Hunan Er Kang Pharmaceutical (300267) SWOT Analysis / TOWS Matrix / MBA Resources
Major Drugs
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Hunan Er Kang Pharmaceutical (China)
Based on various researches at Oak Spring University , Hunan Er Kang Pharmaceutical is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , geopolitical disruptions, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies,
competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Hunan Er Kang Pharmaceutical
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hunan Er Kang Pharmaceutical can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hunan Er Kang Pharmaceutical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical can be done for the following purposes –
1. Strategic planning of Hunan Er Kang Pharmaceutical
2. Improving business portfolio management of Hunan Er Kang Pharmaceutical
3. Assessing feasibility of the new initiative in China
4. Making a Major Drugs sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hunan Er Kang Pharmaceutical
Strengths of Hunan Er Kang Pharmaceutical | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hunan Er Kang Pharmaceutical are -
Highly skilled collaborators
– Hunan Er Kang Pharmaceutical has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Major Drugs industry. Secondly the value chain collaborators of Hunan Er Kang Pharmaceutical have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Hunan Er Kang Pharmaceutical 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 Major Drugs 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.
High switching costs
– The high switching costs that Hunan Er Kang Pharmaceutical 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.
Sustainable margins compare to other players in Major Drugs industry
– Hunan Er Kang Pharmaceutical has clearly differentiated products in the market place. This has enabled Hunan Er Kang Pharmaceutical to fetch slight price premium compare to the competitors in the Major Drugs industry. The sustainable margins have also helped Hunan Er Kang Pharmaceutical to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Hunan Er Kang Pharmaceutical in Major Drugs industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Hunan Er Kang Pharmaceutical emphasize – knowledge, initiative, and innovation.
Digital Transformation in Major Drugs industry
- digital transformation varies from industry to industry. For Hunan Er Kang Pharmaceutical digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hunan Er Kang Pharmaceutical 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.
Effective Research and Development (R&D)
– Hunan Er Kang Pharmaceutical has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hunan Er Kang Pharmaceutical staying ahead in the Major Drugs industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Hunan Er Kang Pharmaceutical has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hunan Er Kang Pharmaceutical 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.
High brand equity
– Hunan Er Kang Pharmaceutical has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hunan Er Kang Pharmaceutical to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Major Drugs
– Hunan Er Kang Pharmaceutical is one of the leading players in the Major Drugs industry in China. Over the years it has not only transformed the business landscape in the Major Drugs industry in China but also across the existing markets. The ability to lead change has enabled Hunan Er Kang Pharmaceutical in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Hunan Er Kang Pharmaceutical is one of the most innovative firm in Major Drugs sector.
Weaknesses of Hunan Er Kang Pharmaceutical | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hunan Er Kang Pharmaceutical are -
Products dominated business model
– Even though Hunan Er Kang Pharmaceutical has some of the most successful models in the Major Drugs industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Hunan Er Kang Pharmaceutical should strive to include more intangible value offerings along with its core products and services.
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 Hunan Er Kang Pharmaceutical supply chain. Even after few cautionary changes, Hunan Er Kang Pharmaceutical is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hunan Er Kang Pharmaceutical vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Hunan Er Kang Pharmaceutical has a high cash cycle compare to other players in the Major Drugs 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, Hunan Er Kang Pharmaceutical has high operating costs in the Major Drugs industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Hunan Er Kang Pharmaceutical lucrative customers.
Employees’ less understanding of Hunan Er Kang Pharmaceutical strategy
– From the outside it seems that the employees of Hunan Er Kang Pharmaceutical 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hunan Er Kang Pharmaceutical is slow explore the new channels of communication. These new channels of communication can help Hunan Er Kang Pharmaceutical to provide better information regarding Major Drugs products and services. It can also build an online community to further reach out to potential customers.
High dependence on Hunan Er Kang Pharmaceutical ‘s star products
– The top 2 products and services of Hunan Er Kang Pharmaceutical still accounts for major business revenue. This dependence on star products in Major Drugs industry has resulted into insufficient focus on developing new products, even though Hunan Er Kang Pharmaceutical has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Hunan Er Kang Pharmaceutical is dominated by functional specialists. It is not different from other players in the Major Drugs industry, but Hunan Er Kang Pharmaceutical needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hunan Er Kang Pharmaceutical to focus more on services in the Major Drugs industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Hunan Er Kang Pharmaceutical is just above the Major Drugs 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.
No frontier risks strategy
– From the 10K / annual statement of Hunan Er Kang Pharmaceutical, it seems that company is thinking out the frontier risks that can impact Major Drugs 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.
Slow to strategic competitive environment developments
– As Hunan Er Kang Pharmaceutical is one of the leading players in the Major Drugs industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Major Drugs industry in last five years.
Hunan Er Kang Pharmaceutical Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Hunan Er Kang Pharmaceutical are -
Developing new processes and practices
– Hunan Er Kang Pharmaceutical can develop new processes and procedures in Major Drugs 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, Hunan Er Kang Pharmaceutical 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.
Using analytics as competitive advantage
– Hunan Er Kang Pharmaceutical has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Major Drugs sector. This continuous investment in analytics has enabled Hunan Er Kang Pharmaceutical to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hunan Er Kang Pharmaceutical to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hunan Er Kang Pharmaceutical in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Major Drugs industry, and it will provide faster access to the consumers.
Manufacturing automation
– Hunan Er Kang Pharmaceutical can use the latest technology developments to improve its manufacturing and designing process in Major Drugs 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hunan Er Kang Pharmaceutical can use these opportunities to build new business models that can help the communities that Hunan Er Kang Pharmaceutical operates in. Secondly it can use opportunities from government spending in Major Drugs sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Major Drugs industry, but it has also influenced the consumer preferences. Hunan Er Kang Pharmaceutical can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Hunan Er Kang Pharmaceutical 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Hunan Er Kang Pharmaceutical has opened avenues for new revenue streams for the organization in Major Drugs industry. This can help Hunan Er Kang Pharmaceutical to build a more holistic ecosystem for Hunan Er Kang Pharmaceutical products in the Major Drugs industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Hunan Er Kang Pharmaceutical to increase its market reach. Hunan Er Kang Pharmaceutical 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.
Leveraging digital technologies
– Hunan Er Kang Pharmaceutical 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.
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 Hunan Er Kang Pharmaceutical 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.
Threats Hunan Er Kang Pharmaceutical External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Hunan Er Kang Pharmaceutical are -
Environmental challenges
– Hunan Er Kang Pharmaceutical 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. Hunan Er Kang Pharmaceutical can take advantage of this fund but it will also bring new competitors in the Major Drugs industry.
Shortening product life cycle
– it is one of the major threat that Hunan Er Kang Pharmaceutical is facing in Major Drugs 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 Major Drugs industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hunan Er Kang Pharmaceutical 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, Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical prominent markets.
High dependence on third party suppliers
– Hunan Er Kang Pharmaceutical 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.
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 Hunan Er Kang Pharmaceutical in the Major Drugs sector and impact the bottomline of the organization.
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 Hunan Er Kang Pharmaceutical.
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. Hunan Er Kang Pharmaceutical 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Hunan Er Kang Pharmaceutical may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Major Drugs sector.
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. Hunan Er Kang Pharmaceutical needs to understand the core reasons impacting the Major Drugs industry. This will help it in building a better workplace.
Increasing wage structure of Hunan Er Kang Pharmaceutical
– 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 Hunan Er Kang Pharmaceutical.
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 Hunan Er Kang Pharmaceutical business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Hunan Er Kang Pharmaceutical has witnessed rapid integration of technology during Covid-19 in the Major Drugs industry. As one of the leading players in the industry, Hunan Er Kang Pharmaceutical needs to keep up with the evolution of technology in the Major Drugs 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 Hunan Er Kang Pharmaceutical Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical 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 Hunan Er Kang Pharmaceutical needs to make to build a sustainable competitive advantage.
