SWOT Analysis / TOWS Matrix for AVIC Aviation Engine (China)
Based on various researches at Oak Spring University , AVIC Aviation Engine is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, there is backlash against globalization, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic ,
increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of AVIC Aviation Engine
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that AVIC Aviation Engine can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the AVIC Aviation Engine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which AVIC Aviation Engine 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 AVIC Aviation Engine can be done for the following purposes –
1. Strategic planning of AVIC Aviation Engine
2. Improving business portfolio management of AVIC Aviation Engine
3. Assessing feasibility of the new initiative in China
4. Making a Aerospace & Defense sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of AVIC Aviation Engine
Strengths of AVIC Aviation Engine | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of AVIC Aviation Engine are -
Successful track record of launching new products
– AVIC Aviation Engine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. AVIC Aviation Engine 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.
Digital Transformation in Aerospace & Defense industry
- digital transformation varies from industry to industry. For AVIC Aviation Engine digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. AVIC Aviation Engine 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
– AVIC Aviation Engine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled AVIC Aviation Engine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Aerospace & Defense
– AVIC Aviation Engine is one of the leading players in the Aerospace & Defense industry in China. Over the years it has not only transformed the business landscape in the Aerospace & Defense industry in China but also across the existing markets. The ability to lead change has enabled AVIC Aviation Engine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- AVIC Aviation Engine 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 AVIC Aviation Engine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at AVIC Aviation Engine emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– AVIC Aviation Engine is one of the leading players in the Aerospace & Defense 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.
Diverse revenue streams
– AVIC Aviation Engine is present in almost all the verticals within the Aerospace & Defense industry. This has provided AVIC Aviation Engine 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.
Sustainable margins compare to other players in Aerospace & Defense industry
– AVIC Aviation Engine has clearly differentiated products in the market place. This has enabled AVIC Aviation Engine to fetch slight price premium compare to the competitors in the Aerospace & Defense industry. The sustainable margins have also helped AVIC Aviation Engine to invest into research and development (R&D) and innovation.
Analytics focus
– AVIC Aviation Engine is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Aerospace & Defense industry. The technology infrastructure of China is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Highly skilled collaborators
– AVIC Aviation Engine has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Aerospace & Defense industry. Secondly the value chain collaborators of AVIC Aviation Engine have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management in the Aerospace & Defense industry
– AVIC Aviation Engine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of AVIC Aviation Engine in the Capital Goods sector have low bargaining power. AVIC Aviation Engine has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps AVIC Aviation Engine to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of AVIC Aviation Engine | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AVIC Aviation Engine are -
High cash cycle compare to competitors
AVIC Aviation Engine has a high cash cycle compare to other players in the Aerospace & Defense industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of AVIC Aviation Engine strategy
– From the outside it seems that the employees of AVIC Aviation Engine 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.
Compensation and incentives
– The revenue per employee of AVIC Aviation Engine is just above the Aerospace & Defense 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.
Increasing silos among functional specialists
– The organizational structure of AVIC Aviation Engine is dominated by functional specialists. It is not different from other players in the Aerospace & Defense industry, but AVIC Aviation Engine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help AVIC Aviation Engine to focus more on services in the Aerospace & Defense industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, AVIC Aviation Engine has high operating costs in the Aerospace & Defense industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract AVIC Aviation Engine lucrative customers.
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 AVIC Aviation Engine supply chain. Even after few cautionary changes, AVIC Aviation Engine is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left AVIC Aviation Engine vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, AVIC Aviation Engine has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Aerospace & Defense industry over the last five years. AVIC Aviation Engine 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, AVIC Aviation Engine is slow explore the new channels of communication. These new channels of communication can help AVIC Aviation Engine to provide better information regarding Aerospace & Defense products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring in Aerospace & Defense industry
– The stress on hiring functional specialists at AVIC Aviation Engine 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.
Need for greater diversity
– AVIC Aviation Engine has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative at AVIC Aviation Engine, in the dynamic environment of Aerospace & Defense industry it has struggled to respond to the nimble upstart competition. AVIC Aviation Engine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
AVIC Aviation Engine Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of AVIC Aviation Engine are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Aerospace & Defense industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. AVIC Aviation Engine 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. AVIC Aviation Engine 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for AVIC Aviation Engine in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Aerospace & Defense industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for AVIC Aviation Engine 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.
Use of Bitcoin and other crypto currencies for transactions in Aerospace & Defense industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for AVIC Aviation Engine in the Aerospace & Defense industry. Now AVIC Aviation Engine can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help AVIC Aviation Engine to increase its market reach. AVIC Aviation Engine 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Aerospace & Defense industry, but it has also influenced the consumer preferences. AVIC Aviation Engine can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for AVIC Aviation Engine 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 AVIC Aviation Engine to hire the very best people irrespective of their geographical location.
Buying journey improvements
– AVIC Aviation Engine can improve the customer journey of consumers in the Aerospace & Defense 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.
Using analytics as competitive advantage
– AVIC Aviation Engine has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Aerospace & Defense sector. This continuous investment in analytics has enabled AVIC Aviation Engine to build a competitive advantage using analytics. The analytics driven competitive advantage can help AVIC Aviation Engine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– AVIC Aviation Engine can develop new processes and procedures in Aerospace & Defense 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects AVIC Aviation Engine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– AVIC Aviation Engine can use the latest technology developments to improve its manufacturing and designing process in Aerospace & Defense 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.
Leveraging digital technologies
– AVIC Aviation Engine 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.
Threats AVIC Aviation Engine External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of AVIC Aviation Engine are -
Stagnating economy with rate increase
– AVIC Aviation Engine 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 Aerospace & Defense industry.
Environmental challenges
– AVIC Aviation Engine 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. AVIC Aviation Engine can take advantage of this fund but it will also bring new competitors in the Aerospace & Defense industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for AVIC Aviation Engine in Aerospace & Defense industry. The Aerospace & Defense 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.
Technology acceleration in Forth Industrial Revolution
– AVIC Aviation Engine has witnessed rapid integration of technology during Covid-19 in the Aerospace & Defense industry. As one of the leading players in the industry, AVIC Aviation Engine needs to keep up with the evolution of technology in the Aerospace & Defense 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.
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. AVIC Aviation Engine needs to understand the core reasons impacting the Aerospace & Defense industry. This will help it in building a better workplace.
Consumer confidence and its impact on AVIC Aviation Engine 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 Aerospace & Defense industry and other sectors.
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.
Easy access to finance
– Easy access to finance in Aerospace & Defense industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. AVIC Aviation Engine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– AVIC Aviation Engine 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Aerospace & Defense industry are lowering. It can presents AVIC Aviation Engine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Aerospace & Defense sector.
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 AVIC Aviation Engine in the Aerospace & Defense sector and impact the bottomline of the organization.
Increasing wage structure of AVIC Aviation Engine
– 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 AVIC Aviation Engine.
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.
Weighted SWOT Analysis of AVIC Aviation Engine Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at AVIC Aviation Engine 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 AVIC Aviation Engine 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 AVIC Aviation Engine 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 AVIC Aviation Engine 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 AVIC Aviation Engine needs to make to build a sustainable competitive advantage.