Shanxi Coal Energy (600546) SWOT Analysis / TOWS Matrix / MBA Resources
Coal
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Shanxi Coal Energy (China)
Based on various researches at Oak Spring University , Shanxi Coal Energy is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, technology disruption, there is backlash against globalization, talent flight as more people leaving formal jobs, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Shanxi Coal Energy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanxi Coal Energy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanxi Coal Energy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanxi Coal 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 Shanxi Coal Energy can be done for the following purposes –
1. Strategic planning of Shanxi Coal Energy
2. Improving business portfolio management of Shanxi Coal 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 Shanxi Coal Energy
Strengths of Shanxi Coal Energy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shanxi Coal Energy are -
Superior customer experience
– The customer experience strategy of Shanxi Coal Energy in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Coal industry
– Shanxi Coal Energy has clearly differentiated products in the market place. This has enabled Shanxi Coal Energy to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped Shanxi Coal Energy to invest into research and development (R&D) and innovation.
Learning organization
- Shanxi Coal 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 Shanxi Coal Energy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shanxi Coal Energy emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Shanxi Coal Energy
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shanxi Coal Energy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Shanxi Coal Energy in the Energy sector have low bargaining power. Shanxi Coal Energy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shanxi Coal Energy to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Shanxi Coal 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 Shanxi Coal Energy have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Shanxi Coal Energy has one of the best training and development program in Energy industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Analytics focus
– Shanxi Coal 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.
Cross disciplinary teams
– Horizontal connected teams at the Shanxi Coal 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.
Diverse revenue streams
– Shanxi Coal Energy is present in almost all the verticals within the Coal industry. This has provided Shanxi Coal 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.
High brand equity
– Shanxi Coal Energy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanxi Coal Energy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Shanxi Coal Energy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shanxi Coal Energy 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 Coal Energy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanxi Coal Energy are -
No frontier risks strategy
– From the 10K / annual statement of Shanxi Coal Energy, 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.
Aligning sales with marketing
– From the outside it seems that Shanxi Coal Energy 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 Coal Energy can leverage the sales team experience to cultivate customer relationships as Shanxi Coal Energy is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the Coal industry, Shanxi Coal Energy needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of China, Shanxi Coal Energy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shanxi Coal Energy is slow explore the new channels of communication. These new channels of communication can help Shanxi Coal Energy to provide better information regarding Coal products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners in Coal industry
– because of the regulatory requirements in China, Shanxi Coal 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.
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 Coal Energy supply chain. Even after few cautionary changes, Shanxi Coal Energy is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shanxi Coal Energy vulnerable to further global disruptions in South East Asia.
Skills based hiring in Coal industry
– The stress on hiring functional specialists at Shanxi Coal 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.
Employees’ less understanding of Shanxi Coal Energy strategy
– From the outside it seems that the employees of Shanxi Coal Energy 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.
High cash cycle compare to competitors
Shanxi Coal 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.
Lack of clear differentiation of Shanxi Coal Energy products
– To increase the profitability and margins on the products, Shanxi Coal Energy needs to provide more differentiated products than what it is currently offering in the marketplace.
Shanxi Coal Energy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shanxi Coal Energy are -
Using analytics as competitive advantage
– Shanxi Coal Energy 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 Coal Energy to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shanxi Coal Energy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Shanxi Coal 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shanxi Coal Energy can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shanxi Coal Energy 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shanxi Coal Energy is facing challenges because of the dominance of functional experts in the organization. Shanxi Coal 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shanxi Coal 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 Shanxi Coal Energy to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Shanxi Coal Energy has opened avenues for new revenue streams for the organization in Coal industry. This can help Shanxi Coal Energy to build a more holistic ecosystem for Shanxi Coal Energy products in the Coal industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Shanxi Coal 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shanxi Coal Energy 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.
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 Coal Energy in the Coal industry. Now Shanxi Coal Energy can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Shanxi Coal 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.
Better consumer reach
– The expansion of the 5G network will help Shanxi Coal Energy to increase its market reach. Shanxi Coal Energy 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.
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. Shanxi Coal Energy can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Shanxi Coal Energy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shanxi Coal Energy are -
Increasing wage structure of Shanxi Coal 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 Shanxi Coal Energy.
Stagnating economy with rate increase
– Shanxi Coal 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.
Shortening product life cycle
– it is one of the major threat that Shanxi Coal Energy is facing in Coal sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Coal Energy needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.
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. Shanxi Coal 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
– Shanxi Coal 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shanxi Coal Energy 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Coal industry are lowering. It can presents Shanxi Coal Energy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Coal sector.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Shanxi Coal Energy has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, Shanxi Coal 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.
High dependence on third party suppliers
– Shanxi Coal 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shanxi Coal Energy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Coal sector.
Weighted SWOT Analysis of Shanxi Coal Energy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanxi Coal 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 Shanxi Coal 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 Shanxi Coal 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 Shanxi Coal 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 Shanxi Coal Energy needs to make to build a sustainable competitive advantage.