Shanghai Waigaoqiao Free Trade Zone (600648) SWOT Analysis / TOWS Matrix / MBA Resources
Retail (Department & Discount)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Shanghai Waigaoqiao Free Trade Zone (China)
Based on various researches at Oak Spring University , Shanghai Waigaoqiao Free Trade Zone is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing energy prices, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Shanghai Waigaoqiao Free Trade Zone
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanghai Waigaoqiao Free Trade Zone can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanghai Waigaoqiao Free Trade Zone, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone can be done for the following purposes –
1. Strategic planning of Shanghai Waigaoqiao Free Trade Zone
2. Improving business portfolio management of Shanghai Waigaoqiao Free Trade Zone
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Department & Discount) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shanghai Waigaoqiao Free Trade Zone
Strengths of Shanghai Waigaoqiao Free Trade Zone | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shanghai Waigaoqiao Free Trade Zone are -
Sustainable margins compare to other players in Retail (Department & Discount) industry
– Shanghai Waigaoqiao Free Trade Zone has clearly differentiated products in the market place. This has enabled Shanghai Waigaoqiao Free Trade Zone to fetch slight price premium compare to the competitors in the Retail (Department & Discount) industry. The sustainable margins have also helped Shanghai Waigaoqiao Free Trade Zone to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Shanghai Waigaoqiao Free Trade Zone in the Services sector have low bargaining power. Shanghai Waigaoqiao Free Trade Zone has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shanghai Waigaoqiao Free Trade Zone to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shanghai Waigaoqiao Free Trade Zone emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Shanghai Waigaoqiao Free Trade Zone is present in almost all the verticals within the Retail (Department & Discount) industry. This has provided Shanghai Waigaoqiao Free Trade Zone 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.
Ability to recruit top talent
– Shanghai Waigaoqiao Free Trade Zone is one of the leading players in the Retail (Department & Discount) 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.
High switching costs
– The high switching costs that Shanghai Waigaoqiao Free Trade Zone 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.
Innovation driven organization
– Shanghai Waigaoqiao Free Trade Zone is one of the most innovative firm in Retail (Department & Discount) sector.
Strong track record of project management in the Retail (Department & Discount) industry
– Shanghai Waigaoqiao Free Trade Zone is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Retail (Department & Discount) industry
- digital transformation varies from industry to industry. For Shanghai Waigaoqiao Free Trade Zone digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shanghai Waigaoqiao Free Trade Zone 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.
Highly skilled collaborators
– Shanghai Waigaoqiao Free Trade Zone has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Department & Discount) industry. Secondly the value chain collaborators of Shanghai Waigaoqiao Free Trade Zone have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Shanghai Waigaoqiao Free Trade Zone in Retail (Department & Discount) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy of Shanghai Waigaoqiao Free Trade Zone comprises – understanding the underlying the factors in the Retail (Department & Discount) 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 Shanghai Waigaoqiao Free Trade Zone | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanghai Waigaoqiao Free Trade Zone are -
Compensation and incentives
– The revenue per employee of Shanghai Waigaoqiao Free Trade Zone is just above the Retail (Department & Discount) 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 operating costs
– Compare to the competitors, Shanghai Waigaoqiao Free Trade Zone has high operating costs in the Retail (Department & Discount) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shanghai Waigaoqiao Free Trade Zone lucrative customers.
Low market penetration in new markets
– Outside its home market of China, Shanghai Waigaoqiao Free Trade Zone needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Shanghai Waigaoqiao Free Trade Zone 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 Retail (Department & Discount) industry using digital technology.
Products dominated business model
– Even though Shanghai Waigaoqiao Free Trade Zone has some of the most successful models in the Retail (Department & Discount) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Shanghai Waigaoqiao Free Trade Zone should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Shanghai Waigaoqiao Free Trade Zone has a high cash cycle compare to other players in the Retail (Department & Discount) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– From the 10K / annual statement of Shanghai Waigaoqiao Free Trade Zone, it seems that company is thinking out the frontier risks that can impact Retail (Department & Discount) industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Lack of clear differentiation of Shanghai Waigaoqiao Free Trade Zone products
– To increase the profitability and margins on the products, Shanghai Waigaoqiao Free Trade Zone needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shanghai Waigaoqiao Free Trade Zone is slow explore the new channels of communication. These new channels of communication can help Shanghai Waigaoqiao Free Trade Zone to provide better information regarding Retail (Department & Discount) products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Shanghai Waigaoqiao Free Trade Zone is dominated by functional specialists. It is not different from other players in the Retail (Department & Discount) industry, but Shanghai Waigaoqiao Free Trade Zone needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shanghai Waigaoqiao Free Trade Zone to focus more on services in the Retail (Department & Discount) industry rather than just following the product oriented approach.
High dependence on Shanghai Waigaoqiao Free Trade Zone ‘s star products
– The top 2 products and services of Shanghai Waigaoqiao Free Trade Zone still accounts for major business revenue. This dependence on star products in Retail (Department & Discount) industry has resulted into insufficient focus on developing new products, even though Shanghai Waigaoqiao Free Trade Zone has relatively successful track record of launching new products.
Shanghai Waigaoqiao Free Trade Zone Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shanghai Waigaoqiao Free Trade Zone are -
Loyalty marketing
– Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone 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.
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. Shanghai Waigaoqiao Free Trade Zone can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Shanghai Waigaoqiao Free Trade Zone 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.
Using analytics as competitive advantage
– Shanghai Waigaoqiao Free Trade Zone has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Department & Discount) sector. This continuous investment in analytics has enabled Shanghai Waigaoqiao Free Trade Zone to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shanghai Waigaoqiao Free Trade Zone to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shanghai Waigaoqiao Free Trade Zone to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Shanghai Waigaoqiao Free Trade Zone to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Shanghai Waigaoqiao Free Trade Zone to increase its market reach. Shanghai Waigaoqiao Free Trade Zone 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shanghai Waigaoqiao Free Trade Zone 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 (Department & Discount) industry, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shanghai Waigaoqiao Free Trade Zone is facing challenges because of the dominance of functional experts in the organization. Shanghai Waigaoqiao Free Trade Zone can utilize new technology in the field of Retail (Department & Discount) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Department & Discount) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shanghai Waigaoqiao Free Trade Zone 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. Shanghai Waigaoqiao Free Trade Zone 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.
Developing new processes and practices
– Shanghai Waigaoqiao Free Trade Zone can develop new processes and procedures in Retail (Department & Discount) 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.
Leveraging digital technologies
– Shanghai Waigaoqiao Free Trade Zone 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, Shanghai Waigaoqiao Free Trade Zone can use these opportunities to build new business models that can help the communities that Shanghai Waigaoqiao Free Trade Zone operates in. Secondly it can use opportunities from government spending in Retail (Department & Discount) sector.
Threats Shanghai Waigaoqiao Free Trade Zone External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shanghai Waigaoqiao Free Trade Zone are -
Stagnating economy with rate increase
– Shanghai Waigaoqiao Free Trade Zone 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 (Department & Discount) 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 Shanghai Waigaoqiao Free Trade Zone in the Retail (Department & Discount) sector and impact the bottomline of the organization.
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. Shanghai Waigaoqiao Free Trade Zone 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.
Shortening product life cycle
– it is one of the major threat that Shanghai Waigaoqiao Free Trade Zone is facing in Retail (Department & Discount) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shanghai Waigaoqiao Free Trade Zone in Retail (Department & Discount) industry. The Retail (Department & Discount) 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.
Environmental challenges
– Shanghai Waigaoqiao Free Trade Zone 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. Shanghai Waigaoqiao Free Trade Zone can take advantage of this fund but it will also bring new competitors in the Retail (Department & Discount) industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shanghai Waigaoqiao Free Trade Zone 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 (Department & Discount) sector.
Regulatory challenges
– Shanghai Waigaoqiao Free Trade Zone 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 (Department & Discount) industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Department & Discount) industry are lowering. It can presents Shanghai Waigaoqiao Free Trade Zone with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Department & Discount) sector.
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 Shanghai Waigaoqiao Free Trade Zone business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Shanghai Waigaoqiao Free Trade Zone 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.
Technology acceleration in Forth Industrial Revolution
– Shanghai Waigaoqiao Free Trade Zone has witnessed rapid integration of technology during Covid-19 in the Retail (Department & Discount) industry. As one of the leading players in the industry, Shanghai Waigaoqiao Free Trade Zone needs to keep up with the evolution of technology in the Retail (Department & Discount) 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.
Increasing wage structure of Shanghai Waigaoqiao Free Trade Zone
– 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 Shanghai Waigaoqiao Free Trade Zone.
Weighted SWOT Analysis of Shanghai Waigaoqiao Free Trade Zone Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone needs to make to build a sustainable competitive advantage.
