Shandong Chenming Paper (200488) SWOT Analysis / TOWS Matrix / MBA Resources
Paper & Paper Products
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Shandong Chenming Paper (China)
Based on various researches at Oak Spring University , Shandong Chenming Paper is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, geopolitical disruptions, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing energy prices,
there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Shandong Chenming Paper
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shandong Chenming Paper can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shandong Chenming Paper, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shandong Chenming Paper 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 Chenming Paper can be done for the following purposes –
1. Strategic planning of Shandong Chenming Paper
2. Improving business portfolio management of Shandong Chenming Paper
3. Assessing feasibility of the new initiative in China
4. Making a Paper & Paper Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shandong Chenming Paper
Strengths of Shandong Chenming Paper | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shandong Chenming Paper are -
High switching costs
– The high switching costs that Shandong Chenming Paper 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.
Superior customer experience
– The customer experience strategy of Shandong Chenming Paper in Paper & Paper Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Shandong Chenming Paper is present in almost all the verticals within the Paper & Paper Products industry. This has provided Shandong Chenming Paper 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.
Innovation driven organization
– Shandong Chenming Paper is one of the most innovative firm in Paper & Paper Products sector.
Cross disciplinary teams
– Horizontal connected teams at the Shandong Chenming Paper 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.
Effective Research and Development (R&D)
– Shandong Chenming Paper has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shandong Chenming Paper staying ahead in the Paper & Paper Products 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 Paper & Paper Products
– Shandong Chenming Paper is one of the leading players in the Paper & Paper Products industry in China. Over the years it has not only transformed the business landscape in the Paper & Paper Products industry in China but also across the existing markets. The ability to lead change has enabled Shandong Chenming Paper in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Shandong Chenming Paper 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 Shandong Chenming Paper is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shandong Chenming Paper emphasize – knowledge, initiative, and innovation.
Training and development
– Shandong Chenming Paper has one of the best training and development program in Basic Materials 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.
High brand equity
– Shandong Chenming Paper has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shandong Chenming Paper to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management in the Paper & Paper Products industry
– Shandong Chenming Paper is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Shandong Chenming Paper comprises – understanding the underlying the factors in the Paper & Paper Products 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.
Weaknesses of Shandong Chenming Paper | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shandong Chenming Paper are -
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 Shandong Chenming Paper supply chain. Even after few cautionary changes, Shandong Chenming Paper is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shandong Chenming Paper vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Shandong Chenming Paper has some of the most successful models in the Paper & Paper Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Shandong Chenming Paper should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee of Shandong Chenming Paper is just above the Paper & Paper Products 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.
High bargaining power of channel partners in Paper & Paper Products industry
– because of the regulatory requirements in China, Shandong Chenming Paper 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 Paper & Paper Products industry.
Lack of clear differentiation of Shandong Chenming Paper products
– To increase the profitability and margins on the products, Shandong Chenming Paper needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Shandong Chenming Paper is one of the leading players in the Paper & Paper Products industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Paper & Paper Products industry in last five years.
High operating costs
– Compare to the competitors, Shandong Chenming Paper has high operating costs in the Paper & Paper Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shandong Chenming Paper lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shandong Chenming Paper is slow explore the new channels of communication. These new channels of communication can help Shandong Chenming Paper to provide better information regarding Paper & Paper Products products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that Shandong Chenming Paper needs to have more collaboration between its sales team and marketing team. Sales professionals in the Paper & Paper Products industry have deep experience in developing customer relationships. Marketing department at Shandong Chenming Paper can leverage the sales team experience to cultivate customer relationships as Shandong Chenming Paper is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Shandong Chenming Paper has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Paper & Paper Products industry over the last five years. Shandong Chenming Paper 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.
Increasing silos among functional specialists
– The organizational structure of Shandong Chenming Paper is dominated by functional specialists. It is not different from other players in the Paper & Paper Products industry, but Shandong Chenming Paper needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shandong Chenming Paper to focus more on services in the Paper & Paper Products industry rather than just following the product oriented approach.
Shandong Chenming Paper Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shandong Chenming Paper are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shandong Chenming Paper can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Shandong Chenming Paper can improve the customer journey of consumers in the Paper & Paper Products 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 Paper & Paper Products industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shandong Chenming Paper in the Paper & Paper Products industry. Now Shandong Chenming Paper can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Shandong Chenming Paper has opened avenues for new revenue streams for the organization in Paper & Paper Products industry. This can help Shandong Chenming Paper to build a more holistic ecosystem for Shandong Chenming Paper products in the Paper & Paper Products industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Shandong Chenming Paper 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 Paper & Paper Products industry.
Manufacturing automation
– Shandong Chenming Paper can use the latest technology developments to improve its manufacturing and designing process in Paper & Paper Products 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shandong Chenming Paper 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 Chenming Paper to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Shandong Chenming Paper 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shandong Chenming Paper is facing challenges because of the dominance of functional experts in the organization. Shandong Chenming Paper can utilize new technology in the field of Paper & Paper Products industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Shandong Chenming Paper 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
– Shandong Chenming Paper can develop new processes and procedures in Paper & Paper Products 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shandong Chenming Paper 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.
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 Chenming Paper can use these opportunities to build new business models that can help the communities that Shandong Chenming Paper operates in. Secondly it can use opportunities from government spending in Paper & Paper Products sector.
Threats Shandong Chenming Paper External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shandong Chenming Paper are -
Increasing wage structure of Shandong Chenming Paper
– 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 Chenming Paper.
Easy access to finance
– Easy access to finance in Paper & Paper Products industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shandong Chenming Paper can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shandong Chenming Paper 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 Chenming Paper prominent markets.
Technology acceleration in Forth Industrial Revolution
– Shandong Chenming Paper has witnessed rapid integration of technology during Covid-19 in the Paper & Paper Products industry. As one of the leading players in the industry, Shandong Chenming Paper needs to keep up with the evolution of technology in the Paper & Paper Products 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.
Consumer confidence and its impact on Shandong Chenming Paper 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 Paper & Paper Products industry and other sectors.
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 Shandong Chenming Paper in the Paper & Paper Products sector and impact the bottomline 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 Shandong Chenming Paper business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Shandong Chenming Paper 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 Paper & Paper Products industry regulations.
Stagnating economy with rate increase
– Shandong Chenming Paper 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 Paper & Paper Products industry.
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. Shandong Chenming Paper needs to understand the core reasons impacting the Paper & Paper Products industry. This will help it in building a better workplace.
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.
Environmental challenges
– Shandong Chenming Paper 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. Shandong Chenming Paper can take advantage of this fund but it will also bring new competitors in the Paper & Paper Products industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shandong Chenming Paper may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Paper & Paper Products sector.
Weighted SWOT Analysis of Shandong Chenming Paper Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shandong Chenming Paper 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 Chenming Paper 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 Chenming Paper 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 Chenming Paper 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 Chenming Paper needs to make to build a sustainable competitive advantage.
