Hunan Er Kang Pharmaceutical (300267) SWOT Analysis / TOWS Matrix / 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 – customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , 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 -

Cross disciplinary teams

– Horizontal connected teams at the Hunan Er Kang Pharmaceutical 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)

– 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.

Low bargaining power of suppliers

– Suppliers of Hunan Er Kang Pharmaceutical in the Healthcare sector have low bargaining power. Hunan Er Kang Pharmaceutical has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hunan Er Kang Pharmaceutical to manage not only supply disruptions but also source products at highly competitive prices.

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.

Innovation driven organization

– Hunan Er Kang Pharmaceutical is one of the most innovative firm in Major Drugs sector.

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.

Diverse revenue streams

– Hunan Er Kang Pharmaceutical is present in almost all the verticals within the Major Drugs industry. This has provided Hunan Er Kang Pharmaceutical 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.

Operational resilience

– The operational resilience strategy of Hunan Er Kang Pharmaceutical comprises – understanding the underlying the factors in the Major Drugs 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.

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.

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.

Ability to recruit top talent

– Hunan Er Kang Pharmaceutical is one of the leading players in the Major Drugs 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.

Strong track record of project management in the Major Drugs industry

– Hunan Er Kang Pharmaceutical is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

---

---

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 -

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.

Slow decision making process

– As mentioned earlier in the report, Hunan Er Kang Pharmaceutical has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Major Drugs industry over the last five years. Hunan Er Kang Pharmaceutical 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.

High bargaining power of channel partners in Major Drugs industry

– because of the regulatory requirements in China, Hunan Er Kang Pharmaceutical 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 Major Drugs industry.

Interest costs

– Compare to the competition, Hunan Er Kang Pharmaceutical 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.

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.

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.

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.

Capital Spending Reduction

– Even during the low interest decade, Hunan Er Kang Pharmaceutical has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Major Drugs industry using digital technology.

Ability to respond to the competition

– As the decision making is very deliberative at Hunan Er Kang Pharmaceutical, in the dynamic environment of Major Drugs industry it has struggled to respond to the nimble upstart competition. Hunan Er Kang Pharmaceutical has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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.

Aligning sales with marketing

– From the outside it seems that Hunan Er Kang Pharmaceutical needs to have more collaboration between its sales team and marketing team. Sales professionals in the Major Drugs industry have deep experience in developing customer relationships. Marketing department at Hunan Er Kang Pharmaceutical can leverage the sales team experience to cultivate customer relationships as Hunan Er Kang Pharmaceutical is planning to shift buying processes online.

---

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 -

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.

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.

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. Hunan Er Kang Pharmaceutical can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Use of Bitcoin and other crypto currencies for transactions in Major Drugs industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hunan Er Kang Pharmaceutical in the Major Drugs industry. Now Hunan Er Kang Pharmaceutical can target international markets with far fewer capital restrictions requirements than the existing system.

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.

Loyalty marketing

– Hunan Er Kang Pharmaceutical 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Major Drugs industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hunan Er Kang Pharmaceutical 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. Hunan Er Kang Pharmaceutical 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.

Building a culture of innovation

– managers at Hunan Er Kang Pharmaceutical 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 Major Drugs industry.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Hunan Er Kang Pharmaceutical is facing challenges because of the dominance of functional experts in the organization. Hunan Er Kang Pharmaceutical can utilize new technology in the field of Major Drugs industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Hunan Er Kang Pharmaceutical can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Hunan Er Kang Pharmaceutical to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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.

Buying journey improvements

– Hunan Er Kang Pharmaceutical can improve the customer journey of consumers in the Major Drugs 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.

---

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.

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.

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.

Stagnating economy with rate increase

– Hunan Er Kang Pharmaceutical 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 Major Drugs industry.

Consumer confidence and its impact on Hunan Er Kang Pharmaceutical demand

– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Major Drugs industry and other sectors.

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.

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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Hunan Er Kang Pharmaceutical in Major Drugs industry. The Major Drugs 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.

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.

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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Major Drugs industry are lowering. It can presents Hunan Er Kang Pharmaceutical with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Major Drugs sector.

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.

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.

---

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.

--- ---