China Merchants Energy Shipping (601872) SWOT Analysis / TOWS Matrix / MBA Resources
Water Transportation
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Merchants Energy Shipping (China)
Based on various researches at Oak Spring University , China Merchants Energy Shipping is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, wage bills are increasing, increasing commodity prices,
increasing energy prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of China Merchants Energy Shipping
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Merchants Energy Shipping can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Merchants Energy Shipping, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Merchants Energy Shipping 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 China Merchants Energy Shipping can be done for the following purposes –
1. Strategic planning of China Merchants Energy Shipping
2. Improving business portfolio management of China Merchants Energy Shipping
3. Assessing feasibility of the new initiative in China
4. Making a Water Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Merchants Energy Shipping
Strengths of China Merchants Energy Shipping | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Merchants Energy Shipping are -
Digital Transformation in Water Transportation industry
- digital transformation varies from industry to industry. For China Merchants Energy Shipping digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Merchants Energy Shipping 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.
Highly skilled collaborators
– China Merchants Energy Shipping has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Transportation industry. Secondly the value chain collaborators of China Merchants Energy Shipping have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that China Merchants Energy Shipping 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.
Operational resilience
– The operational resilience strategy of China Merchants Energy Shipping comprises – understanding the underlying the factors in the Water Transportation 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.
Training and development
– China Merchants Energy Shipping has one of the best training and development program in Transportation industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the China Merchants Energy Shipping 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 China Merchants Energy Shipping in the Transportation sector have low bargaining power. China Merchants Energy Shipping has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps China Merchants Energy Shipping to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– China Merchants Energy Shipping is one of the most innovative firm in Water Transportation sector.
Superior customer experience
– The customer experience strategy of China Merchants Energy Shipping in Water Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– China Merchants Energy Shipping is one of the leading players in the Water Transportation 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.
Learning organization
- China Merchants Energy Shipping 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 China Merchants Energy Shipping is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Merchants Energy Shipping emphasize – knowledge, initiative, and innovation.
Strong track record of project management in the Water Transportation industry
– China Merchants Energy Shipping is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of China Merchants Energy Shipping | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Merchants Energy Shipping are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, China Merchants Energy Shipping is slow explore the new channels of communication. These new channels of communication can help China Merchants Energy Shipping to provide better information regarding Water Transportation products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of China, China Merchants Energy Shipping needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring in Water Transportation industry
– The stress on hiring functional specialists at China Merchants Energy Shipping 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.
Capital Spending Reduction
– Even during the low interest decade, China Merchants Energy Shipping has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Water Transportation industry using digital technology.
High cash cycle compare to competitors
China Merchants Energy Shipping has a high cash cycle compare to other players in the Water Transportation industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative at China Merchants Energy Shipping, in the dynamic environment of Water Transportation industry it has struggled to respond to the nimble upstart competition. China Merchants Energy Shipping has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, China Merchants Energy Shipping has high operating costs in the Water Transportation industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract China Merchants Energy Shipping lucrative customers.
Increasing silos among functional specialists
– The organizational structure of China Merchants Energy Shipping is dominated by functional specialists. It is not different from other players in the Water Transportation industry, but China Merchants Energy Shipping needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help China Merchants Energy Shipping to focus more on services in the Water Transportation industry rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, China Merchants Energy Shipping has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Water Transportation industry over the last five years. China Merchants Energy Shipping 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.
Interest costs
– Compare to the competition, China Merchants Energy Shipping has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Employees’ less understanding of China Merchants Energy Shipping strategy
– From the outside it seems that the employees of China Merchants Energy Shipping 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.
China Merchants Energy Shipping Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Merchants Energy Shipping are -
Building a culture of innovation
– managers at China Merchants Energy Shipping 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 Water Transportation industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, China Merchants Energy Shipping can use these opportunities to build new business models that can help the communities that China Merchants Energy Shipping operates in. Secondly it can use opportunities from government spending in Water Transportation sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for China Merchants Energy Shipping 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 China Merchants Energy Shipping to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, China Merchants Energy Shipping is facing challenges because of the dominance of functional experts in the organization. China Merchants Energy Shipping can utilize new technology in the field of Water Transportation industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Water Transportation industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Merchants Energy Shipping in the Water Transportation industry. Now China Merchants Energy Shipping can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– China Merchants Energy Shipping can develop new processes and procedures in Water Transportation 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Water Transportation industry, but it has also influenced the consumer preferences. China Merchants Energy Shipping can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– China Merchants Energy Shipping can use the latest technology developments to improve its manufacturing and designing process in Water Transportation 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 China Merchants Energy Shipping 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 China Merchants Energy Shipping to increase its market reach. China Merchants Energy Shipping 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.
Leveraging digital technologies
– China Merchants Energy Shipping 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.
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 China Merchants Energy Shipping 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Water Transportation industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. China Merchants Energy Shipping 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. China Merchants Energy Shipping 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.
Threats China Merchants Energy Shipping External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Merchants Energy Shipping are -
Technology acceleration in Forth Industrial Revolution
– China Merchants Energy Shipping has witnessed rapid integration of technology during Covid-19 in the Water Transportation industry. As one of the leading players in the industry, China Merchants Energy Shipping needs to keep up with the evolution of technology in the Water Transportation 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
– China Merchants Energy Shipping 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. China Merchants Energy Shipping can take advantage of this fund but it will also bring new competitors in the Water Transportation industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, China Merchants Energy Shipping 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 China Merchants Energy Shipping prominent markets.
Shortening product life cycle
– it is one of the major threat that China Merchants Energy Shipping is facing in Water Transportation sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 China Merchants Energy Shipping in the Water Transportation sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for China Merchants Energy Shipping in Water Transportation industry. The Water Transportation 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.
Regulatory challenges
– China Merchants Energy Shipping 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 Water Transportation industry regulations.
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 China Merchants Energy Shipping.
Consumer confidence and its impact on China Merchants Energy Shipping 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 Water Transportation industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, China Merchants Energy Shipping may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Water Transportation sector.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Water Transportation industry are lowering. It can presents China Merchants Energy Shipping with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Transportation sector.
Easy access to finance
– Easy access to finance in Water Transportation industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China Merchants Energy Shipping 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
– China Merchants Energy Shipping 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.
Weighted SWOT Analysis of China Merchants Energy Shipping Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Merchants Energy Shipping 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 China Merchants Energy Shipping 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 China Merchants Energy Shipping 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 China Merchants Energy Shipping 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 China Merchants Energy Shipping needs to make to build a sustainable competitive advantage.