North Navigation (600435) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for North Navigation (China)

Based on various researches at Oak Spring University , North Navigation is operating in a macro-environment that has been destablized by – wage bills are increasing, increasing transportation and logistics costs, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc

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Introduction to SWOT Analysis of North Navigation

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that North Navigation can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the North Navigation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which North Navigation 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of North Navigation can be done for the following purposes –
1. Strategic planning of North Navigation
2. Improving business portfolio management of North Navigation
3. Assessing feasibility of the new initiative in China
4. Making a Aerospace & Defense sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of North Navigation

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Strengths of North Navigation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of North Navigation are -

Diverse revenue streams

– North Navigation is present in almost all the verticals within the Aerospace & Defense industry. This has provided North Navigation 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.

Sustainable margins compare to other players in Aerospace & Defense industry

– North Navigation has clearly differentiated products in the market place. This has enabled North Navigation to fetch slight price premium compare to the competitors in the Aerospace & Defense industry. The sustainable margins have also helped North Navigation to invest into research and development (R&D) and innovation.

Training and development

– North Navigation has one of the best training and development program in Capital Goods 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 North Navigation in the Capital Goods sector have low bargaining power. North Navigation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps North Navigation to manage not only supply disruptions but also source products at highly competitive prices.

Superior customer experience

– The customer experience strategy of North Navigation in Aerospace & Defense industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

High brand equity

– North Navigation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled North Navigation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to lead change in Aerospace & Defense

– North Navigation is one of the leading players in the Aerospace & Defense industry in China. Over the years it has not only transformed the business landscape in the Aerospace & Defense industry in China but also across the existing markets. The ability to lead change has enabled North Navigation in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Learning organization

- North Navigation 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 North Navigation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at North Navigation emphasize – knowledge, initiative, and innovation.

Effective Research and Development (R&D)

– North Navigation has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – North Navigation staying ahead in the Aerospace & Defense industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Cross disciplinary teams

– Horizontal connected teams at the North Navigation 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.

Highly skilled collaborators

– North Navigation has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Aerospace & Defense industry. Secondly the value chain collaborators of North Navigation have helped the firm to develop new products and bring them quickly to the marketplace.

Analytics focus

– North Navigation 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 Aerospace & Defense 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.

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Weaknesses of North Navigation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of North Navigation are -

High dependence on North Navigation ‘s star products

– The top 2 products and services of North Navigation still accounts for major business revenue. This dependence on star products in Aerospace & Defense industry has resulted into insufficient focus on developing new products, even though North Navigation has relatively successful track record of launching new products.

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 North Navigation supply chain. Even after few cautionary changes, North Navigation is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left North Navigation vulnerable to further global disruptions in South East Asia.

High cash cycle compare to competitors

North Navigation has a high cash cycle compare to other players in the Aerospace & Defense 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 operating costs

– Compare to the competitors, North Navigation has high operating costs in the Aerospace & Defense industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract North Navigation lucrative customers.

High bargaining power of channel partners in Aerospace & Defense industry

– because of the regulatory requirements in China, North Navigation 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 Aerospace & Defense industry.

Lack of clear differentiation of North Navigation products

– To increase the profitability and margins on the products, North Navigation needs to provide more differentiated products than what it is currently offering in the marketplace.

Workers concerns about automation

– As automation is fast increasing in the Aerospace & Defense industry, North Navigation 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.

Increasing silos among functional specialists

– The organizational structure of North Navigation is dominated by functional specialists. It is not different from other players in the Aerospace & Defense industry, but North Navigation needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help North Navigation to focus more on services in the Aerospace & Defense industry rather than just following the product oriented approach.

Aligning sales with marketing

– From the outside it seems that North Navigation needs to have more collaboration between its sales team and marketing team. Sales professionals in the Aerospace & Defense industry have deep experience in developing customer relationships. Marketing department at North Navigation can leverage the sales team experience to cultivate customer relationships as North Navigation is planning to shift buying processes online.

Low market penetration in new markets

– Outside its home market of China, North Navigation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, North Navigation is slow explore the new channels of communication. These new channels of communication can help North Navigation to provide better information regarding Aerospace & Defense products and services. It can also build an online community to further reach out to potential customers.

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North Navigation Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of North Navigation are -

Low interest rates

– Even though inflation is raising its head in most developed economies, North Navigation 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.

Use of Bitcoin and other crypto currencies for transactions in Aerospace & Defense industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for North Navigation in the Aerospace & Defense industry. Now North Navigation can target international markets with far fewer capital restrictions requirements than the existing system.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, North Navigation can use these opportunities to build new business models that can help the communities that North Navigation operates in. Secondly it can use opportunities from government spending in Aerospace & Defense sector.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for North Navigation 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 North Navigation to hire the very best people irrespective of their geographical location.

Loyalty marketing

– North Navigation 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, North Navigation is facing challenges because of the dominance of functional experts in the organization. North Navigation can utilize new technology in the field of Aerospace & Defense industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

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 North Navigation 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.

Manufacturing automation

– North Navigation can use the latest technology developments to improve its manufacturing and designing process in Aerospace & Defense 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for North Navigation in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Aerospace & Defense 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. North Navigation can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Creating value in data economy

– The success of analytics program of North Navigation has opened avenues for new revenue streams for the organization in Aerospace & Defense industry. This can help North Navigation to build a more holistic ecosystem for North Navigation products in the Aerospace & Defense industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Using analytics as competitive advantage

– North Navigation has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Aerospace & Defense sector. This continuous investment in analytics has enabled North Navigation to build a competitive advantage using analytics. The analytics driven competitive advantage can help North Navigation to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Buying journey improvements

– North Navigation can improve the customer journey of consumers in the Aerospace & Defense 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.

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Threats North Navigation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of North Navigation 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 North Navigation.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Aerospace & Defense industry are lowering. It can presents North Navigation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Aerospace & Defense sector.

Increasing wage structure of North Navigation

– 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 North Navigation.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, North Navigation may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Aerospace & Defense sector.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of North Navigation business can come under increasing regulations regarding data privacy, data security, etc.

Shortening product life cycle

– it is one of the major threat that North Navigation is facing in Aerospace & Defense sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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 North Navigation in the Aerospace & Defense sector and impact the bottomline of the organization.

Easy access to finance

– Easy access to finance in Aerospace & Defense industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. North Navigation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 North Navigation in Aerospace & Defense industry. The Aerospace & Defense 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.

Consumer confidence and its impact on North Navigation 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 Aerospace & Defense industry and other sectors.

Regulatory challenges

– North Navigation 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 Aerospace & Defense industry regulations.

High dependence on third party suppliers

– North Navigation 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.

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Weighted SWOT Analysis of North Navigation Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at North Navigation 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 North Navigation 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 North Navigation 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 North Navigation 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 North Navigation needs to make to build a sustainable competitive advantage.

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