Maanshan Iron & Steel (600808) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Maanshan Iron & Steel (China)

Based on various researches at Oak Spring University , Maanshan Iron & Steel is operating in a macro-environment that has been destablized by – technology disruption, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing commodity prices, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Maanshan Iron & Steel

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

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Strengths of Maanshan Iron & Steel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Maanshan Iron & Steel are -

Diverse revenue streams

– Maanshan Iron & Steel is present in almost all the verticals within the Iron & Steel industry. This has provided Maanshan Iron & Steel 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.

Learning organization

- Maanshan Iron & Steel 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 Maanshan Iron & Steel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Maanshan Iron & Steel emphasize – knowledge, initiative, and innovation.

Ability to recruit top talent

– Maanshan Iron & Steel is one of the leading players in the Iron & Steel 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.

Highly skilled collaborators

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

High brand equity

– Maanshan Iron & Steel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Maanshan Iron & Steel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to lead change in Iron & Steel

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

Successful track record of launching new products

– Maanshan Iron & Steel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Maanshan Iron & Steel 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.

Effective Research and Development (R&D)

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

High switching costs

– The high switching costs that Maanshan Iron & Steel 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.

Analytics focus

– Maanshan Iron & Steel 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 Iron & Steel 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.

Low bargaining power of suppliers

– Suppliers of Maanshan Iron & Steel in the Basic Materials sector have low bargaining power. Maanshan Iron & Steel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Maanshan Iron & Steel to manage not only supply disruptions but also source products at highly competitive prices.

Superior customer experience

– The customer experience strategy of Maanshan Iron & Steel in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

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Weaknesses of Maanshan Iron & Steel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Maanshan Iron & Steel are -

Slow to harness new channels of communication

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

Workers concerns about automation

– As automation is fast increasing in the Iron & Steel industry, Maanshan Iron & Steel 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.

Aligning sales with marketing

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

Skills based hiring in Iron & Steel industry

– The stress on hiring functional specialists at Maanshan Iron & Steel 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.

Low market penetration in new markets

– Outside its home market of China, Maanshan Iron & Steel needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High dependence on Maanshan Iron & Steel ‘s star products

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

Slow decision making process

– As mentioned earlier in the report, Maanshan Iron & Steel has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Iron & Steel industry over the last five years. Maanshan Iron & Steel 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.

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 Maanshan Iron & Steel supply chain. Even after few cautionary changes, Maanshan Iron & Steel is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Maanshan Iron & Steel vulnerable to further global disruptions in South East Asia.

Need for greater diversity

– Maanshan Iron & Steel 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.

High operating costs

– Compare to the competitors, Maanshan Iron & Steel has high operating costs in the Iron & Steel industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Maanshan Iron & Steel lucrative customers.

Ability to respond to the competition

– As the decision making is very deliberative at Maanshan Iron & Steel, in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. Maanshan Iron & Steel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Maanshan Iron & Steel Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Maanshan Iron & Steel are -

Developing new processes and practices

– Maanshan Iron & Steel can develop new processes and procedures in Iron & Steel 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 Maanshan Iron & Steel to increase its market reach. Maanshan Iron & Steel 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, Maanshan Iron & Steel 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 Maanshan Iron & Steel to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. Maanshan Iron & Steel can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Maanshan Iron & Steel 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 Maanshan Iron & Steel to hire the very best people irrespective of their geographical location.

Building a culture of innovation

– managers at Maanshan Iron & Steel 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 Iron & Steel industry.

Redefining models of collaboration and team work

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

Creating value in data economy

– The success of analytics program of Maanshan Iron & Steel has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help Maanshan Iron & Steel to build a more holistic ecosystem for Maanshan Iron & Steel products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Loyalty marketing

– Maanshan Iron & Steel 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Iron & Steel industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Maanshan Iron & Steel 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. Maanshan Iron & Steel 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.

Increase in government spending

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

Buying journey improvements

– Maanshan Iron & Steel can improve the customer journey of consumers in the Iron & Steel 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Maanshan Iron & Steel 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 Maanshan Iron & Steel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Maanshan Iron & Steel are -

Stagnating economy with rate increase

– Maanshan Iron & Steel 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 Iron & Steel industry.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Iron & Steel industry are lowering. It can presents Maanshan Iron & Steel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Iron & Steel sector.

Consumer confidence and its impact on Maanshan Iron & Steel 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 Iron & Steel industry and other sectors.

Regulatory challenges

– Maanshan Iron & Steel 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 Iron & Steel industry regulations.

Instability in the European markets

– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Maanshan Iron & Steel will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Maanshan Iron & Steel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Iron & Steel sector.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Maanshan Iron & Steel in Iron & Steel industry. The Iron & Steel industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Increasing wage structure of Maanshan Iron & Steel

– 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 Maanshan Iron & Steel.

Technology acceleration in Forth Industrial Revolution

– Maanshan Iron & Steel has witnessed rapid integration of technology during Covid-19 in the Iron & Steel industry. As one of the leading players in the industry, Maanshan Iron & Steel needs to keep up with the evolution of technology in the Iron & Steel 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.

Environmental challenges

– Maanshan Iron & Steel 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. Maanshan Iron & Steel can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.

High dependence on third party suppliers

– Maanshan Iron & Steel 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.

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 Maanshan Iron & Steel in the Iron & Steel sector and impact the bottomline of the organization.

Shortening product life cycle

– it is one of the major threat that Maanshan Iron & Steel is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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Weighted SWOT Analysis of Maanshan Iron & Steel Template, Example

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

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