SWOT Analysis / TOWS Matrix for Sichuan Hejia (China)
Based on various researches at Oak Spring University , Sichuan Hejia is operating in a macro-environment that has been destablized by – there is backlash against globalization, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sichuan Hejia can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sichuan Hejia, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sichuan Hejia 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 Sichuan Hejia can be done for the following purposes –
1. Strategic planning of Sichuan Hejia
2. Improving business portfolio management of Sichuan Hejia
3. Assessing feasibility of the new initiative in China
4. Making a Business Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sichuan Hejia
Strengths of Sichuan Hejia | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sichuan Hejia are -
Organizational Resilience of Sichuan Hejia
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sichuan Hejia does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Business Services
– Sichuan Hejia is one of the leading players in the Business Services industry in China. Over the years it has not only transformed the business landscape in the Business Services industry in China but also across the existing markets. The ability to lead change has enabled Sichuan Hejia in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Sichuan Hejia in the Services sector have low bargaining power. Sichuan Hejia has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sichuan Hejia to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Sichuan Hejia comprises – understanding the underlying the factors in the Business Services industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Strong track record of project management in the Business Services industry
– Sichuan Hejia 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
- Sichuan Hejia 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 Sichuan Hejia is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sichuan Hejia emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Sichuan Hejia has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Sichuan Hejia staying ahead in the Business Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Sichuan Hejia 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.
High brand equity
– Sichuan Hejia has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sichuan Hejia to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Sichuan Hejia has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sichuan Hejia 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.
Innovation driven organization
– Sichuan Hejia is one of the most innovative firm in Business Services sector.
Cross disciplinary teams
– Horizontal connected teams at the Sichuan Hejia 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.
Weaknesses of Sichuan Hejia | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sichuan Hejia are -
High cash cycle compare to competitors
Sichuan Hejia has a high cash cycle compare to other players in the Business Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to strategic competitive environment developments
– As Sichuan Hejia is one of the leading players in the Business Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Business Services industry in last five years.
Lack of clear differentiation of Sichuan Hejia products
– To increase the profitability and margins on the products, Sichuan Hejia needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Sichuan Hejia 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.
Employees’ less understanding of Sichuan Hejia strategy
– From the outside it seems that the employees of Sichuan Hejia 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.
Aligning sales with marketing
– From the outside it seems that Sichuan Hejia needs to have more collaboration between its sales team and marketing team. Sales professionals in the Business Services industry have deep experience in developing customer relationships. Marketing department at Sichuan Hejia can leverage the sales team experience to cultivate customer relationships as Sichuan Hejia is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Sichuan Hejia has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Business Services industry over the last five years. Sichuan Hejia 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.
Products dominated business model
– Even though Sichuan Hejia has some of the most successful models in the Business Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Sichuan Hejia should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Sichuan Hejia has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Compensation and incentives
– The revenue per employee of Sichuan Hejia is just above the Business Services 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sichuan Hejia is slow explore the new channels of communication. These new channels of communication can help Sichuan Hejia to provide better information regarding Business Services products and services. It can also build an online community to further reach out to potential customers.
Sichuan Hejia Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sichuan Hejia are -
Using analytics as competitive advantage
– Sichuan Hejia has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Business Services sector. This continuous investment in analytics has enabled Sichuan Hejia to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sichuan Hejia to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sichuan Hejia 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sichuan Hejia can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sichuan Hejia can use these opportunities to build new business models that can help the communities that Sichuan Hejia operates in. Secondly it can use opportunities from government spending in Business Services sector.
Building a culture of innovation
– managers at Sichuan Hejia 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 Business Services industry.
Developing new processes and practices
– Sichuan Hejia can develop new processes and procedures in Business Services industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Business Services industry, but it has also influenced the consumer preferences. Sichuan Hejia can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Sichuan Hejia to increase its market reach. Sichuan Hejia 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.
Buying journey improvements
– Sichuan Hejia can improve the customer journey of consumers in the Business Services industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Leveraging digital technologies
– Sichuan Hejia 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.
Learning at scale
– Online learning technologies has now opened space for Sichuan Hejia 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.
Loyalty marketing
– Sichuan Hejia 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.
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. Sichuan Hejia can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Sichuan Hejia External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sichuan Hejia are -
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 Sichuan Hejia in the Business Services sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Business Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sichuan Hejia can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sichuan Hejia may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Business Services sector.
Stagnating economy with rate increase
– Sichuan Hejia 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 Business Services industry.
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 Sichuan Hejia.
Increasing wage structure of Sichuan Hejia
– 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 Sichuan Hejia.
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 Sichuan Hejia business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Sichuan Hejia 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 Business Services industry regulations.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sichuan Hejia in Business Services industry. The Business Services industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Sichuan Hejia 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. Sichuan Hejia can take advantage of this fund but it will also bring new competitors in the Business Services industry.
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. Sichuan Hejia will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Technology acceleration in Forth Industrial Revolution
– Sichuan Hejia has witnessed rapid integration of technology during Covid-19 in the Business Services industry. As one of the leading players in the industry, Sichuan Hejia needs to keep up with the evolution of technology in the Business Services 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.
Weighted SWOT Analysis of Sichuan Hejia Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sichuan Hejia 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 Sichuan Hejia 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 Sichuan Hejia 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 Sichuan Hejia 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 Sichuan Hejia needs to make to build a sustainable competitive advantage.
