Based on various researches at Oak Spring University , Yunnan Hongxiang Yixintang Pharma is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, talent flight as more people leaving formal jobs, geopolitical disruptions,
wage bills are increasing, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Yunnan Hongxiang Yixintang Pharma
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Yunnan Hongxiang Yixintang Pharma can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yunnan Hongxiang Yixintang Pharma, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma can be done for the following purposes –
1. Strategic planning of Yunnan Hongxiang Yixintang Pharma
2. Improving business portfolio management of Yunnan Hongxiang Yixintang Pharma
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Drugs) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Yunnan Hongxiang Yixintang Pharma
Strengths of Yunnan Hongxiang Yixintang Pharma | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yunnan Hongxiang Yixintang Pharma are -
Organizational Resilience of Yunnan Hongxiang Yixintang Pharma
– The covid-19 pandemic has put organizational resilience at the centre of everthing Yunnan Hongxiang Yixintang Pharma does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Yunnan Hongxiang Yixintang Pharma has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Yunnan Hongxiang Yixintang Pharma staying ahead in the Retail (Drugs) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Retail (Drugs) industry
– Yunnan Hongxiang Yixintang Pharma has clearly differentiated products in the market place. This has enabled Yunnan Hongxiang Yixintang Pharma to fetch slight price premium compare to the competitors in the Retail (Drugs) industry. The sustainable margins have also helped Yunnan Hongxiang Yixintang Pharma to invest into research and development (R&D) and innovation.
Training and development
– Yunnan Hongxiang Yixintang Pharma 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.
Innovation driven organization
– Yunnan Hongxiang Yixintang Pharma is one of the most innovative firm in Retail (Drugs) sector.
Superior customer experience
– The customer experience strategy of Yunnan Hongxiang Yixintang Pharma in Retail (Drugs) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Retail (Drugs)
– Yunnan Hongxiang Yixintang Pharma is one of the leading players in the Retail (Drugs) industry in China. Over the years it has not only transformed the business landscape in the Retail (Drugs) industry in China but also across the existing markets. The ability to lead change has enabled Yunnan Hongxiang Yixintang Pharma in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Yunnan Hongxiang Yixintang Pharma comprises – understanding the underlying the factors in the Retail (Drugs) 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.
Learning organization
- Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Yunnan Hongxiang Yixintang Pharma emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Yunnan Hongxiang Yixintang Pharma is present in almost all the verticals within the Retail (Drugs) industry. This has provided Yunnan Hongxiang Yixintang Pharma 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.
Highly skilled collaborators
– Yunnan Hongxiang Yixintang Pharma has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Drugs) industry. Secondly the value chain collaborators of Yunnan Hongxiang Yixintang Pharma have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Yunnan Hongxiang Yixintang Pharma 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.
Weaknesses of Yunnan Hongxiang Yixintang Pharma | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yunnan Hongxiang Yixintang Pharma are -
High bargaining power of channel partners in Retail (Drugs) industry
– because of the regulatory requirements in China, Yunnan Hongxiang Yixintang Pharma 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 Retail (Drugs) industry.
Capital Spending Reduction
– Even during the low interest decade, Yunnan Hongxiang Yixintang Pharma 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 (Drugs) industry using digital technology.
Skills based hiring in Retail (Drugs) industry
– The stress on hiring functional specialists at Yunnan Hongxiang Yixintang Pharma 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.
Compensation and incentives
– The revenue per employee of Yunnan Hongxiang Yixintang Pharma is just above the Retail (Drugs) 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.
Need for greater diversity
– Yunnan Hongxiang Yixintang Pharma 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.
Workers concerns about automation
– As automation is fast increasing in the Retail (Drugs) industry, Yunnan Hongxiang Yixintang Pharma 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.
High operating costs
– Compare to the competitors, Yunnan Hongxiang Yixintang Pharma has high operating costs in the Retail (Drugs) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Yunnan Hongxiang Yixintang Pharma lucrative customers.
Employees’ less understanding of Yunnan Hongxiang Yixintang Pharma strategy
– From the outside it seems that the employees of Yunnan Hongxiang Yixintang Pharma 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.
Aligning sales with marketing
– From the outside it seems that Yunnan Hongxiang Yixintang Pharma needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Drugs) industry have deep experience in developing customer relationships. Marketing department at Yunnan Hongxiang Yixintang Pharma can leverage the sales team experience to cultivate customer relationships as Yunnan Hongxiang Yixintang Pharma is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative at Yunnan Hongxiang Yixintang Pharma, in the dynamic environment of Retail (Drugs) industry it has struggled to respond to the nimble upstart competition. Yunnan Hongxiang Yixintang Pharma 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, Yunnan Hongxiang Yixintang Pharma needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Yunnan Hongxiang Yixintang Pharma Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Yunnan Hongxiang Yixintang Pharma are -
Developing new processes and practices
– Yunnan Hongxiang Yixintang Pharma can develop new processes and procedures in Retail (Drugs) 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.
Creating value in data economy
– The success of analytics program of Yunnan Hongxiang Yixintang Pharma has opened avenues for new revenue streams for the organization in Retail (Drugs) industry. This can help Yunnan Hongxiang Yixintang Pharma to build a more holistic ecosystem for Yunnan Hongxiang Yixintang Pharma products in the Retail (Drugs) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Yunnan Hongxiang Yixintang Pharma is facing challenges because of the dominance of functional experts in the organization. Yunnan Hongxiang Yixintang Pharma can utilize new technology in the field of Retail (Drugs) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yunnan Hongxiang Yixintang Pharma can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Yunnan Hongxiang Yixintang Pharma 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yunnan Hongxiang Yixintang Pharma 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Drugs) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Yunnan Hongxiang Yixintang Pharma 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. Yunnan Hongxiang Yixintang Pharma 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.
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 Yunnan Hongxiang Yixintang Pharma 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Yunnan Hongxiang Yixintang Pharma can use these opportunities to build new business models that can help the communities that Yunnan Hongxiang Yixintang Pharma operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
Building a culture of innovation
– managers at Yunnan Hongxiang Yixintang Pharma 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 (Drugs) industry.
Use of Bitcoin and other crypto currencies for transactions in Retail (Drugs) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Yunnan Hongxiang Yixintang Pharma in the Retail (Drugs) industry. Now Yunnan Hongxiang Yixintang Pharma can target international markets with far fewer capital restrictions requirements than the existing system.
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. Yunnan Hongxiang Yixintang Pharma can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Yunnan Hongxiang Yixintang Pharma External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Yunnan Hongxiang Yixintang Pharma are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Yunnan Hongxiang Yixintang Pharma with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Drugs) sector.
Environmental challenges
– Yunnan Hongxiang Yixintang Pharma 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. Yunnan Hongxiang Yixintang Pharma can take advantage of this fund but it will also bring new competitors in the Retail (Drugs) industry.
Regulatory challenges
– Yunnan Hongxiang Yixintang Pharma 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 (Drugs) industry regulations.
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. Yunnan Hongxiang Yixintang Pharma needs to understand the core reasons impacting the Retail (Drugs) industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma prominent markets.
Shortening product life cycle
– it is one of the major threat that Yunnan Hongxiang Yixintang Pharma is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Yunnan Hongxiang Yixintang Pharma business can come under increasing regulations regarding data privacy, data security, etc.
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. Yunnan Hongxiang Yixintang Pharma 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Yunnan Hongxiang Yixintang Pharma 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 (Drugs) sector.
Easy access to finance
– Easy access to finance in Retail (Drugs) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Yunnan Hongxiang Yixintang Pharma can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Yunnan Hongxiang Yixintang Pharma 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
– Yunnan Hongxiang Yixintang Pharma has witnessed rapid integration of technology during Covid-19 in the Retail (Drugs) industry. As one of the leading players in the industry, Yunnan Hongxiang Yixintang Pharma needs to keep up with the evolution of technology in the Retail (Drugs) 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.
Weighted SWOT Analysis of Yunnan Hongxiang Yixintang Pharma Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma 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 Yunnan Hongxiang Yixintang Pharma needs to make to build a sustainable competitive advantage.