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 – banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, increasing energy prices,
technology disruption, wage bills are increasing, 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 -
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.
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.
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.
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.
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.
Innovation driven organization
– Laobaixing Pharmacy Chain is one of the most innovative firm in Retail (Drugs) sector.
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.
High brand equity
– Laobaixing Pharmacy Chain has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Laobaixing Pharmacy Chain to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Retail (Drugs) industry
- digital transformation varies from industry to industry. For Laobaixing Pharmacy Chain digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Laobaixing 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.
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.
Analytics focus
– Laobaixing Pharmacy Chain 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 Retail (Drugs) 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.
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.
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 -
Need for greater diversity
– Laobaixing 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.
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.
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.
Compensation and incentives
– The revenue per employee of Laobaixing Pharmacy Chain is just above the Retail (Drugs) 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.
Slow to strategic competitive environment developments
– As Laobaixing Pharmacy Chain is one of the leading players in the Retail (Drugs) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Drugs) industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Laobaixing Pharmacy Chain is slow explore the new channels of communication. These new channels of communication can help Laobaixing Pharmacy Chain to provide better information regarding Retail (Drugs) products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative at Laobaixing Pharmacy Chain, in the dynamic environment of Retail (Drugs) industry it has struggled to respond to the nimble upstart competition. Laobaixing Pharmacy Chain 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 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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Laobaixing Pharmacy Chain is dominated by functional specialists. It is not different from other players in the Retail (Drugs) industry, but Laobaixing Pharmacy Chain needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Laobaixing Pharmacy Chain to focus more on services in the Retail (Drugs) industry rather than just following the product 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 -
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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Drugs) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Laobaixing Pharmacy Chain 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. Laobaixing Pharmacy Chain 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.
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.
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.
Manufacturing automation
– Laobaixing Pharmacy Chain can use the latest technology developments to improve its manufacturing and designing process in Retail (Drugs) 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.
Loyalty marketing
– Laobaixing Pharmacy Chain 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.
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.
Using analytics as competitive advantage
– Laobaixing 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 Laobaixing Pharmacy Chain to build a competitive advantage using analytics. The analytics driven competitive advantage can help Laobaixing Pharmacy Chain to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Laobaixing Pharmacy Chain has opened avenues for new revenue streams for the organization in Retail (Drugs) industry. This can help Laobaixing Pharmacy Chain to build a more holistic ecosystem for Laobaixing Pharmacy Chain products in the Retail (Drugs) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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 -
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. Laobaixing Pharmacy Chain needs to understand the core reasons impacting the Retail (Drugs) 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 Laobaixing Pharmacy Chain business can come under increasing regulations regarding data privacy, data security, 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.
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.
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.
Regulatory challenges
– Laobaixing 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Laobaixing 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 Laobaixing Pharmacy Chain prominent markets.
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.
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.
Stagnating economy with rate increase
– Laobaixing Pharmacy Chain 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 Retail (Drugs) 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 Laobaixing Pharmacy Chain in the Retail (Drugs) sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Laobaixing Pharmacy Chain may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Drugs) sector.
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.