SWOT Analysis / TOWS Matrix for Shandong Hi-speed (China)
Based on various researches at Oak Spring University , Shandong Hi-speed is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic ,
there is backlash against globalization, increasing energy prices, etc
Introduction to SWOT Analysis of Shandong Hi-speed
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shandong Hi-speed can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shandong Hi-speed, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shandong Hi-speed 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 Shandong Hi-speed can be done for the following purposes –
1. Strategic planning of Shandong Hi-speed
2. Improving business portfolio management of Shandong Hi-speed
3. Assessing feasibility of the new initiative in China
4. Making a Misc. Transportation sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shandong Hi-speed
Strengths of Shandong Hi-speed | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shandong Hi-speed are -
Operational resilience
– The operational resilience strategy of Shandong Hi-speed comprises – understanding the underlying the factors in the Misc. 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.
High brand equity
– Shandong Hi-speed has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shandong Hi-speed to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Shandong Hi-speed in Misc. Transportation industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Misc. Transportation
– Shandong Hi-speed is one of the leading players in the Misc. Transportation industry in China. Over the years it has not only transformed the business landscape in the Misc. Transportation industry in China but also across the existing markets. The ability to lead change has enabled Shandong Hi-speed in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Shandong Hi-speed in the Transportation sector have low bargaining power. Shandong Hi-speed has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shandong Hi-speed to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Shandong Hi-speed has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shandong Hi-speed 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.
Sustainable margins compare to other players in Misc. Transportation industry
– Shandong Hi-speed has clearly differentiated products in the market place. This has enabled Shandong Hi-speed to fetch slight price premium compare to the competitors in the Misc. Transportation industry. The sustainable margins have also helped Shandong Hi-speed to invest into research and development (R&D) and innovation.
Strong track record of project management in the Misc. Transportation industry
– Shandong Hi-speed is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Shandong Hi-speed is one of the most innovative firm in Misc. Transportation sector.
Highly skilled collaborators
– Shandong Hi-speed has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Misc. Transportation industry. Secondly the value chain collaborators of Shandong Hi-speed have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Shandong Hi-speed 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 Shandong Hi-speed is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shandong Hi-speed emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Shandong Hi-speed is present in almost all the verticals within the Misc. Transportation industry. This has provided Shandong Hi-speed 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.
Weaknesses of Shandong Hi-speed | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shandong Hi-speed are -
Slow decision making process
– As mentioned earlier in the report, Shandong Hi-speed has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Misc. Transportation industry over the last five years. Shandong Hi-speed 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.
No frontier risks strategy
– From the 10K / annual statement of Shandong Hi-speed, it seems that company is thinking out the frontier risks that can impact Misc. Transportation 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.
High dependence on Shandong Hi-speed ‘s star products
– The top 2 products and services of Shandong Hi-speed still accounts for major business revenue. This dependence on star products in Misc. Transportation industry has resulted into insufficient focus on developing new products, even though Shandong Hi-speed has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Shandong Hi-speed 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.
Ability to respond to the competition
– As the decision making is very deliberative at Shandong Hi-speed, in the dynamic environment of Misc. Transportation industry it has struggled to respond to the nimble upstart competition. Shandong Hi-speed has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Misc. Transportation industry, Shandong Hi-speed 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.
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 Shandong Hi-speed supply chain. Even after few cautionary changes, Shandong Hi-speed is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shandong Hi-speed vulnerable to further global disruptions in South East Asia.
Employees’ less understanding of Shandong Hi-speed strategy
– From the outside it seems that the employees of Shandong Hi-speed 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.
Capital Spending Reduction
– Even during the low interest decade, Shandong Hi-speed 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 Misc. Transportation industry using digital technology.
Products dominated business model
– Even though Shandong Hi-speed has some of the most successful models in the Misc. Transportation industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Shandong Hi-speed should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Shandong Hi-speed 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.
Shandong Hi-speed Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shandong Hi-speed are -
Leveraging digital technologies
– Shandong Hi-speed 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.
Using analytics as competitive advantage
– Shandong Hi-speed has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Transportation sector. This continuous investment in analytics has enabled Shandong Hi-speed to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shandong Hi-speed to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Transportation industry, but it has also influenced the consumer preferences. Shandong Hi-speed can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Shandong Hi-speed 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 Misc. Transportation industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shandong Hi-speed is facing challenges because of the dominance of functional experts in the organization. Shandong Hi-speed can utilize new technology in the field of Misc. Transportation industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shandong Hi-speed can use these opportunities to build new business models that can help the communities that Shandong Hi-speed operates in. Secondly it can use opportunities from government spending in Misc. Transportation sector.
Use of Bitcoin and other crypto currencies for transactions in Misc. Transportation industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shandong Hi-speed in the Misc. Transportation industry. Now Shandong Hi-speed 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 Misc. Transportation industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shandong Hi-speed 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. Shandong Hi-speed 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shandong Hi-speed 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shandong Hi-speed in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Transportation industry, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shandong Hi-speed can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shandong Hi-speed 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 Shandong Hi-speed to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Shandong Hi-speed can improve the customer journey of consumers in the Misc. Transportation 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.
Threats Shandong Hi-speed External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shandong Hi-speed are -
Stagnating economy with rate increase
– Shandong Hi-speed 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 Misc. Transportation industry.
Easy access to finance
– Easy access to finance in Misc. Transportation industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shandong Hi-speed can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Shandong Hi-speed is facing in Misc. Transportation sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Shandong Hi-speed 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 Misc. Transportation industry and other sectors.
High dependence on third party suppliers
– Shandong Hi-speed 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.
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. Shandong Hi-speed 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, Shandong Hi-speed may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Transportation sector.
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 Shandong Hi-speed.
Regulatory challenges
– Shandong Hi-speed 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 Misc. Transportation industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shandong Hi-speed in Misc. Transportation industry. The Misc. 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.
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 Shandong Hi-speed business can come under increasing regulations regarding data privacy, data security, etc.
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. Shandong Hi-speed needs to understand the core reasons impacting the Misc. Transportation industry. This will help it in building a better workplace.
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.
Weighted SWOT Analysis of Shandong Hi-speed Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shandong Hi-speed 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 Shandong Hi-speed 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 Shandong Hi-speed 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 Shandong Hi-speed 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 Shandong Hi-speed needs to make to build a sustainable competitive advantage.