SWOT Analysis / TOWS Matrix for Huafa Industrial Zhuhai (China)
Based on various researches at Oak Spring University , Huafa Industrial Zhuhai is operating in a macro-environment that has been destablized by – increasing energy prices, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
challanges to central banks by blockchain based private currencies, increasing commodity prices, etc
Introduction to SWOT Analysis of Huafa Industrial Zhuhai
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Huafa Industrial Zhuhai can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huafa Industrial Zhuhai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai can be done for the following purposes –
1. Strategic planning of Huafa Industrial Zhuhai
2. Improving business portfolio management of Huafa Industrial Zhuhai
3. Assessing feasibility of the new initiative in China
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Huafa Industrial Zhuhai
Strengths of Huafa Industrial Zhuhai | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huafa Industrial Zhuhai are -
High switching costs
– The high switching costs that Huafa Industrial Zhuhai 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.
Sustainable margins compare to other players in Construction Services industry
– Huafa Industrial Zhuhai has clearly differentiated products in the market place. This has enabled Huafa Industrial Zhuhai to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped Huafa Industrial Zhuhai to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Huafa Industrial Zhuhai has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Construction Services industry. Secondly the value chain collaborators of Huafa Industrial Zhuhai have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Huafa Industrial Zhuhai in the Capital Goods sector have low bargaining power. Huafa Industrial Zhuhai has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Huafa Industrial Zhuhai to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Huafa Industrial Zhuhai is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Construction Services industry. The technology infrastructure of China is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Huafa Industrial Zhuhai 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.
Diverse revenue streams
– Huafa Industrial Zhuhai is present in almost all the verticals within the Construction Services industry. This has provided Huafa Industrial Zhuhai 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
– Huafa Industrial Zhuhai is one of the most innovative firm in Construction Services sector.
Organizational Resilience of Huafa Industrial Zhuhai
– The covid-19 pandemic has put organizational resilience at the centre of everthing Huafa Industrial Zhuhai does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Construction Services industry
- digital transformation varies from industry to industry. For Huafa Industrial Zhuhai digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Huafa Industrial Zhuhai 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.
Strong track record of project management in the Construction Services industry
– Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai comprises – understanding the underlying the factors in the Construction Services 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 Huafa Industrial Zhuhai | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Huafa Industrial Zhuhai are -
Capital Spending Reduction
– Even during the low interest decade, Huafa Industrial Zhuhai 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 Construction Services industry using digital technology.
High bargaining power of channel partners in Construction Services industry
– because of the regulatory requirements in China, Huafa Industrial Zhuhai 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 Construction Services industry.
High cash cycle compare to competitors
Huafa Industrial Zhuhai has a high cash cycle compare to other players in the Construction Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Huafa Industrial Zhuhai 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.
High operating costs
– Compare to the competitors, Huafa Industrial Zhuhai has high operating costs in the Construction Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Huafa Industrial Zhuhai lucrative customers.
Low market penetration in new markets
– Outside its home market of China, Huafa Industrial Zhuhai needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Huafa Industrial Zhuhai, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. Huafa Industrial Zhuhai has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring in Construction Services industry
– The stress on hiring functional specialists at Huafa Industrial Zhuhai has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Huafa Industrial Zhuhai supply chain. Even after few cautionary changes, Huafa Industrial Zhuhai is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Huafa Industrial Zhuhai vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Huafa Industrial Zhuhai needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at Huafa Industrial Zhuhai can leverage the sales team experience to cultivate customer relationships as Huafa Industrial Zhuhai is planning to shift buying processes online.
Products dominated business model
– Even though Huafa Industrial Zhuhai has some of the most successful models in the Construction Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Huafa Industrial Zhuhai should strive to include more intangible value offerings along with its core products and services.
Huafa Industrial Zhuhai Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Huafa Industrial Zhuhai are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai 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
– Huafa Industrial Zhuhai 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.
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. Huafa Industrial Zhuhai can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Huafa Industrial Zhuhai 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 Construction Services industry.
Loyalty marketing
– Huafa Industrial Zhuhai 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Huafa Industrial Zhuhai is facing challenges because of the dominance of functional experts in the organization. Huafa Industrial Zhuhai can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Construction Services industry, but it has also influenced the consumer preferences. Huafa Industrial Zhuhai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Huafa Industrial Zhuhai can develop new processes and procedures in Construction Services 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Huafa Industrial Zhuhai 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
– Huafa Industrial Zhuhai can improve the customer journey of consumers in the Construction Services 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Huafa Industrial Zhuhai can use these opportunities to build new business models that can help the communities that Huafa Industrial Zhuhai operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Learning at scale
– Online learning technologies has now opened space for Huafa Industrial Zhuhai 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.
Threats Huafa Industrial Zhuhai External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Huafa Industrial Zhuhai are -
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Huafa Industrial Zhuhai.
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. Huafa Industrial Zhuhai will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huafa Industrial Zhuhai in Construction Services industry. The Construction Services 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.
High dependence on third party suppliers
– Huafa Industrial Zhuhai high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai prominent markets.
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 Huafa Industrial Zhuhai in the Construction Services sector and impact the bottomline of the organization.
Environmental challenges
– Huafa Industrial Zhuhai 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. Huafa Industrial Zhuhai can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
Shortening product life cycle
– it is one of the major threat that Huafa Industrial Zhuhai is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Huafa Industrial Zhuhai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Huafa Industrial Zhuhai needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Increasing wage structure of Huafa Industrial Zhuhai
– 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 Huafa Industrial Zhuhai.
Stagnating economy with rate increase
– Huafa Industrial Zhuhai 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 Construction Services industry.
Weighted SWOT Analysis of Huafa Industrial Zhuhai Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai 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 Huafa Industrial Zhuhai needs to make to build a sustainable competitive advantage.