SWOT Analysis / TOWS Matrix for Hua Xin Cement (China)
Based on various researches at Oak Spring University , Hua Xin Cement is operating in a macro-environment that has been destablized by – technology disruption, increasing commodity prices, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings,
wage bills are increasing, challanges to central banks by blockchain based private currencies, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hua Xin Cement can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hua Xin Cement, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hua Xin Cement 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 Hua Xin Cement can be done for the following purposes –
1. Strategic planning of Hua Xin Cement
2. Improving business portfolio management of Hua Xin Cement
3. Assessing feasibility of the new initiative in China
4. Making a Construction - Raw Materials sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hua Xin Cement
Strengths of Hua Xin Cement | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hua Xin Cement are -
Innovation driven organization
– Hua Xin Cement is one of the most innovative firm in Construction - Raw Materials sector.
Successful track record of launching new products
– Hua Xin Cement has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hua Xin Cement 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.
Organizational Resilience of Hua Xin Cement
– The covid-19 pandemic has put organizational resilience at the centre of everthing Hua Xin Cement does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Hua Xin Cement is present in almost all the verticals within the Construction - Raw Materials industry. This has provided Hua Xin Cement 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.
Superior customer experience
– The customer experience strategy of Hua Xin Cement in Construction - Raw Materials industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Hua Xin Cement has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hua Xin Cement staying ahead in the Construction - Raw Materials industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Hua Xin Cement comprises – understanding the underlying the factors in the Construction - Raw Materials 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.
Low bargaining power of suppliers
– Suppliers of Hua Xin Cement in the Capital Goods sector have low bargaining power. Hua Xin Cement has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hua Xin Cement to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Hua Xin Cement has one of the best training and development program in Capital Goods 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.
Sustainable margins compare to other players in Construction - Raw Materials industry
– Hua Xin Cement has clearly differentiated products in the market place. This has enabled Hua Xin Cement to fetch slight price premium compare to the competitors in the Construction - Raw Materials industry. The sustainable margins have also helped Hua Xin Cement to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Hua Xin Cement 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.
Cross disciplinary teams
– Horizontal connected teams at the Hua Xin Cement 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.
Weaknesses of Hua Xin Cement | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hua Xin Cement are -
Slow decision making process
– As mentioned earlier in the report, Hua Xin Cement has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction - Raw Materials industry over the last five years. Hua Xin Cement 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.
Products dominated business model
– Even though Hua Xin Cement has some of the most successful models in the Construction - Raw Materials industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Hua Xin Cement should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Hua Xin Cement products
– To increase the profitability and margins on the products, Hua Xin Cement needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of Hua Xin Cement, it seems that company is thinking out the frontier risks that can impact Construction - Raw Materials industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– From the outside it seems that Hua Xin Cement needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction - Raw Materials industry have deep experience in developing customer relationships. Marketing department at Hua Xin Cement can leverage the sales team experience to cultivate customer relationships as Hua Xin Cement is planning to shift buying processes online.
Need for greater diversity
– Hua Xin Cement 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 dependence on Hua Xin Cement ‘s star products
– The top 2 products and services of Hua Xin Cement still accounts for major business revenue. This dependence on star products in Construction - Raw Materials industry has resulted into insufficient focus on developing new products, even though Hua Xin Cement has relatively successful track record of launching new products.
High bargaining power of channel partners in Construction - Raw Materials industry
– because of the regulatory requirements in China, Hua Xin Cement is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Construction - Raw Materials industry.
Employees’ less understanding of Hua Xin Cement strategy
– From the outside it seems that the employees of Hua Xin Cement 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.
Increasing silos among functional specialists
– The organizational structure of Hua Xin Cement is dominated by functional specialists. It is not different from other players in the Construction - Raw Materials industry, but Hua Xin Cement needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hua Xin Cement to focus more on services in the Construction - Raw Materials industry rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of China, Hua Xin Cement needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Hua Xin Cement Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Hua Xin Cement are -
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 Hua Xin Cement 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hua Xin Cement 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 Hua Xin Cement to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hua Xin Cement can use these opportunities to build new business models that can help the communities that Hua Xin Cement operates in. Secondly it can use opportunities from government spending in Construction - Raw Materials sector.
Using analytics as competitive advantage
– Hua Xin Cement has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Construction - Raw Materials sector. This continuous investment in analytics has enabled Hua Xin Cement to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hua Xin Cement to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hua Xin Cement 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 Hua Xin Cement to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Hua Xin Cement has opened avenues for new revenue streams for the organization in Construction - Raw Materials industry. This can help Hua Xin Cement to build a more holistic ecosystem for Hua Xin Cement products in the Construction - Raw Materials industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Hua Xin Cement can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Hua Xin Cement 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 Construction - Raw Materials industry.
Buying journey improvements
– Hua Xin Cement can improve the customer journey of consumers in the Construction - Raw Materials 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.
Use of Bitcoin and other crypto currencies for transactions in Construction - Raw Materials industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hua Xin Cement in the Construction - Raw Materials industry. Now Hua Xin Cement can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction - Raw Materials industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hua Xin Cement 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. Hua Xin Cement 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.
Learning at scale
– Online learning technologies has now opened space for Hua Xin Cement 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.
Better consumer reach
– The expansion of the 5G network will help Hua Xin Cement to increase its market reach. Hua Xin Cement 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.
Threats Hua Xin Cement External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Hua Xin Cement are -
Regulatory challenges
– Hua Xin Cement 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 Construction - Raw Materials industry regulations.
Stagnating economy with rate increase
– Hua Xin Cement 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 Construction - Raw Materials industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction - Raw Materials industry are lowering. It can presents Hua Xin Cement with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction - Raw Materials sector.
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 Hua Xin Cement business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hua Xin Cement in Construction - Raw Materials industry. The Construction - Raw Materials 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.
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 Hua Xin Cement in the Construction - Raw Materials sector and impact the bottomline of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Hua Xin Cement needs to understand the core reasons impacting the Construction - Raw Materials industry. This will help it in building a better workplace.
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.
Environmental challenges
– Hua Xin Cement 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. Hua Xin Cement can take advantage of this fund but it will also bring new competitors in the Construction - Raw Materials industry.
Consumer confidence and its impact on Hua Xin Cement 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 Construction - Raw Materials industry and other sectors.
Shortening product life cycle
– it is one of the major threat that Hua Xin Cement is facing in Construction - Raw Materials sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Hua Xin Cement may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Construction - Raw Materials sector.
Increasing wage structure of Hua Xin Cement
– 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 Hua Xin Cement.
Weighted SWOT Analysis of Hua Xin Cement Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hua Xin Cement 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 Hua Xin Cement 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 Hua Xin Cement 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 Hua Xin Cement 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 Hua Xin Cement needs to make to build a sustainable competitive advantage.