SWOT Analysis / TOWS Matrix for Pengxin Mining (China)
Based on various researches at Oak Spring University , Pengxin Mining is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing household debt because of falling income levels, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Pengxin Mining can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pengxin Mining, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pengxin Mining 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 Pengxin Mining can be done for the following purposes –
1. Strategic planning of Pengxin Mining
2. Improving business portfolio management of Pengxin Mining
3. Assessing feasibility of the new initiative in China
4. Making a Coal sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pengxin Mining
Strengths of Pengxin Mining | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pengxin Mining are -
Organizational Resilience of Pengxin Mining
– The covid-19 pandemic has put organizational resilience at the centre of everthing Pengxin Mining does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Pengxin Mining in the Energy sector have low bargaining power. Pengxin Mining has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pengxin Mining to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Coal industry
– Pengxin Mining has clearly differentiated products in the market place. This has enabled Pengxin Mining to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped Pengxin Mining to invest into research and development (R&D) and innovation.
High brand equity
– Pengxin Mining has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pengxin Mining to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Pengxin Mining has one of the best training and development program in Energy 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.
Strong track record of project management in the Coal industry
– Pengxin Mining is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Pengxin Mining 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 Pengxin Mining is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Pengxin Mining emphasize – knowledge, initiative, and innovation.
Digital Transformation in Coal industry
- digital transformation varies from industry to industry. For Pengxin Mining digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pengxin Mining 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.
Ability to lead change in Coal
– Pengxin Mining is one of the leading players in the Coal industry in China. Over the years it has not only transformed the business landscape in the Coal industry in China but also across the existing markets. The ability to lead change has enabled Pengxin Mining in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Pengxin Mining 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.
Effective Research and Development (R&D)
– Pengxin Mining has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Pengxin Mining staying ahead in the Coal industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Pengxin Mining is present in almost all the verticals within the Coal industry. This has provided Pengxin Mining 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.
Weaknesses of Pengxin Mining | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pengxin Mining are -
Compensation and incentives
– The revenue per employee of Pengxin Mining is just above the Coal industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High cash cycle compare to competitors
Pengxin Mining has a high cash cycle compare to other players in the Coal industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pengxin Mining is slow explore the new channels of communication. These new channels of communication can help Pengxin Mining to provide better information regarding Coal products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Pengxin Mining strategy
– From the outside it seems that the employees of Pengxin Mining 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.
High bargaining power of channel partners in Coal industry
– because of the regulatory requirements in China, Pengxin Mining 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 Coal industry.
Skills based hiring in Coal industry
– The stress on hiring functional specialists at Pengxin Mining 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 Pengxin Mining has some of the most successful models in the Coal industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Pengxin Mining should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Pengxin Mining is dominated by functional specialists. It is not different from other players in the Coal industry, but Pengxin Mining needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pengxin Mining to focus more on services in the Coal industry rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Pengxin Mining has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of China, Pengxin Mining needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Pengxin Mining ‘s star products
– The top 2 products and services of Pengxin Mining still accounts for major business revenue. This dependence on star products in Coal industry has resulted into insufficient focus on developing new products, even though Pengxin Mining has relatively successful track record of launching new products.
Pengxin Mining Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Pengxin Mining are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pengxin Mining can use these opportunities to build new business models that can help the communities that Pengxin Mining operates in. Secondly it can use opportunities from government spending in Coal sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pengxin Mining 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 Pengxin Mining to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Pengxin Mining can develop new processes and procedures in Coal 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pengxin Mining 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.
Loyalty marketing
– Pengxin Mining 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.
Using analytics as competitive advantage
– Pengxin Mining has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Coal sector. This continuous investment in analytics has enabled Pengxin Mining to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pengxin Mining to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Pengxin Mining 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pengxin Mining in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Coal industry, and it will provide faster access to the consumers.
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 Pengxin Mining 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Coal industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pengxin Mining 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. Pengxin Mining 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pengxin Mining is facing challenges because of the dominance of functional experts in the organization. Pengxin Mining can utilize new technology in the field of Coal 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 Pengxin Mining 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 Coal industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pengxin Mining can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Pengxin Mining External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Pengxin Mining are -
High dependence on third party suppliers
– Pengxin Mining 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.
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 Pengxin Mining business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Pengxin Mining 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. Pengxin Mining can take advantage of this fund but it will also bring new competitors in the Coal industry.
Easy access to finance
– Easy access to finance in Coal industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pengxin Mining can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Coal industry are lowering. It can presents Pengxin Mining with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Coal sector.
Shortening product life cycle
– it is one of the major threat that Pengxin Mining is facing in Coal sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Pengxin Mining may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Coal sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pengxin Mining 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 Pengxin Mining prominent markets.
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.
Stagnating economy with rate increase
– Pengxin Mining 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 Coal industry.
Increasing wage structure of Pengxin Mining
– 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 Pengxin Mining.
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 Pengxin Mining.
Regulatory challenges
– Pengxin Mining 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 Coal industry regulations.
Weighted SWOT Analysis of Pengxin Mining Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Pengxin Mining 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 Pengxin Mining 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 Pengxin Mining 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 Pengxin Mining 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 Pengxin Mining needs to make to build a sustainable competitive advantage.