SWOT Analysis / TOWS Matrix for Shanxi Lanhua Sci-Tech (China)
Based on various researches at Oak Spring University , Shanxi Lanhua Sci-Tech is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, 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, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing government debt because of Covid-19 spendings,
increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Shanxi Lanhua Sci-Tech
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanxi Lanhua Sci-Tech can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanxi Lanhua Sci-Tech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech can be done for the following purposes –
1. Strategic planning of Shanxi Lanhua Sci-Tech
2. Improving business portfolio management of Shanxi Lanhua Sci-Tech
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 Shanxi Lanhua Sci-Tech
Strengths of Shanxi Lanhua Sci-Tech | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shanxi Lanhua Sci-Tech are -
Highly skilled collaborators
– Shanxi Lanhua Sci-Tech has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Coal industry. Secondly the value chain collaborators of Shanxi Lanhua Sci-Tech have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Shanxi Lanhua Sci-Tech is one of the leading players in the Coal 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.
Organizational Resilience of Shanxi Lanhua Sci-Tech
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shanxi Lanhua Sci-Tech does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Shanxi Lanhua Sci-Tech in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Coal
– Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Shanxi Lanhua Sci-Tech comprises – understanding the underlying the factors in the Coal 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.
High switching costs
– The high switching costs that Shanxi Lanhua Sci-Tech 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
– Shanxi Lanhua Sci-Tech has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanxi Lanhua Sci-Tech to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Coal industry
– Shanxi Lanhua Sci-Tech has clearly differentiated products in the market place. This has enabled Shanxi Lanhua Sci-Tech to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped Shanxi Lanhua Sci-Tech to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Shanxi Lanhua Sci-Tech has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shanxi Lanhua Sci-Tech 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.
Innovation driven organization
– Shanxi Lanhua Sci-Tech is one of the most innovative firm in Coal sector.
Successful track record of launching new products
– Shanxi Lanhua Sci-Tech has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shanxi Lanhua Sci-Tech 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.
Weaknesses of Shanxi Lanhua Sci-Tech | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanxi Lanhua Sci-Tech are -
High dependence on Shanxi Lanhua Sci-Tech ‘s star products
– The top 2 products and services of Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech has relatively successful track record of launching new products.
No frontier risks strategy
– From the 10K / annual statement of Shanxi Lanhua Sci-Tech, it seems that company is thinking out the frontier risks that can impact Coal 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.
Compensation and incentives
– The revenue per employee of Shanxi Lanhua Sci-Tech 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.
Products dominated business model
– Even though Shanxi Lanhua Sci-Tech 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. Shanxi Lanhua Sci-Tech should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Shanxi Lanhua Sci-Tech 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.
Interest costs
– Compare to the competition, Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech strategy
– From the outside it seems that the employees of Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech needs to have more collaboration between its sales team and marketing team. Sales professionals in the Coal industry have deep experience in developing customer relationships. Marketing department at Shanxi Lanhua Sci-Tech can leverage the sales team experience to cultivate customer relationships as Shanxi Lanhua Sci-Tech is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shanxi Lanhua Sci-Tech is slow explore the new channels of communication. These new channels of communication can help Shanxi Lanhua Sci-Tech to provide better information regarding Coal products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, Shanxi Lanhua Sci-Tech has high operating costs in the Coal industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shanxi Lanhua Sci-Tech lucrative customers.
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 Shanxi Lanhua Sci-Tech supply chain. Even after few cautionary changes, Shanxi Lanhua Sci-Tech is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shanxi Lanhua Sci-Tech vulnerable to further global disruptions in South East Asia.
Shanxi Lanhua Sci-Tech Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shanxi Lanhua Sci-Tech are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shanxi Lanhua Sci-Tech 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.
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. Shanxi Lanhua Sci-Tech 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. Shanxi Lanhua Sci-Tech 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.
Use of Bitcoin and other crypto currencies for transactions in Coal industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shanxi Lanhua Sci-Tech in the Coal industry. Now Shanxi Lanhua Sci-Tech can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shanxi Lanhua Sci-Tech is facing challenges because of the dominance of functional experts in the organization. Shanxi Lanhua Sci-Tech 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Shanxi Lanhua Sci-Tech can improve the customer journey of consumers in the Coal 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shanxi Lanhua Sci-Tech can use these opportunities to build new business models that can help the communities that Shanxi Lanhua Sci-Tech operates in. Secondly it can use opportunities from government spending in Coal sector.
Manufacturing automation
– Shanxi Lanhua Sci-Tech can use the latest technology developments to improve its manufacturing and designing process in Coal 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.
Developing new processes and practices
– Shanxi Lanhua Sci-Tech 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.
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 Shanxi Lanhua Sci-Tech 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.
Learning at scale
– Online learning technologies has now opened space for Shanxi Lanhua Sci-Tech 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.
Using analytics as competitive advantage
– Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shanxi Lanhua Sci-Tech to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Shanxi Lanhua Sci-Tech has opened avenues for new revenue streams for the organization in Coal industry. This can help Shanxi Lanhua Sci-Tech to build a more holistic ecosystem for Shanxi Lanhua Sci-Tech products in the Coal industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Shanxi Lanhua Sci-Tech External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shanxi Lanhua Sci-Tech are -
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. Shanxi Lanhua Sci-Tech can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Shanxi Lanhua Sci-Tech 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 Coal industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shanxi Lanhua Sci-Tech in Coal industry. The Coal 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech 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.
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 Shanxi Lanhua Sci-Tech.
Shortening product life cycle
– it is one of the major threat that Shanxi Lanhua Sci-Tech is facing in Coal sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Shanxi Lanhua Sci-Tech business can come under increasing regulations regarding data privacy, data security, etc.
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. Shanxi Lanhua Sci-Tech needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Shanxi Lanhua Sci-Tech has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, Shanxi Lanhua Sci-Tech needs to keep up with the evolution of technology in the Coal 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.
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.
High dependence on third party suppliers
– Shanxi Lanhua Sci-Tech 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Coal industry are lowering. It can presents Shanxi Lanhua Sci-Tech with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Coal sector.
Weighted SWOT Analysis of Shanxi Lanhua Sci-Tech Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech 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 Shanxi Lanhua Sci-Tech needs to make to build a sustainable competitive advantage.
