Based on various researches at Oak Spring University , Yantai Changyu Pioneer Wine is operating in a macro-environment that has been destablized by – increasing commodity prices, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies,
wage bills are increasing, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Yantai Changyu Pioneer Wine
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Yantai Changyu Pioneer Wine can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yantai Changyu Pioneer Wine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine can be done for the following purposes –
1. Strategic planning of Yantai Changyu Pioneer Wine
2. Improving business portfolio management of Yantai Changyu Pioneer Wine
3. Assessing feasibility of the new initiative in China
4. Making a Beverages (Alcoholic) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yantai Changyu Pioneer Wine
Strengths of Yantai Changyu Pioneer Wine | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yantai Changyu Pioneer Wine are -
Ability to lead change in Beverages (Alcoholic)
– Yantai Changyu Pioneer Wine is one of the leading players in the Beverages (Alcoholic) industry in China. Over the years it has not only transformed the business landscape in the Beverages (Alcoholic) industry in China but also across the existing markets. The ability to lead change has enabled Yantai Changyu Pioneer Wine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Yantai Changyu Pioneer Wine in the Consumer/Non-Cyclical sector have low bargaining power. Yantai Changyu Pioneer Wine has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yantai Changyu Pioneer Wine to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Yantai Changyu Pioneer Wine comprises – understanding the underlying the factors in the Beverages (Alcoholic) 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.
Sustainable margins compare to other players in Beverages (Alcoholic) industry
– Yantai Changyu Pioneer Wine has clearly differentiated products in the market place. This has enabled Yantai Changyu Pioneer Wine to fetch slight price premium compare to the competitors in the Beverages (Alcoholic) industry. The sustainable margins have also helped Yantai Changyu Pioneer Wine to invest into research and development (R&D) and innovation.
Training and development
– Yantai Changyu Pioneer Wine has one of the best training and development program in Consumer/Non-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.
Diverse revenue streams
– Yantai Changyu Pioneer Wine is present in almost all the verticals within the Beverages (Alcoholic) industry. This has provided Yantai Changyu Pioneer Wine 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.
Strong track record of project management in the Beverages (Alcoholic) industry
– Yantai Changyu Pioneer Wine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Yantai Changyu Pioneer Wine in Beverages (Alcoholic) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Yantai Changyu Pioneer Wine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yantai Changyu Pioneer Wine 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.
Effective Research and Development (R&D)
– Yantai Changyu Pioneer Wine has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Yantai Changyu Pioneer Wine staying ahead in the Beverages (Alcoholic) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Yantai Changyu Pioneer Wine
– The covid-19 pandemic has put organizational resilience at the centre of everthing Yantai Changyu Pioneer Wine does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Yantai Changyu Pioneer Wine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Yantai Changyu Pioneer Wine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of Yantai Changyu Pioneer Wine | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yantai Changyu Pioneer Wine are -
Increasing silos among functional specialists
– The organizational structure of Yantai Changyu Pioneer Wine is dominated by functional specialists. It is not different from other players in the Beverages (Alcoholic) industry, but Yantai Changyu Pioneer Wine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yantai Changyu Pioneer Wine to focus more on services in the Beverages (Alcoholic) industry rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at Yantai Changyu Pioneer Wine, in the dynamic environment of Beverages (Alcoholic) industry it has struggled to respond to the nimble upstart competition. Yantai Changyu Pioneer Wine has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of China, Yantai Changyu Pioneer Wine needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Yantai Changyu Pioneer Wine is slow explore the new channels of communication. These new channels of communication can help Yantai Changyu Pioneer Wine to provide better information regarding Beverages (Alcoholic) products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Yantai Changyu Pioneer Wine 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 Beverages (Alcoholic) industry using digital technology.
High cash cycle compare to competitors
Yantai Changyu Pioneer Wine has a high cash cycle compare to other players in the Beverages (Alcoholic) 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 Yantai Changyu Pioneer Wine ‘s star products
– The top 2 products and services of Yantai Changyu Pioneer Wine still accounts for major business revenue. This dependence on star products in Beverages (Alcoholic) industry has resulted into insufficient focus on developing new products, even though Yantai Changyu Pioneer Wine has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that Yantai Changyu Pioneer Wine needs to have more collaboration between its sales team and marketing team. Sales professionals in the Beverages (Alcoholic) industry have deep experience in developing customer relationships. Marketing department at Yantai Changyu Pioneer Wine can leverage the sales team experience to cultivate customer relationships as Yantai Changyu Pioneer Wine is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Yantai Changyu Pioneer Wine is just above the Beverages (Alcoholic) 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.
Skills based hiring in Beverages (Alcoholic) industry
– The stress on hiring functional specialists at Yantai Changyu Pioneer Wine 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.
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 Yantai Changyu Pioneer Wine supply chain. Even after few cautionary changes, Yantai Changyu Pioneer Wine is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Yantai Changyu Pioneer Wine vulnerable to further global disruptions in South East Asia.
Yantai Changyu Pioneer Wine Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Yantai Changyu Pioneer Wine are -
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 Yantai Changyu Pioneer Wine 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Beverages (Alcoholic) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Yantai Changyu Pioneer Wine 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. Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine to increase its market reach. Yantai Changyu Pioneer Wine 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, Yantai Changyu Pioneer Wine is facing challenges because of the dominance of functional experts in the organization. Yantai Changyu Pioneer Wine can utilize new technology in the field of Beverages (Alcoholic) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Buying journey improvements
– Yantai Changyu Pioneer Wine can improve the customer journey of consumers in the Beverages (Alcoholic) 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.
Use of Bitcoin and other crypto currencies for transactions in Beverages (Alcoholic) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Yantai Changyu Pioneer Wine in the Beverages (Alcoholic) industry. Now Yantai Changyu Pioneer Wine can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Yantai Changyu Pioneer Wine has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Beverages (Alcoholic) sector. This continuous investment in analytics has enabled Yantai Changyu Pioneer Wine to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yantai Changyu Pioneer Wine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yantai Changyu Pioneer Wine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Yantai Changyu Pioneer Wine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yantai Changyu Pioneer Wine 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Beverages (Alcoholic) industry, but it has also influenced the consumer preferences. Yantai Changyu Pioneer Wine can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Yantai Changyu Pioneer Wine 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, Yantai Changyu Pioneer Wine can use these opportunities to build new business models that can help the communities that Yantai Changyu Pioneer Wine operates in. Secondly it can use opportunities from government spending in Beverages (Alcoholic) sector.
Threats Yantai Changyu Pioneer Wine External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Yantai Changyu Pioneer Wine are -
Shortening product life cycle
– it is one of the major threat that Yantai Changyu Pioneer Wine is facing in Beverages (Alcoholic) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Yantai Changyu Pioneer Wine 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. Yantai Changyu Pioneer Wine can take advantage of this fund but it will also bring new competitors in the Beverages (Alcoholic) industry.
High dependence on third party suppliers
– Yantai Changyu Pioneer Wine 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.
Increasing wage structure of Yantai Changyu Pioneer Wine
– 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 Yantai Changyu Pioneer Wine.
Stagnating economy with rate increase
– Yantai Changyu Pioneer Wine 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 Beverages (Alcoholic) industry.
Easy access to finance
– Easy access to finance in Beverages (Alcoholic) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Yantai Changyu Pioneer Wine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Yantai Changyu Pioneer Wine 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.
Technology acceleration in Forth Industrial Revolution
– Yantai Changyu Pioneer Wine has witnessed rapid integration of technology during Covid-19 in the Beverages (Alcoholic) industry. As one of the leading players in the industry, Yantai Changyu Pioneer Wine needs to keep up with the evolution of technology in the Beverages (Alcoholic) 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.
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 Yantai Changyu Pioneer Wine business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yantai Changyu Pioneer Wine in Beverages (Alcoholic) industry. The Beverages (Alcoholic) 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.
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 Yantai Changyu Pioneer Wine in the Beverages (Alcoholic) 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 Yantai Changyu Pioneer Wine.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Beverages (Alcoholic) industry are lowering. It can presents Yantai Changyu Pioneer Wine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Beverages (Alcoholic) sector.
Weighted SWOT Analysis of Yantai Changyu Pioneer Wine Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine 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 Yantai Changyu Pioneer Wine needs to make to build a sustainable competitive advantage.