Anhui Kouzi Distillery (603589) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Anhui Kouzi Distillery (China)

Based on various researches at Oak Spring University , Anhui Kouzi Distillery is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, increasing commodity prices, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, geopolitical disruptions, technology disruption, increasing energy prices, etc

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Introduction to SWOT Analysis of Anhui Kouzi Distillery

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

Strengths of Anhui Kouzi Distillery | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Anhui Kouzi Distillery are -

Diverse revenue streams

– Anhui Kouzi Distillery is present in almost all the verticals within the Beverages (Alcoholic) industry. This has provided Anhui Kouzi Distillery 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.

Cross disciplinary teams

– Horizontal connected teams at the Anhui Kouzi Distillery 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.

Ability to recruit top talent

– Anhui Kouzi Distillery is one of the leading players in the Beverages (Alcoholic) industry in China. It is in a position to attract the best talent available in China. The firm has a robust talent identification program that helps in identifying the brightest.

Low bargaining power of suppliers

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

Sustainable margins compare to other players in Beverages (Alcoholic) industry

– Anhui Kouzi Distillery has clearly differentiated products in the market place. This has enabled Anhui Kouzi Distillery to fetch slight price premium compare to the competitors in the Beverages (Alcoholic) industry. The sustainable margins have also helped Anhui Kouzi Distillery to invest into research and development (R&D) and innovation.

Training and development

– Anhui Kouzi Distillery has one of the best training and development program in Consumer/Non-Cyclical 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.

Analytics focus

– Anhui Kouzi Distillery 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 Beverages (Alcoholic) 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.

High switching costs

– The high switching costs that Anhui Kouzi Distillery 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.

Successful track record of launching new products

– Anhui Kouzi Distillery has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Anhui Kouzi Distillery 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 Beverages (Alcoholic) industry

- digital transformation varies from industry to industry. For Anhui Kouzi Distillery digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Anhui Kouzi Distillery 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.

Organizational Resilience of Anhui Kouzi Distillery

– The covid-19 pandemic has put organizational resilience at the centre of everthing Anhui Kouzi Distillery does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

High brand equity

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

Weaknesses of Anhui Kouzi Distillery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Anhui Kouzi Distillery are -

Slow to strategic competitive environment developments

– As Anhui Kouzi Distillery is one of the leading players in the Beverages (Alcoholic) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Beverages (Alcoholic) industry in last five years.

High bargaining power of channel partners in Beverages (Alcoholic) industry

– because of the regulatory requirements in China, Anhui Kouzi Distillery 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 Beverages (Alcoholic) industry.

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

High operating costs

– Compare to the competitors, Anhui Kouzi Distillery has high operating costs in the Beverages (Alcoholic) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Anhui Kouzi Distillery lucrative customers.

High dependence on Anhui Kouzi Distillery ‘s star products

– The top 2 products and services of Anhui Kouzi Distillery still accounts for major business revenue. This dependence on star products in Beverages (Alcoholic) industry has resulted into insufficient focus on developing new products, even though Anhui Kouzi Distillery has relatively successful track record of launching new products.

Increasing silos among functional specialists

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

High cash cycle compare to competitors

Anhui Kouzi Distillery has a high cash cycle compare to other players in the Beverages (Alcoholic) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Workers concerns about automation

– As automation is fast increasing in the Beverages (Alcoholic) industry, Anhui Kouzi Distillery 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.

Need for greater diversity

– Anhui Kouzi Distillery 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.

Lack of clear differentiation of Anhui Kouzi Distillery products

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

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Anhui Kouzi Distillery is slow explore the new channels of communication. These new channels of communication can help Anhui Kouzi Distillery to provide better information regarding Beverages (Alcoholic) products and services. It can also build an online community to further reach out to potential customers.

Anhui Kouzi Distillery Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Anhui Kouzi Distillery are -

Low interest rates

– Even though inflation is raising its head in most developed economies, Anhui Kouzi Distillery 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Anhui Kouzi Distillery can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Use of Bitcoin and other crypto currencies for transactions in Beverages (Alcoholic) industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Anhui Kouzi Distillery in the Beverages (Alcoholic) industry. Now Anhui Kouzi Distillery can target international markets with far fewer capital restrictions requirements than the existing system.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Beverages (Alcoholic) industry, but it has also influenced the consumer preferences. Anhui Kouzi Distillery can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Leveraging digital technologies

– Anhui Kouzi Distillery 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.

Manufacturing automation

– Anhui Kouzi Distillery can use the latest technology developments to improve its manufacturing and designing process in Beverages (Alcoholic) 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.

Learning at scale

– Online learning technologies has now opened space for Anhui Kouzi Distillery 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Anhui Kouzi Distillery 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 Anhui Kouzi Distillery 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. Anhui Kouzi Distillery can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Creating value in data economy

– The success of analytics program of Anhui Kouzi Distillery has opened avenues for new revenue streams for the organization in Beverages (Alcoholic) industry. This can help Anhui Kouzi Distillery to build a more holistic ecosystem for Anhui Kouzi Distillery products in the Beverages (Alcoholic) industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Developing new processes and practices

– Anhui Kouzi Distillery can develop new processes and procedures in Beverages (Alcoholic) 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Anhui Kouzi Distillery is facing challenges because of the dominance of functional experts in the organization. Anhui Kouzi Distillery can utilize new technology in the field of Beverages (Alcoholic) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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 Anhui Kouzi Distillery 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.

Threats Anhui Kouzi Distillery External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Anhui Kouzi Distillery are -

Technology acceleration in Forth Industrial Revolution

– Anhui Kouzi Distillery has witnessed rapid integration of technology during Covid-19 in the Beverages (Alcoholic) industry. As one of the leading players in the industry, Anhui Kouzi Distillery needs to keep up with the evolution of technology in the Beverages (Alcoholic) 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.

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.

High dependence on third party suppliers

– Anhui Kouzi Distillery 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.

Environmental challenges

– Anhui Kouzi Distillery 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. Anhui Kouzi Distillery can take advantage of this fund but it will also bring new competitors in the Beverages (Alcoholic) industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Anhui Kouzi Distillery 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 Anhui Kouzi Distillery prominent markets.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Anhui Kouzi Distillery in Beverages (Alcoholic) industry. The Beverages (Alcoholic) 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.

Consumer confidence and its impact on Anhui Kouzi Distillery 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 Beverages (Alcoholic) industry and other sectors.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Anhui Kouzi Distillery may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Beverages (Alcoholic) sector.

Shortening product life cycle

– it is one of the major threat that Anhui Kouzi Distillery is facing in Beverages (Alcoholic) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– Anhui Kouzi Distillery 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 Beverages (Alcoholic) industry.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Beverages (Alcoholic) industry are lowering. It can presents Anhui Kouzi Distillery with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Beverages (Alcoholic) sector.

Regulatory challenges

– Anhui Kouzi Distillery 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 Beverages (Alcoholic) 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 Anhui Kouzi Distillery.

Weighted SWOT Analysis of Anhui Kouzi Distillery Template, Example

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

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