Sinotrans Air Transport (600270) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Sinotrans Air Transport (China)

Based on various researches at Oak Spring University , Sinotrans Air Transport is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, technology disruption, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc

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Introduction to SWOT Analysis of Sinotrans Air Transport

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sinotrans Air Transport can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sinotrans Air Transport, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sinotrans Air Transport 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Sinotrans Air Transport can be done for the following purposes –
1. Strategic planning of Sinotrans Air Transport
2. Improving business portfolio management of Sinotrans Air Transport
3. Assessing feasibility of the new initiative in China
4. Making a Airline sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sinotrans Air Transport

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Strengths of Sinotrans Air Transport | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Sinotrans Air Transport are -

Successful track record of launching new products

– Sinotrans Air Transport has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sinotrans Air Transport 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 Airline industry

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

Innovation driven organization

– Sinotrans Air Transport is one of the most innovative firm in Airline sector.

Diverse revenue streams

– Sinotrans Air Transport is present in almost all the verticals within the Airline industry. This has provided Sinotrans Air Transport 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.

Highly skilled collaborators

– Sinotrans Air Transport has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Airline industry. Secondly the value chain collaborators of Sinotrans Air Transport have helped the firm to develop new products and bring them quickly to the marketplace.

Effective Research and Development (R&D)

– Sinotrans Air Transport has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Sinotrans Air Transport staying ahead in the Airline industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Ability to lead change in Airline

– Sinotrans Air Transport is one of the leading players in the Airline industry in China. Over the years it has not only transformed the business landscape in the Airline industry in China but also across the existing markets. The ability to lead change has enabled Sinotrans Air Transport in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Digital Transformation in Airline industry

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

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

High switching costs

– The high switching costs that Sinotrans Air Transport has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.

Cross disciplinary teams

– Horizontal connected teams at the Sinotrans Air Transport 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.

High brand equity

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

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Weaknesses of Sinotrans Air Transport | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Sinotrans Air Transport are -

Lack of clear differentiation of Sinotrans Air Transport products

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

High operating costs

– Compare to the competitors, Sinotrans Air Transport has high operating costs in the Airline industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sinotrans Air Transport lucrative customers.

Slow to strategic competitive environment developments

– As Sinotrans Air Transport is one of the leading players in the Airline industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Airline industry in last five years.

High cash cycle compare to competitors

Sinotrans Air Transport has a high cash cycle compare to other players in the Airline industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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

Low market penetration in new markets

– Outside its home market of China, Sinotrans Air Transport needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Increasing silos among functional specialists

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

Slow decision making process

– As mentioned earlier in the report, Sinotrans Air Transport has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Airline industry over the last five years. Sinotrans Air Transport 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.

Aligning sales with marketing

– From the outside it seems that Sinotrans Air Transport needs to have more collaboration between its sales team and marketing team. Sales professionals in the Airline industry have deep experience in developing customer relationships. Marketing department at Sinotrans Air Transport can leverage the sales team experience to cultivate customer relationships as Sinotrans Air Transport is planning to shift buying processes online.

Interest costs

– Compare to the competition, Sinotrans Air Transport 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.

Employees’ less understanding of Sinotrans Air Transport strategy

– From the outside it seems that the employees of Sinotrans Air Transport 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.

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Sinotrans Air Transport Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Sinotrans Air Transport are -

Redefining models of collaboration and team work

– As explained in the weaknesses section, Sinotrans Air Transport is facing challenges because of the dominance of functional experts in the organization. Sinotrans Air Transport can utilize new technology in the field of Airline industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Airline industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sinotrans Air Transport 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. Sinotrans Air Transport 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.

Better consumer reach

– The expansion of the 5G network will help Sinotrans Air Transport to increase its market reach. Sinotrans Air Transport 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Sinotrans Air Transport 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.

Leveraging digital technologies

– Sinotrans Air Transport 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.

Developing new processes and practices

– Sinotrans Air Transport can develop new processes and procedures in Airline 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.

Manufacturing automation

– Sinotrans Air Transport can use the latest technology developments to improve its manufacturing and designing process in Airline 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.

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. Sinotrans Air Transport 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 Sinotrans Air Transport has opened avenues for new revenue streams for the organization in Airline industry. This can help Sinotrans Air Transport to build a more holistic ecosystem for Sinotrans Air Transport products in the Airline industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Finding new ways to collaborate

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

Using analytics as competitive advantage

– Sinotrans Air Transport has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Airline sector. This continuous investment in analytics has enabled Sinotrans Air Transport to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sinotrans Air Transport to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sinotrans Air Transport can use these opportunities to build new business models that can help the communities that Sinotrans Air Transport operates in. Secondly it can use opportunities from government spending in Airline sector.

Loyalty marketing

– Sinotrans Air Transport has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

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Threats Sinotrans Air Transport External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Sinotrans Air Transport are -

Stagnating economy with rate increase

– Sinotrans Air Transport 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 Airline industry.

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 Sinotrans Air Transport in the Airline sector and impact the bottomline of the organization.

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. Sinotrans Air Transport 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Airline industry are lowering. It can presents Sinotrans Air Transport with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Airline sector.

Shortening product life cycle

– it is one of the major threat that Sinotrans Air Transport is facing in Airline sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Sinotrans Air Transport in Airline industry. The Airline 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Sinotrans Air Transport 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 Sinotrans Air Transport prominent markets.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Sinotrans Air Transport may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Airline sector.

Easy access to finance

– Easy access to finance in Airline industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sinotrans Air Transport can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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.

Regulatory challenges

– Sinotrans Air Transport 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 Airline industry regulations.

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 Sinotrans Air Transport 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 Airline industry and other sectors.

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Weighted SWOT Analysis of Sinotrans Air Transport Template, Example

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

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