SWOT Analysis / TOWS Matrix for Yifeng Pharmacy Chain (China)
Based on various researches at Oak Spring University , Yifeng Pharmacy Chain is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%,
challanges to central banks by blockchain based private currencies, increasing energy prices, etc
Introduction to SWOT Analysis of Yifeng Pharmacy Chain
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Yifeng Pharmacy Chain can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yifeng Pharmacy Chain, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain can be done for the following purposes –
1. Strategic planning of Yifeng Pharmacy Chain
2. Improving business portfolio management of Yifeng Pharmacy Chain
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Drugs) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yifeng Pharmacy Chain
Strengths of Yifeng Pharmacy Chain | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yifeng Pharmacy Chain are -
Superior customer experience
– The customer experience strategy of Yifeng Pharmacy Chain in Retail (Drugs) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Retail (Drugs)
– Yifeng Pharmacy Chain is one of the leading players in the Retail (Drugs) industry in China. Over the years it has not only transformed the business landscape in the Retail (Drugs) industry in China but also across the existing markets. The ability to lead change has enabled Yifeng Pharmacy Chain in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Yifeng Pharmacy Chain has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yifeng Pharmacy Chain 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.
Learning organization
- Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Yifeng Pharmacy Chain emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Yifeng Pharmacy Chain is one of the leading players in the Retail (Drugs) 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.
Diverse revenue streams
– Yifeng Pharmacy Chain is present in almost all the verticals within the Retail (Drugs) industry. This has provided Yifeng Pharmacy Chain 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.
Training and development
– Yifeng Pharmacy Chain has one of the best training and development program in Services 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.
Organizational Resilience of Yifeng Pharmacy Chain
– The covid-19 pandemic has put organizational resilience at the centre of everthing Yifeng Pharmacy Chain does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Retail (Drugs) industry
- digital transformation varies from industry to industry. For Yifeng Pharmacy Chain digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Yifeng Pharmacy Chain 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.
Strong track record of project management in the Retail (Drugs) industry
– Yifeng Pharmacy Chain is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Yifeng Pharmacy Chain in the Services sector have low bargaining power. Yifeng Pharmacy Chain has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yifeng Pharmacy Chain to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Yifeng Pharmacy Chain has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Yifeng Pharmacy Chain to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of Yifeng Pharmacy Chain | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yifeng Pharmacy Chain are -
High dependence on Yifeng Pharmacy Chain ‘s star products
– The top 2 products and services of Yifeng Pharmacy Chain still accounts for major business revenue. This dependence on star products in Retail (Drugs) industry has resulted into insufficient focus on developing new products, even though Yifeng Pharmacy Chain has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Yifeng Pharmacy Chain 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.
High cash cycle compare to competitors
Yifeng Pharmacy Chain has a high cash cycle compare to other players in the Retail (Drugs) 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 Retail (Drugs) industry, Yifeng Pharmacy Chain 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.
Low market penetration in new markets
– Outside its home market of China, Yifeng Pharmacy Chain needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Yifeng Pharmacy Chain supply chain. Even after few cautionary changes, Yifeng Pharmacy Chain is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Yifeng Pharmacy Chain vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Yifeng Pharmacy Chain 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 Retail (Drugs) industry using digital technology.
Need for greater diversity
– Yifeng Pharmacy Chain 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.
Increasing silos among functional specialists
– The organizational structure of Yifeng Pharmacy Chain is dominated by functional specialists. It is not different from other players in the Retail (Drugs) industry, but Yifeng Pharmacy Chain needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yifeng Pharmacy Chain to focus more on services in the Retail (Drugs) industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, Yifeng Pharmacy Chain has high operating costs in the Retail (Drugs) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Yifeng Pharmacy Chain lucrative customers.
High bargaining power of channel partners in Retail (Drugs) industry
– because of the regulatory requirements in China, Yifeng Pharmacy Chain 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 Retail (Drugs) industry.
Yifeng Pharmacy Chain Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Yifeng Pharmacy Chain are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Retail (Drugs) industry, but it has also influenced the consumer preferences. Yifeng Pharmacy Chain can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Yifeng Pharmacy Chain can use these opportunities to build new business models that can help the communities that Yifeng Pharmacy Chain operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
Better consumer reach
– The expansion of the 5G network will help Yifeng Pharmacy Chain to increase its market reach. Yifeng Pharmacy Chain 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.
Creating value in data economy
– The success of analytics program of Yifeng Pharmacy Chain has opened avenues for new revenue streams for the organization in Retail (Drugs) industry. This can help Yifeng Pharmacy Chain to build a more holistic ecosystem for Yifeng Pharmacy Chain products in the Retail (Drugs) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Yifeng Pharmacy Chain has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Drugs) sector. This continuous investment in analytics has enabled Yifeng Pharmacy Chain to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yifeng Pharmacy Chain to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yifeng Pharmacy Chain can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Yifeng Pharmacy Chain in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Drugs) industry, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yifeng Pharmacy Chain 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.
Learning at scale
– Online learning technologies has now opened space for Yifeng Pharmacy Chain 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.
Buying journey improvements
– Yifeng Pharmacy Chain can improve the customer journey of consumers in the Retail (Drugs) 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.
Developing new processes and practices
– Yifeng Pharmacy Chain can develop new processes and procedures in Retail (Drugs) 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.
Threats Yifeng Pharmacy Chain External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Yifeng Pharmacy Chain are -
Shortening product life cycle
– it is one of the major threat that Yifeng Pharmacy Chain is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yifeng Pharmacy Chain in Retail (Drugs) industry. The Retail (Drugs) 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Yifeng Pharmacy Chain with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Drugs) sector.
Technology acceleration in Forth Industrial Revolution
– Yifeng Pharmacy Chain has witnessed rapid integration of technology during Covid-19 in the Retail (Drugs) industry. As one of the leading players in the industry, Yifeng Pharmacy Chain needs to keep up with the evolution of technology in the Retail (Drugs) 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain prominent markets.
Increasing wage structure of Yifeng Pharmacy Chain
– 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 Yifeng Pharmacy Chain.
Environmental challenges
– Yifeng Pharmacy Chain 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. Yifeng Pharmacy Chain can take advantage of this fund but it will also bring new competitors in the Retail (Drugs) industry.
Consumer confidence and its impact on Yifeng Pharmacy Chain 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 Retail (Drugs) industry and other sectors.
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 Yifeng Pharmacy Chain.
Regulatory challenges
– Yifeng Pharmacy Chain 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 Retail (Drugs) industry regulations.
High dependence on third party suppliers
– Yifeng Pharmacy Chain 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.
Easy access to finance
– Easy access to finance in Retail (Drugs) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Yifeng Pharmacy Chain can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Yifeng Pharmacy Chain Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain 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 Yifeng Pharmacy Chain needs to make to build a sustainable competitive advantage.
