GuangYuYuan Herbal Medicine (600771) SWOT Analysis / TOWS Matrix / MBA Resources
Personal & Household Prods.
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for GuangYuYuan Herbal Medicine (China)
Based on various researches at Oak Spring University , GuangYuYuan Herbal Medicine is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing energy prices, there is backlash against globalization, technology disruption,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of GuangYuYuan Herbal Medicine
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that GuangYuYuan Herbal Medicine can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the GuangYuYuan Herbal Medicine, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine can be done for the following purposes –
1. Strategic planning of GuangYuYuan Herbal Medicine
2. Improving business portfolio management of GuangYuYuan Herbal Medicine
3. Assessing feasibility of the new initiative in China
4. Making a Personal & Household Prods. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of GuangYuYuan Herbal Medicine
Strengths of GuangYuYuan Herbal Medicine | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of GuangYuYuan Herbal Medicine are -
High brand equity
– GuangYuYuan Herbal Medicine has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled GuangYuYuan Herbal Medicine to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– GuangYuYuan Herbal Medicine 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 Personal & Household Prods. 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.
Innovation driven organization
– GuangYuYuan Herbal Medicine is one of the most innovative firm in Personal & Household Prods. sector.
Effective Research and Development (R&D)
– GuangYuYuan Herbal Medicine has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – GuangYuYuan Herbal Medicine staying ahead in the Personal & Household Prods. industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at GuangYuYuan Herbal Medicine emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that GuangYuYuan Herbal Medicine has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– GuangYuYuan Herbal Medicine is one of the leading players in the Personal & Household Prods. industry in China. It is in a position to attract the best talent available in China. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy of GuangYuYuan Herbal Medicine comprises – understanding the underlying the factors in the Personal & Household Prods. 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.
Strong track record of project management in the Personal & Household Prods. industry
– GuangYuYuan Herbal Medicine is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of GuangYuYuan Herbal Medicine in Personal & Household Prods. industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– GuangYuYuan Herbal Medicine has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. GuangYuYuan Herbal Medicine has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Personal & Household Prods.
– GuangYuYuan Herbal Medicine is one of the leading players in the Personal & Household Prods. industry in China. Over the years it has not only transformed the business landscape in the Personal & Household Prods. industry in China but also across the existing markets. The ability to lead change has enabled GuangYuYuan Herbal Medicine in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of GuangYuYuan Herbal Medicine | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of GuangYuYuan Herbal Medicine are -
Increasing silos among functional specialists
– The organizational structure of GuangYuYuan Herbal Medicine is dominated by functional specialists. It is not different from other players in the Personal & Household Prods. industry, but GuangYuYuan Herbal Medicine needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help GuangYuYuan Herbal Medicine to focus more on services in the Personal & Household Prods. industry rather than just following the product oriented approach.
High dependence on GuangYuYuan Herbal Medicine ‘s star products
– The top 2 products and services of GuangYuYuan Herbal Medicine still accounts for major business revenue. This dependence on star products in Personal & Household Prods. industry has resulted into insufficient focus on developing new products, even though GuangYuYuan Herbal Medicine has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of China, GuangYuYuan Herbal Medicine needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ less understanding of GuangYuYuan Herbal Medicine strategy
– From the outside it seems that the employees of GuangYuYuan Herbal Medicine 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.
Slow decision making process
– As mentioned earlier in the report, GuangYuYuan Herbal Medicine has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Personal & Household Prods. industry over the last five years. GuangYuYuan Herbal Medicine even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As GuangYuYuan Herbal Medicine is one of the leading players in the Personal & Household Prods. industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Personal & Household Prods. industry in last five years.
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 GuangYuYuan Herbal Medicine supply chain. Even after few cautionary changes, GuangYuYuan Herbal Medicine is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left GuangYuYuan Herbal Medicine vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of GuangYuYuan Herbal Medicine products
– To increase the profitability and margins on the products, GuangYuYuan Herbal Medicine needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring in Personal & Household Prods. industry
– The stress on hiring functional specialists at GuangYuYuan Herbal Medicine 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.
Products dominated business model
– Even though GuangYuYuan Herbal Medicine has some of the most successful models in the Personal & Household Prods. industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. GuangYuYuan Herbal Medicine should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
GuangYuYuan Herbal Medicine has a high cash cycle compare to other players in the Personal & Household Prods. industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
GuangYuYuan Herbal Medicine Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of GuangYuYuan Herbal Medicine are -
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. GuangYuYuan Herbal Medicine can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– GuangYuYuan Herbal Medicine 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for GuangYuYuan Herbal Medicine in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Personal & Household Prods. industry, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Personal & Household Prods. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. GuangYuYuan Herbal Medicine 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. GuangYuYuan Herbal Medicine 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.
Loyalty marketing
– GuangYuYuan Herbal Medicine 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, GuangYuYuan Herbal Medicine is facing challenges because of the dominance of functional experts in the organization. GuangYuYuan Herbal Medicine can utilize new technology in the field of Personal & Household Prods. industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at GuangYuYuan Herbal Medicine 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 Personal & Household Prods. industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, GuangYuYuan Herbal Medicine 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.
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 GuangYuYuan Herbal Medicine 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, GuangYuYuan Herbal Medicine can use these opportunities to build new business models that can help the communities that GuangYuYuan Herbal Medicine operates in. Secondly it can use opportunities from government spending in Personal & Household Prods. sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects GuangYuYuan Herbal Medicine can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help GuangYuYuan Herbal Medicine to increase its market reach. GuangYuYuan Herbal Medicine 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.
Using analytics as competitive advantage
– GuangYuYuan Herbal Medicine has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Personal & Household Prods. sector. This continuous investment in analytics has enabled GuangYuYuan Herbal Medicine to build a competitive advantage using analytics. The analytics driven competitive advantage can help GuangYuYuan Herbal Medicine to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats GuangYuYuan Herbal Medicine External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of GuangYuYuan Herbal Medicine are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Personal & Household Prods. industry are lowering. It can presents GuangYuYuan Herbal Medicine with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Personal & Household Prods. sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for GuangYuYuan Herbal Medicine in the Personal & Household Prods. sector and impact the bottomline of the organization.
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.
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. GuangYuYuan Herbal Medicine will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High 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. GuangYuYuan Herbal Medicine needs to understand the core reasons impacting the Personal & Household Prods. industry. This will help it in building a better workplace.
Environmental challenges
– GuangYuYuan Herbal Medicine 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. GuangYuYuan Herbal Medicine can take advantage of this fund but it will also bring new competitors in the Personal & Household Prods. industry.
Increasing wage structure of GuangYuYuan Herbal Medicine
– 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 GuangYuYuan Herbal Medicine.
Shortening product life cycle
– it is one of the major threat that GuangYuYuan Herbal Medicine is facing in Personal & Household Prods. 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 Personal & Household Prods. industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. GuangYuYuan Herbal Medicine can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 GuangYuYuan Herbal Medicine.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for GuangYuYuan Herbal Medicine in Personal & Household Prods. industry. The Personal & Household Prods. 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.
Technology acceleration in Forth Industrial Revolution
– GuangYuYuan Herbal Medicine has witnessed rapid integration of technology during Covid-19 in the Personal & Household Prods. industry. As one of the leading players in the industry, GuangYuYuan Herbal Medicine needs to keep up with the evolution of technology in the Personal & Household Prods. 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine prominent markets.
Weighted SWOT Analysis of GuangYuYuan Herbal Medicine Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine 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 GuangYuYuan Herbal Medicine needs to make to build a sustainable competitive advantage.
