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 – increasing commodity prices, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, geopolitical disruptions,
talent flight as more people leaving formal jobs, increasing energy prices, 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 -
Training and development
– Shanghai Waigaoqiao Free Trade Zone has one of the best training and development program in Services industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
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.
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.
High brand equity
– Shanghai Waigaoqiao Free Trade Zone has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanghai Waigaoqiao Free Trade Zone to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
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.
Ability to lead change in Retail (Department & Discount)
– Shanghai Waigaoqiao Free Trade Zone is one of the leading players in the Retail (Department & Discount) industry in China. Over the years it has not only transformed the business landscape in the Retail (Department & Discount) industry in China but also across the existing markets. The ability to lead change has enabled Shanghai Waigaoqiao Free Trade Zone in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
Organizational Resilience of Shanghai Waigaoqiao Free Trade Zone
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shanghai Waigaoqiao Free Trade Zone does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Shanghai Waigaoqiao Free Trade Zone is one of the most innovative firm in Retail (Department & Discount) sector.
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 -
Interest costs
– Compare to the competition, Shanghai Waigaoqiao Free Trade Zone has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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 Shanghai Waigaoqiao Free Trade Zone supply chain. Even after few cautionary changes, Shanghai Waigaoqiao Free Trade Zone is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shanghai Waigaoqiao Free Trade Zone vulnerable to further global disruptions in South East Asia.
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.
Workers concerns about automation
– As automation is fast increasing in the Retail (Department & Discount) industry, Shanghai Waigaoqiao Free Trade Zone needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
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.
Skills based hiring in Retail (Department & Discount) industry
– The stress on hiring functional specialists at Shanghai Waigaoqiao Free Trade Zone has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of 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.
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.
Employees’ less understanding of Shanghai Waigaoqiao Free Trade Zone strategy
– From the outside it seems that the employees of Shanghai Waigaoqiao Free Trade Zone don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Shanghai Waigaoqiao Free Trade Zone 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.
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 -
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.
Use of Bitcoin and other crypto currencies for transactions in Retail (Department & Discount) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shanghai Waigaoqiao Free Trade Zone in the Retail (Department & Discount) industry. Now Shanghai Waigaoqiao Free Trade Zone can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Shanghai Waigaoqiao Free Trade Zone can improve the customer journey of consumers in the Retail (Department & Discount) 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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shanghai Waigaoqiao Free Trade Zone can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
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.
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.
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.
Building a culture of innovation
– managers at Shanghai Waigaoqiao Free Trade Zone 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 Retail (Department & Discount) industry.
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 -
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.
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shanghai Waigaoqiao Free Trade Zone 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 Shanghai Waigaoqiao Free Trade Zone prominent markets.
Consumer confidence and its impact on Shanghai Waigaoqiao Free Trade Zone 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 Retail (Department & Discount) industry and other sectors.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
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.
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.
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.