Mongolia Yili 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 Inner Mongolia Yili supply chain. Even after few cautionary changes, Inner Mongolia Yili is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Inner Mongolia Yili vulnerable to further global disruptions in South East Asia.

High operating costs

– Compare to the competitors, Inner Mongolia Yili has high operating costs in the Food Processing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Inner Mongolia Yili lucrative customers.

Lack of clear differentiation of Inner Mongolia Yili products

– To increase the profitability and margins on the products, Inner Mongolia Yili needs to provide more differentiated products than what it is currently offering in the marketplace.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Inner Mongolia Yili is slow explore the new channels of communication. These new channels of communication can help Inner Mongolia Yili to provide better information regarding Food Processing products and services. It can also build an online community to further reach out to potential customers.

Skills based hiring in Food Processing industry

– The stress on hiring functional specialists at Inner Mongolia Yili 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.

Increasing silos among functional specialists

– The organizational structure of Inner Mongolia Yili is dominated by functional specialists. It is not different from other players in the Food Processing industry, but Inner Mongolia Yili needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Inner Mongolia Yili to focus more on services in the Food Processing industry rather than just following the product oriented approach.

Compensation and incentives

– The revenue per employee of Inner Mongolia Yili is just above the Food Processing 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.

Aligning sales with marketing

– From the outside it seems that Inner Mongolia Yili needs to have more collaboration between its sales team and marketing team. Sales professionals in the Food Processing industry have deep experience in developing customer relationships. Marketing department at Inner Mongolia Yili can leverage the sales team experience to cultivate customer relationships as Inner Mongolia Yili is planning to shift buying processes online.

High dependence on Inner Mongolia Yili ‘s star products

– The top 2 products and services of Inner Mongolia Yili still accounts for major business revenue. This dependence on star products in Food Processing industry has resulted into insufficient focus on developing new products, even though Inner Mongolia Yili has relatively successful track record of launching new products.

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Inner Mongolia Yili Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Inner Mongolia Yili are -

Using analytics as competitive advantage

– Inner Mongolia Yili has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled Inner Mongolia Yili to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inner Mongolia Yili to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inner Mongolia Yili can use these opportunities to build new business models that can help the communities that Inner Mongolia Yili operates in. Secondly it can use opportunities from government spending in Food Processing sector.

Use of Bitcoin and other crypto currencies for transactions in Food Processing industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Inner Mongolia Yili in the Food Processing industry. Now Inner Mongolia Yili can target international markets with far fewer capital restrictions requirements than the existing system.

Finding new ways to collaborate

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

Leveraging digital technologies

– Inner Mongolia Yili 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 Inner Mongolia Yili 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 Inner Mongolia Yili to hire the very best people irrespective of their geographical location.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Inner Mongolia Yili is facing challenges because of the dominance of functional experts in the organization. Inner Mongolia Yili can utilize new technology in the field of Food Processing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Manufacturing automation

– Inner Mongolia Yili can use the latest technology developments to improve its manufacturing and designing process in Food Processing 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.

Buying journey improvements

– Inner Mongolia Yili can improve the customer journey of consumers in the Food Processing 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.

Loyalty marketing

– Inner Mongolia Yili 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. Inner Mongolia Yili can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Building a culture of innovation

– managers at Inner Mongolia Yili 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 Food Processing industry.

Low interest rates

– Even though inflation is raising its head in most developed economies, Inner Mongolia Yili 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.

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Threats Inner Mongolia Yili External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Inner Mongolia Yili are -

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 Inner Mongolia Yili business can come under increasing regulations regarding data privacy, data security, etc.

Environmental challenges

– Inner Mongolia Yili 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. Inner Mongolia Yili can take advantage of this fund but it will also bring new competitors in the Food Processing 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.

Stagnating economy with rate increase

– Inner Mongolia Yili 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 Food Processing 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 Inner Mongolia Yili.

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. Inner Mongolia Yili needs to understand the core reasons impacting the Food Processing industry. This will help it in building a better workplace.

Shortening product life cycle

– it is one of the major threat that Inner Mongolia Yili is facing in Food Processing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

High dependence on third party suppliers

– Inner Mongolia Yili 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.

Easy access to finance

– Easy access to finance in Food Processing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Inner Mongolia Yili 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

– Inner Mongolia Yili has witnessed rapid integration of technology during Covid-19 in the Food Processing industry. As one of the leading players in the industry, Inner Mongolia Yili needs to keep up with the evolution of technology in the Food Processing 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.

Increasing wage structure of Inner Mongolia Yili

– 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 Inner Mongolia Yili.

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.

Regulatory challenges

– Inner Mongolia Yili 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 Food Processing industry regulations.

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Weighted SWOT Analysis of Inner Mongolia Yili Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Inner Mongolia Yili 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 Inner Mongolia Yili 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 Inner Mongolia Yili 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 Inner Mongolia Yili 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 Inner Mongolia Yili needs to make to build a sustainable competitive advantage.

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