SWOT Analysis / TOWS Matrix for Laobaixing Pharmacy Chain (China)
Based on various researches at Oak Spring University , Laobaixing Pharmacy Chain is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , wage bills are increasing, there is backlash against globalization, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, increasing commodity prices,
there is increasing trade war between United States & China, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Laobaixing Pharmacy Chain
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Laobaixing Pharmacy Chain can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Laobaixing Pharmacy Chain, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Laobaixing 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 Laobaixing Pharmacy Chain can be done for the following purposes –
1. Strategic planning of Laobaixing Pharmacy Chain
2. Improving business portfolio management of Laobaixing 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 Laobaixing Pharmacy Chain
Strengths of Laobaixing Pharmacy Chain | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Laobaixing Pharmacy Chain are -
Superior customer experience
– The customer experience strategy of Laobaixing Pharmacy Chain in Retail (Drugs) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Laobaixing 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.
Innovation driven organization
– Laobaixing Pharmacy Chain is one of the most innovative firm in Retail (Drugs) sector.
Sustainable margins compare to other players in Retail (Drugs) industry
– Laobaixing Pharmacy Chain has clearly differentiated products in the market place. This has enabled Laobaixing Pharmacy Chain to fetch slight price premium compare to the competitors in the Retail (Drugs) industry. The sustainable margins have also helped Laobaixing Pharmacy Chain to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Laobaixing Pharmacy Chain has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Laobaixing 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.
Organizational Resilience of Laobaixing Pharmacy Chain
– The covid-19 pandemic has put organizational resilience at the centre of everthing Laobaixing Pharmacy Chain does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy of Laobaixing Pharmacy Chain comprises – understanding the underlying the factors in the Retail (Drugs) 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 switching costs
– The high switching costs that Laobaixing Pharmacy Chain 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 lead change in Retail (Drugs)
– Laobaixing 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 Laobaixing Pharmacy Chain in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Laobaixing Pharmacy Chain has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Laobaixing Pharmacy Chain staying ahead in the Retail (Drugs) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Laobaixing 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.
Learning organization
- Laobaixing 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 Laobaixing Pharmacy Chain is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Laobaixing Pharmacy Chain emphasize – knowledge, initiative, and innovation.
Weaknesses of Laobaixing Pharmacy Chain | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Laobaixing Pharmacy Chain are -
High dependence on Laobaixing Pharmacy Chain ‘s star products
– The top 2 products and services of Laobaixing 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 Laobaixing Pharmacy Chain has relatively successful track record of launching new products.
Lack of clear differentiation of Laobaixing Pharmacy Chain products
– To increase the profitability and margins on the products, Laobaixing Pharmacy Chain needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, Laobaixing 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 Laobaixing Pharmacy Chain lucrative customers.
Employees’ less understanding of Laobaixing Pharmacy Chain strategy
– From the outside it seems that the employees of Laobaixing Pharmacy Chain 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.
High bargaining power of channel partners in Retail (Drugs) industry
– because of the regulatory requirements in China, Laobaixing 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.
Interest costs
– Compare to the competition, Laobaixing 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.
Slow decision making process
– As mentioned earlier in the report, Laobaixing Pharmacy Chain has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Drugs) industry over the last five years. Laobaixing Pharmacy Chain 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.
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 Laobaixing Pharmacy Chain supply chain. Even after few cautionary changes, Laobaixing Pharmacy Chain is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Laobaixing Pharmacy Chain vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Laobaixing Pharmacy Chain has some of the most successful models in the Retail (Drugs) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Laobaixing Pharmacy Chain should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Retail (Drugs) industry, Laobaixing 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.
Skills based hiring in Retail (Drugs) industry
– The stress on hiring functional specialists at Laobaixing Pharmacy Chain has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Laobaixing Pharmacy Chain Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Laobaixing Pharmacy Chain are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Laobaixing 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 Laobaixing 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Laobaixing Pharmacy Chain is facing challenges because of the dominance of functional experts in the organization. Laobaixing Pharmacy Chain can utilize new technology in the field of Retail (Drugs) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. Laobaixing 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.
Buying journey improvements
– Laobaixing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Laobaixing 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.
Better consumer reach
– The expansion of the 5G network will help Laobaixing Pharmacy Chain to increase its market reach. Laobaixing 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Laobaixing 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.
Learning at scale
– Online learning technologies has now opened space for Laobaixing 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.
Leveraging digital technologies
– Laobaixing Pharmacy Chain 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Laobaixing Pharmacy Chain can use these opportunities to build new business models that can help the communities that Laobaixing Pharmacy Chain operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
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 Laobaixing Pharmacy Chain 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.
Developing new processes and practices
– Laobaixing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Laobaixing 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.
Threats Laobaixing Pharmacy Chain External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Laobaixing Pharmacy Chain are -
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. Laobaixing Pharmacy Chain needs to understand the core reasons impacting the Retail (Drugs) industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Laobaixing 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.
Shortening product life cycle
– it is one of the major threat that Laobaixing Pharmacy Chain is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Laobaixing 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.
High dependence on third party suppliers
– Laobaixing 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.
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.
Increasing wage structure of Laobaixing 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 Laobaixing Pharmacy Chain.
Environmental challenges
– Laobaixing 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. Laobaixing Pharmacy Chain can take advantage of this fund but it will also bring new competitors in the Retail (Drugs) industry.
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 Laobaixing Pharmacy Chain.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Laobaixing 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 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.
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 Laobaixing Pharmacy Chain 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 Laobaixing Pharmacy Chain in the Retail (Drugs) sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Laobaixing Pharmacy Chain Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Laobaixing 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 Laobaixing 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 Laobaixing 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 Laobaixing 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 Laobaixing Pharmacy Chain needs to make to build a sustainable competitive advantage.