MengDian HuaNeng Power (600863) SWOT Analysis / TOWS Matrix / MBA Resources
Electric Utilities
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for MengDian HuaNeng Power (China)
Based on various researches at Oak Spring University , MengDian HuaNeng Power is operating in a macro-environment that has been destablized by – increasing energy prices, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, there is backlash against globalization, wage bills are increasing, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of MengDian HuaNeng Power
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that MengDian HuaNeng Power can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the MengDian HuaNeng Power, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which MengDian HuaNeng Power 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 MengDian HuaNeng Power can be done for the following purposes –
1. Strategic planning of MengDian HuaNeng Power
2. Improving business portfolio management of MengDian HuaNeng Power
3. Assessing feasibility of the new initiative in China
4. Making a Electric Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of MengDian HuaNeng Power
Strengths of MengDian HuaNeng Power | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of MengDian HuaNeng Power are -
Organizational Resilience of MengDian HuaNeng Power
– The covid-19 pandemic has put organizational resilience at the centre of everthing MengDian HuaNeng Power does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– MengDian HuaNeng Power has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Electric Utilities industry. Secondly the value chain collaborators of MengDian HuaNeng Power have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- MengDian HuaNeng Power 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 MengDian HuaNeng Power is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at MengDian HuaNeng Power emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– MengDian HuaNeng Power is one of the most innovative firm in Electric Utilities sector.
Diverse revenue streams
– MengDian HuaNeng Power is present in almost all the verticals within the Electric Utilities industry. This has provided MengDian HuaNeng Power 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
– MengDian HuaNeng Power has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled MengDian HuaNeng Power to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– MengDian HuaNeng Power has one of the best training and development program in Utilities 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.
Low bargaining power of suppliers
– Suppliers of MengDian HuaNeng Power in the Utilities sector have low bargaining power. MengDian HuaNeng Power has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps MengDian HuaNeng Power to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Electric Utilities industry
– MengDian HuaNeng Power has clearly differentiated products in the market place. This has enabled MengDian HuaNeng Power to fetch slight price premium compare to the competitors in the Electric Utilities industry. The sustainable margins have also helped MengDian HuaNeng Power to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that MengDian HuaNeng Power 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.
Cross disciplinary teams
– Horizontal connected teams at the MengDian HuaNeng Power 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.
Ability to lead change in Electric Utilities
– MengDian HuaNeng Power is one of the leading players in the Electric Utilities industry in China. Over the years it has not only transformed the business landscape in the Electric Utilities industry in China but also across the existing markets. The ability to lead change has enabled MengDian HuaNeng Power in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of MengDian HuaNeng Power | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MengDian HuaNeng Power are -
Low market penetration in new markets
– Outside its home market of China, MengDian HuaNeng Power needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of MengDian HuaNeng Power is dominated by functional specialists. It is not different from other players in the Electric Utilities industry, but MengDian HuaNeng Power needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help MengDian HuaNeng Power to focus more on services in the Electric Utilities industry rather than just following the product oriented approach.
Aligning sales with marketing
– From the outside it seems that MengDian HuaNeng Power needs to have more collaboration between its sales team and marketing team. Sales professionals in the Electric Utilities industry have deep experience in developing customer relationships. Marketing department at MengDian HuaNeng Power can leverage the sales team experience to cultivate customer relationships as MengDian HuaNeng Power is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative at MengDian HuaNeng Power, in the dynamic environment of Electric Utilities industry it has struggled to respond to the nimble upstart competition. MengDian HuaNeng Power 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 Electric Utilities industry
– The stress on hiring functional specialists at MengDian HuaNeng Power 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.
Lack of clear differentiation of MengDian HuaNeng Power products
– To increase the profitability and margins on the products, MengDian HuaNeng Power needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
MengDian HuaNeng Power has a high cash cycle compare to other players in the Electric Utilities industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on MengDian HuaNeng Power ‘s star products
– The top 2 products and services of MengDian HuaNeng Power still accounts for major business revenue. This dependence on star products in Electric Utilities industry has resulted into insufficient focus on developing new products, even though MengDian HuaNeng Power has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, MengDian HuaNeng Power has high operating costs in the Electric Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract MengDian HuaNeng Power lucrative customers.
Slow to strategic competitive environment developments
– As MengDian HuaNeng Power is one of the leading players in the Electric Utilities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Electric Utilities industry in last five years.
No frontier risks strategy
– From the 10K / annual statement of MengDian HuaNeng Power, it seems that company is thinking out the frontier risks that can impact Electric Utilities 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.
MengDian HuaNeng Power Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of MengDian HuaNeng Power are -
Leveraging digital technologies
– MengDian HuaNeng Power 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, MengDian HuaNeng Power can use these opportunities to build new business models that can help the communities that MengDian HuaNeng Power operates in. Secondly it can use opportunities from government spending in Electric Utilities sector.
Using analytics as competitive advantage
– MengDian HuaNeng Power has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Electric Utilities sector. This continuous investment in analytics has enabled MengDian HuaNeng Power to build a competitive advantage using analytics. The analytics driven competitive advantage can help MengDian HuaNeng Power to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help MengDian HuaNeng Power to increase its market reach. MengDian HuaNeng Power 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.
Use of Bitcoin and other crypto currencies for transactions in Electric Utilities industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for MengDian HuaNeng Power in the Electric Utilities industry. Now MengDian HuaNeng Power can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, MengDian HuaNeng Power 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 MengDian HuaNeng Power to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for MengDian HuaNeng Power in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Electric Utilities industry, and it will provide faster access to the consumers.
Buying journey improvements
– MengDian HuaNeng Power can improve the customer journey of consumers in the Electric Utilities 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, MengDian HuaNeng Power 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for MengDian HuaNeng Power 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 MengDian HuaNeng Power to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects MengDian HuaNeng Power can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– MengDian HuaNeng Power can use the latest technology developments to improve its manufacturing and designing process in Electric Utilities sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at MengDian HuaNeng Power 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 Electric Utilities industry.
Threats MengDian HuaNeng Power External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of MengDian HuaNeng Power 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 MengDian HuaNeng Power.
Easy access to finance
– Easy access to finance in Electric Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. MengDian HuaNeng Power can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, MengDian HuaNeng Power 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 MengDian HuaNeng Power prominent markets.
High dependence on third party suppliers
– MengDian HuaNeng Power 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.
Consumer confidence and its impact on MengDian HuaNeng Power 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 Electric Utilities industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– MengDian HuaNeng Power has witnessed rapid integration of technology during Covid-19 in the Electric Utilities industry. As one of the leading players in the industry, MengDian HuaNeng Power needs to keep up with the evolution of technology in the Electric Utilities 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.
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.
Shortening product life cycle
– it is one of the major threat that MengDian HuaNeng Power is facing in Electric Utilities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of MengDian HuaNeng Power
– 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 MengDian HuaNeng Power.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, MengDian HuaNeng Power may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Electric Utilities sector.
Environmental challenges
– MengDian HuaNeng Power 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. MengDian HuaNeng Power can take advantage of this fund but it will also bring new competitors in the Electric Utilities industry.
Regulatory challenges
– MengDian HuaNeng Power 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 Electric Utilities industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for MengDian HuaNeng Power in Electric Utilities industry. The Electric Utilities 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.
Weighted SWOT Analysis of MengDian HuaNeng Power Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at MengDian HuaNeng Power 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 MengDian HuaNeng Power 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 MengDian HuaNeng Power 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 MengDian HuaNeng Power 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 MengDian HuaNeng Power needs to make to build a sustainable competitive advantage.