Shanghai Datun Energy (600508) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Shanghai Datun Energy (China)

Based on various researches at Oak Spring University , Shanghai Datun Energy is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, geopolitical disruptions, increasing government debt because of Covid-19 spendings, there is backlash against globalization, increasing commodity prices, challanges to central banks by blockchain based private currencies, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, etc

---

---

---

---

Introduction to SWOT Analysis of Shanghai Datun Energy

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanghai Datun Energy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanghai Datun Energy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanghai Datun Energy 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 Shanghai Datun Energy can be done for the following purposes –
1. Strategic planning of Shanghai Datun Energy
2. Improving business portfolio management of Shanghai Datun Energy
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 Shanghai Datun Energy

---

Strengths of Shanghai Datun Energy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Shanghai Datun Energy are -

Sustainable margins compare to other players in Coal industry

– Shanghai Datun Energy has clearly differentiated products in the market place. This has enabled Shanghai Datun Energy to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped Shanghai Datun Energy to invest into research and development (R&D) and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Shanghai Datun Energy 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.

Operational resilience

– The operational resilience strategy of Shanghai Datun Energy 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.

Effective Research and Development (R&D)

– Shanghai Datun Energy has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shanghai Datun Energy 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.

Ability to recruit top talent

– Shanghai Datun Energy 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.

Innovation driven organization

– Shanghai Datun Energy is one of the most innovative firm in Coal sector.

Learning organization

- Shanghai Datun Energy 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 Shanghai Datun Energy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shanghai Datun Energy emphasize – knowledge, initiative, and innovation.

Diverse revenue streams

– Shanghai Datun Energy is present in almost all the verticals within the Coal industry. This has provided Shanghai Datun Energy 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.

Analytics focus

– Shanghai Datun Energy 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 Coal 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 brand equity

– Shanghai Datun Energy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanghai Datun Energy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Organizational Resilience of Shanghai Datun Energy

– The covid-19 pandemic has put organizational resilience at the centre of everthing Shanghai Datun Energy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Highly skilled collaborators

– Shanghai Datun Energy 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 Shanghai Datun Energy have helped the firm to develop new products and bring them quickly to the marketplace.

---

---

Weaknesses of Shanghai Datun Energy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Shanghai Datun Energy are -

Compensation and incentives

– The revenue per employee of Shanghai Datun Energy 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shanghai Datun Energy is slow explore the new channels of communication. These new channels of communication can help Shanghai Datun Energy to provide better information regarding Coal products and services. It can also build an online community to further reach out to potential customers.

Skills based hiring in Coal industry

– The stress on hiring functional specialists at Shanghai Datun Energy has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.

High cash cycle compare to competitors

Shanghai Datun Energy has a high cash cycle compare to other players in the Coal industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Slow decision making process

– As mentioned earlier in the report, Shanghai Datun Energy has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Coal industry over the last five years. Shanghai Datun Energy 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.

Lack of clear differentiation of Shanghai Datun Energy products

– To increase the profitability and margins on the products, Shanghai Datun Energy needs to provide more differentiated products than what it is currently offering in the marketplace.

Products dominated business model

– Even though Shanghai Datun Energy 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. Shanghai Datun Energy should strive to include more intangible value offerings along with its core products and services.

Need for greater diversity

– Shanghai Datun Energy 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.

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 Shanghai Datun Energy supply chain. Even after few cautionary changes, Shanghai Datun Energy is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shanghai Datun Energy vulnerable to further global disruptions in South East Asia.

Low market penetration in new markets

– Outside its home market of China, Shanghai Datun Energy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

High bargaining power of channel partners in Coal industry

– because of the regulatory requirements in China, Shanghai Datun Energy is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Coal industry.

---

Shanghai Datun Energy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Shanghai Datun Energy are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Shanghai Datun Energy can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Loyalty marketing

– Shanghai Datun Energy 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.

Leveraging digital technologies

– Shanghai Datun Energy 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.

Developing new processes and practices

– Shanghai Datun Energy 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Shanghai Datun Energy is facing challenges because of the dominance of functional experts in the organization. Shanghai Datun Energy 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Shanghai Datun Energy 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 Shanghai Datun Energy to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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. Shanghai Datun Energy can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shanghai Datun Energy can use these opportunities to build new business models that can help the communities that Shanghai Datun Energy operates in. Secondly it can use opportunities from government spending in Coal sector.

Creating value in data economy

– The success of analytics program of Shanghai Datun Energy has opened avenues for new revenue streams for the organization in Coal industry. This can help Shanghai Datun Energy to build a more holistic ecosystem for Shanghai Datun Energy products in the Coal industry by providing – data insight services, data privacy related products, data based consulting services, etc.

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 Shanghai Datun Energy in the Coal industry. Now Shanghai Datun Energy can target international markets with far fewer capital restrictions requirements than the existing system.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shanghai Datun Energy 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 Shanghai Datun Energy to hire the very best people irrespective of their geographical location.

Building a culture of innovation

– managers at Shanghai Datun Energy can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Coal industry.

Learning at scale

– Online learning technologies has now opened space for Shanghai Datun Energy 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.

---

Threats Shanghai Datun Energy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Shanghai Datun Energy are -

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Shanghai Datun Energy 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 Shanghai Datun Energy prominent markets.

Technology acceleration in Forth Industrial Revolution

– Shanghai Datun Energy has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, Shanghai Datun Energy 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.

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 Shanghai Datun Energy business can come under increasing regulations regarding data privacy, data security, etc.

High dependence on third party suppliers

– Shanghai Datun Energy 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.

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. Shanghai Datun Energy 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.

Regulatory challenges

– Shanghai Datun Energy needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Coal industry regulations.

Environmental challenges

– Shanghai Datun Energy 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. Shanghai Datun Energy can take advantage of this fund but it will also bring new competitors in the Coal industry.

Consumer confidence and its impact on Shanghai Datun Energy 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.

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. Shanghai Datun Energy needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.

Increasing wage structure of Shanghai Datun Energy

– 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 Shanghai Datun Energy.

Stagnating economy with rate increase

– Shanghai Datun Energy can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Coal industry.

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 Shanghai Datun Energy in the Coal sector and impact the bottomline of the organization.

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. Shanghai Datun Energy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

---

Weighted SWOT Analysis of Shanghai Datun Energy Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanghai Datun Energy 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 Shanghai Datun Energy 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 Shanghai Datun Energy 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 Shanghai Datun Energy 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 Shanghai Datun Energy needs to make to build a sustainable competitive advantage.

--- ---