Chengdu Hongqi Chain A (2697) SWOT Analysis / TOWS Matrix / MBA Resources
Retail (Grocery)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Chengdu Hongqi Chain A (China)
Based on various researches at Oak Spring University , Chengdu Hongqi Chain A is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing transportation and logistics costs, technology disruption, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Chengdu Hongqi Chain A
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Chengdu Hongqi Chain A can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chengdu Hongqi Chain A, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A can be done for the following purposes –
1. Strategic planning of Chengdu Hongqi Chain A
2. Improving business portfolio management of Chengdu Hongqi Chain A
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Grocery) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Chengdu Hongqi Chain A
Strengths of Chengdu Hongqi Chain A | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chengdu Hongqi Chain A are -
Digital Transformation in Retail (Grocery) industry
- digital transformation varies from industry to industry. For Chengdu Hongqi Chain A digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chengdu Hongqi Chain A 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.
Highly skilled collaborators
– Chengdu Hongqi Chain A has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Grocery) industry. Secondly the value chain collaborators of Chengdu Hongqi Chain A have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Chengdu Hongqi Chain A is one of the most innovative firm in Retail (Grocery) sector.
Cross disciplinary teams
– Horizontal connected teams at the Chengdu Hongqi Chain A 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.
Successful track record of launching new products
– Chengdu Hongqi Chain A has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Chengdu Hongqi Chain A 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.
Learning organization
- Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Chengdu Hongqi Chain A emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Chengdu Hongqi Chain A is present in almost all the verticals within the Retail (Grocery) industry. This has provided Chengdu Hongqi Chain A 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.
Superior customer experience
– The customer experience strategy of Chengdu Hongqi Chain A in Retail (Grocery) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Chengdu Hongqi Chain A in the Services sector have low bargaining power. Chengdu Hongqi Chain A has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chengdu Hongqi Chain A to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Chengdu Hongqi Chain A comprises – understanding the underlying the factors in the Retail (Grocery) 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.
Ability to recruit top talent
– Chengdu Hongqi Chain A is one of the leading players in the Retail (Grocery) 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.
Sustainable margins compare to other players in Retail (Grocery) industry
– Chengdu Hongqi Chain A has clearly differentiated products in the market place. This has enabled Chengdu Hongqi Chain A to fetch slight price premium compare to the competitors in the Retail (Grocery) industry. The sustainable margins have also helped Chengdu Hongqi Chain A to invest into research and development (R&D) and innovation.
Weaknesses of Chengdu Hongqi Chain A | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chengdu Hongqi Chain A are -
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 Chengdu Hongqi Chain A supply chain. Even after few cautionary changes, Chengdu Hongqi Chain A is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chengdu Hongqi Chain A vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Chengdu Hongqi Chain A needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Grocery) industry have deep experience in developing customer relationships. Marketing department at Chengdu Hongqi Chain A can leverage the sales team experience to cultivate customer relationships as Chengdu Hongqi Chain A is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Chengdu Hongqi Chain A is just above the Retail (Grocery) 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 strategic competitive environment developments
– As Chengdu Hongqi Chain A is one of the leading players in the Retail (Grocery) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Grocery) industry in last five years.
Need for greater diversity
– Chengdu Hongqi Chain A 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, Chengdu Hongqi Chain A 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.
Lack of clear differentiation of Chengdu Hongqi Chain A products
– To increase the profitability and margins on the products, Chengdu Hongqi Chain A needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of Chengdu Hongqi Chain A, it seems that company is thinking out the frontier risks that can impact Retail (Grocery) 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.
Skills based hiring in Retail (Grocery) industry
– The stress on hiring functional specialists at Chengdu Hongqi Chain A 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.
Employees’ less understanding of Chengdu Hongqi Chain A strategy
– From the outside it seems that the employees of Chengdu Hongqi Chain A 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.
Ability to respond to the competition
– As the decision making is very deliberative at Chengdu Hongqi Chain A, in the dynamic environment of Retail (Grocery) industry it has struggled to respond to the nimble upstart competition. Chengdu Hongqi Chain A has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Chengdu Hongqi Chain A Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Chengdu Hongqi Chain A are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Grocery) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Chengdu Hongqi Chain A 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. Chengdu Hongqi Chain A 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.
Better consumer reach
– The expansion of the 5G network will help Chengdu Hongqi Chain A to increase its market reach. Chengdu Hongqi Chain A 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.
Use of Bitcoin and other crypto currencies for transactions in Retail (Grocery) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Chengdu Hongqi Chain A in the Retail (Grocery) industry. Now Chengdu Hongqi Chain A can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Chengdu Hongqi Chain A can develop new processes and procedures in Retail (Grocery) 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 Chengdu Hongqi Chain A 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.
Using analytics as competitive advantage
– Chengdu Hongqi Chain A has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Grocery) sector. This continuous investment in analytics has enabled Chengdu Hongqi Chain A to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chengdu Hongqi Chain A to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Chengdu Hongqi Chain A 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Chengdu Hongqi Chain A can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Chengdu Hongqi Chain A is facing challenges because of the dominance of functional experts in the organization. Chengdu Hongqi Chain A can utilize new technology in the field of Retail (Grocery) 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, Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Chengdu Hongqi Chain A has opened avenues for new revenue streams for the organization in Retail (Grocery) industry. This can help Chengdu Hongqi Chain A to build a more holistic ecosystem for Chengdu Hongqi Chain A products in the Retail (Grocery) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chengdu Hongqi Chain A 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.
Threats Chengdu Hongqi Chain A External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Chengdu Hongqi Chain A are -
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. Chengdu Hongqi Chain A needs to understand the core reasons impacting the Retail (Grocery) industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A prominent markets.
Easy access to finance
– Easy access to finance in Retail (Grocery) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Chengdu Hongqi Chain A can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Chengdu Hongqi Chain A 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 Retail (Grocery) industry regulations.
Consumer confidence and its impact on Chengdu Hongqi Chain A 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 Retail (Grocery) industry and other sectors.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Grocery) industry are lowering. It can presents Chengdu Hongqi Chain A with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Grocery) sector.
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 Chengdu Hongqi Chain A.
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 Chengdu Hongqi Chain A in the Retail (Grocery) sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Chengdu Hongqi Chain A may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Grocery) sector.
Shortening product life cycle
– it is one of the major threat that Chengdu Hongqi Chain A is facing in Retail (Grocery) 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 Chengdu Hongqi Chain A business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Chengdu Hongqi Chain A has witnessed rapid integration of technology during Covid-19 in the Retail (Grocery) industry. As one of the leading players in the industry, Chengdu Hongqi Chain A needs to keep up with the evolution of technology in the Retail (Grocery) 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 Chengdu Hongqi Chain A Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A 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 Chengdu Hongqi Chain A needs to make to build a sustainable competitive advantage.
