Zhejiang Longsheng Auto (2625) SWOT Analysis / TOWS Matrix / MBA Resources
Auto & Truck Parts
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Zhejiang Longsheng Auto (China)
Based on various researches at Oak Spring University , Zhejiang Longsheng Auto is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, technology disruption, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of Zhejiang Longsheng Auto
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Zhejiang Longsheng Auto can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zhejiang Longsheng Auto, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zhejiang Longsheng Auto 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 Zhejiang Longsheng Auto can be done for the following purposes –
1. Strategic planning of Zhejiang Longsheng Auto
2. Improving business portfolio management of Zhejiang Longsheng Auto
3. Assessing feasibility of the new initiative in China
4. Making a Auto & Truck Parts sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Zhejiang Longsheng Auto
Strengths of Zhejiang Longsheng Auto | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zhejiang Longsheng Auto are -
High switching costs
– The high switching costs that Zhejiang Longsheng Auto 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.
Ability to recruit top talent
– Zhejiang Longsheng Auto is one of the leading players in the Auto & Truck Parts 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.
Effective Research and Development (R&D)
– Zhejiang Longsheng Auto has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Zhejiang Longsheng Auto staying ahead in the Auto & Truck Parts industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the Auto & Truck Parts industry
– Zhejiang Longsheng Auto is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Zhejiang Longsheng Auto 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 Auto & Truck Parts 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.
Sustainable margins compare to other players in Auto & Truck Parts industry
– Zhejiang Longsheng Auto has clearly differentiated products in the market place. This has enabled Zhejiang Longsheng Auto to fetch slight price premium compare to the competitors in the Auto & Truck Parts industry. The sustainable margins have also helped Zhejiang Longsheng Auto to invest into research and development (R&D) and innovation.
Organizational Resilience of Zhejiang Longsheng Auto
– The covid-19 pandemic has put organizational resilience at the centre of everthing Zhejiang Longsheng Auto does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Zhejiang Longsheng Auto in Auto & Truck Parts industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Zhejiang Longsheng Auto has one of the best training and development program in Consumer 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.
Low bargaining power of suppliers
– Suppliers of Zhejiang Longsheng Auto in the Consumer Cyclical sector have low bargaining power. Zhejiang Longsheng Auto has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Zhejiang Longsheng Auto to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Zhejiang Longsheng Auto is one of the most innovative firm in Auto & Truck Parts sector.
High brand equity
– Zhejiang Longsheng Auto has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zhejiang Longsheng Auto to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of Zhejiang Longsheng Auto | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zhejiang Longsheng Auto are -
Need for greater diversity
– Zhejiang Longsheng Auto 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Zhejiang Longsheng Auto is slow explore the new channels of communication. These new channels of communication can help Zhejiang Longsheng Auto to provide better information regarding Auto & Truck Parts products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Zhejiang Longsheng Auto has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Auto & Truck Parts industry over the last five years. Zhejiang Longsheng Auto 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.
Compensation and incentives
– The revenue per employee of Zhejiang Longsheng Auto is just above the Auto & Truck Parts industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative at Zhejiang Longsheng Auto, in the dynamic environment of Auto & Truck Parts industry it has struggled to respond to the nimble upstart competition. Zhejiang Longsheng Auto has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Zhejiang Longsheng Auto 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 Auto & Truck Parts industry using digital technology.
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 Zhejiang Longsheng Auto supply chain. Even after few cautionary changes, Zhejiang Longsheng Auto is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Zhejiang Longsheng Auto vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of China, Zhejiang Longsheng Auto needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Zhejiang Longsheng Auto is dominated by functional specialists. It is not different from other players in the Auto & Truck Parts industry, but Zhejiang Longsheng Auto needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Zhejiang Longsheng Auto to focus more on services in the Auto & Truck Parts industry rather than just following the product oriented approach.
Employees’ less understanding of Zhejiang Longsheng Auto strategy
– From the outside it seems that the employees of Zhejiang Longsheng Auto 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.
Interest costs
– Compare to the competition, Zhejiang Longsheng Auto 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.
Zhejiang Longsheng Auto Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Zhejiang Longsheng Auto are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Zhejiang Longsheng Auto 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.
Creating value in data economy
– The success of analytics program of Zhejiang Longsheng Auto has opened avenues for new revenue streams for the organization in Auto & Truck Parts industry. This can help Zhejiang Longsheng Auto to build a more holistic ecosystem for Zhejiang Longsheng Auto products in the Auto & Truck Parts industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Zhejiang Longsheng Auto 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.
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 Zhejiang Longsheng Auto 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.
Leveraging digital technologies
– Zhejiang Longsheng Auto 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.
Better consumer reach
– The expansion of the 5G network will help Zhejiang Longsheng Auto to increase its market reach. Zhejiang Longsheng Auto 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zhejiang Longsheng Auto is facing challenges because of the dominance of functional experts in the organization. Zhejiang Longsheng Auto can utilize new technology in the field of Auto & Truck Parts industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Zhejiang Longsheng Auto 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 Auto & Truck Parts industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Auto & Truck Parts industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Zhejiang Longsheng Auto 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. Zhejiang Longsheng Auto 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zhejiang Longsheng Auto can use these opportunities to build new business models that can help the communities that Zhejiang Longsheng Auto operates in. Secondly it can use opportunities from government spending in Auto & Truck Parts sector.
Manufacturing automation
– Zhejiang Longsheng Auto can use the latest technology developments to improve its manufacturing and designing process in Auto & Truck Parts 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Auto & Truck Parts industry, but it has also influenced the consumer preferences. Zhejiang Longsheng Auto can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zhejiang Longsheng Auto in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Auto & Truck Parts industry, and it will provide faster access to the consumers.
Threats Zhejiang Longsheng Auto External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Zhejiang Longsheng Auto are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Auto & Truck Parts industry are lowering. It can presents Zhejiang Longsheng Auto with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Auto & Truck Parts sector.
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.
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. Zhejiang Longsheng Auto needs to understand the core reasons impacting the Auto & Truck Parts industry. This will help it in building a better workplace.
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 Zhejiang Longsheng Auto business can come under increasing regulations regarding data privacy, data security, 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 Zhejiang Longsheng Auto in the Auto & Truck Parts sector and impact the bottomline of the organization.
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 Zhejiang Longsheng Auto.
Technology acceleration in Forth Industrial Revolution
– Zhejiang Longsheng Auto has witnessed rapid integration of technology during Covid-19 in the Auto & Truck Parts industry. As one of the leading players in the industry, Zhejiang Longsheng Auto needs to keep up with the evolution of technology in the Auto & Truck Parts 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.
Shortening product life cycle
– it is one of the major threat that Zhejiang Longsheng Auto is facing in Auto & Truck Parts sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Zhejiang Longsheng Auto
– 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 Zhejiang Longsheng Auto.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zhejiang Longsheng Auto in Auto & Truck Parts industry. The Auto & Truck Parts 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.
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.
Consumer confidence and its impact on Zhejiang Longsheng Auto 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 Auto & Truck Parts industry and other sectors.
Environmental challenges
– Zhejiang Longsheng Auto 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. Zhejiang Longsheng Auto can take advantage of this fund but it will also bring new competitors in the Auto & Truck Parts industry.
Weighted SWOT Analysis of Zhejiang Longsheng Auto Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Zhejiang Longsheng Auto 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 Zhejiang Longsheng Auto 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 Zhejiang Longsheng Auto 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 Zhejiang Longsheng Auto 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 Zhejiang Longsheng Auto needs to make to build a sustainable competitive advantage.