Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Shandong Linglong Tyre (China)
Based on various researches at Oak Spring University , Shandong Linglong Tyre is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, increasing commodity prices, wage bills are increasing, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, etc
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- 100% Plagiarism Free
- On Time Delivery | 27x7
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Introduction to SWOT Analysis of Shandong Linglong Tyre
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shandong Linglong Tyre can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shandong Linglong Tyre, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shandong Linglong Tyre 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 Shandong Linglong Tyre can be done for the following purposes –
1. Strategic planning of Shandong Linglong Tyre
2. Improving business portfolio management of Shandong Linglong Tyre
3. Assessing feasibility of the new initiative in China
4. Making a Tires sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shandong Linglong Tyre
Strengths of Shandong Linglong Tyre | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shandong Linglong Tyre are -
Highly skilled collaborators
– Shandong Linglong Tyre has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Tires industry. Secondly the value chain collaborators of Shandong Linglong Tyre have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Shandong Linglong Tyre has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shandong Linglong Tyre to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Shandong Linglong Tyre 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 Shandong Linglong Tyre 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.
Ability to lead change in Tires
– Shandong Linglong Tyre is one of the leading players in the Tires industry in China. Over the years it has not only transformed the business landscape in the Tires industry in China but also across the existing markets. The ability to lead change has enabled Shandong Linglong Tyre in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management in the Tires industry
– Shandong Linglong Tyre is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Shandong Linglong Tyre has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shandong Linglong Tyre staying ahead in the Tires industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Shandong Linglong Tyre 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.
Ability to recruit top talent
– Shandong Linglong Tyre is one of the leading players in the Tires 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
– Shandong Linglong Tyre is present in almost all the verticals within the Tires industry. This has provided Shandong Linglong Tyre 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.
Digital Transformation in Tires industry
- digital transformation varies from industry to industry. For Shandong Linglong Tyre digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shandong Linglong Tyre 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.
Innovation driven organization
– Shandong Linglong Tyre is one of the most innovative firm in Tires sector.
Weaknesses of Shandong Linglong Tyre | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shandong Linglong Tyre are -
Aligning sales with marketing
– From the outside it seems that Shandong Linglong Tyre needs to have more collaboration between its sales team and marketing team. Sales professionals in the Tires industry have deep experience in developing customer relationships. Marketing department at Shandong Linglong Tyre can leverage the sales team experience to cultivate customer relationships as Shandong Linglong Tyre is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Shandong Linglong Tyre has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Tires industry over the last five years. Shandong Linglong Tyre 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.
Low market penetration in new markets
– Outside its home market of China, Shandong Linglong Tyre needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee of Shandong Linglong Tyre is just above the Tires 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.
Lack of clear differentiation of Shandong Linglong Tyre products
– To increase the profitability and margins on the products, Shandong Linglong Tyre needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Shandong Linglong Tyre is one of the leading players in the Tires industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Tires industry in last five years.
Skills based hiring in Tires industry
– The stress on hiring functional specialists at Shandong Linglong Tyre 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shandong Linglong Tyre is slow explore the new channels of communication. These new channels of communication can help Shandong Linglong Tyre to provide better information regarding Tires products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, Shandong Linglong Tyre has high operating costs in the Tires industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shandong Linglong Tyre lucrative customers.
High dependence on Shandong Linglong Tyre ‘s star products
– The top 2 products and services of Shandong Linglong Tyre still accounts for major business revenue. This dependence on star products in Tires industry has resulted into insufficient focus on developing new products, even though Shandong Linglong Tyre has relatively successful track record of launching new products.
Need for greater diversity
– Shandong Linglong Tyre 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.
Shandong Linglong Tyre Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shandong Linglong Tyre are -
Creating value in data economy
– The success of analytics program of Shandong Linglong Tyre has opened avenues for new revenue streams for the organization in Tires industry. This can help Shandong Linglong Tyre to build a more holistic ecosystem for Shandong Linglong Tyre products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Shandong Linglong Tyre 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 Tires industry.
– Shandong Linglong Tyre can use the latest technology developments to improve its manufacturing and designing process in Tires 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Tires industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shandong Linglong Tyre 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. Shandong Linglong Tyre 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shandong Linglong Tyre 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 Shandong Linglong Tyre to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shandong Linglong Tyre can use these opportunities to build new business models that can help the communities that Shandong Linglong Tyre operates in. Secondly it can use opportunities from government spending in Tires sector.
Using analytics as competitive advantage
– Shandong Linglong Tyre has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Tires sector. This continuous investment in analytics has enabled Shandong Linglong Tyre to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shandong Linglong Tyre to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shandong Linglong Tyre is facing challenges because of the dominance of functional experts in the organization. Shandong Linglong Tyre can utilize new technology in the field of Tires industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Shandong Linglong Tyre 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 Shandong Linglong Tyre 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.
– Shandong Linglong Tyre 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.
Better consumer reach
– The expansion of the 5G network will help Shandong Linglong Tyre to increase its market reach. Shandong Linglong Tyre 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 Shandong Linglong Tyre can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Shandong Linglong Tyre External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shandong Linglong Tyre are -
Shortening product life cycle
– it is one of the major threat that Shandong Linglong Tyre is facing in Tires sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Shandong Linglong Tyre 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 Tires industry and other sectors.
High dependence on third party suppliers
– Shandong Linglong Tyre 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shandong Linglong Tyre in Tires industry. The Tires 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 wage structure of Shandong Linglong Tyre
– 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 Shandong Linglong Tyre.
– 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.
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 Shandong Linglong Tyre business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shandong Linglong Tyre 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 Shandong Linglong Tyre prominent markets.
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.
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 Shandong Linglong Tyre.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Tires industry are lowering. It can presents Shandong Linglong Tyre with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Tires sector.
– 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 Shandong Linglong Tyre in the Tires 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, Shandong Linglong Tyre may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Tires sector.
Weighted SWOT Analysis of Shandong Linglong Tyre Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shandong Linglong Tyre 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 Shandong Linglong Tyre 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 Shandong Linglong Tyre 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 Shandong Linglong Tyre 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 Shandong Linglong Tyre needs to make to build a sustainable competitive advantage.