Anhui Hengyuan Coal and Electricity (600971) SWOT Analysis / TOWS Matrix / MBA Resources
Coal
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Anhui Hengyuan Coal and Electricity (China)
Based on various researches at Oak Spring University , Anhui Hengyuan Coal and Electricity is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, there is increasing trade war between United States & China, wage bills are increasing, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Anhui Hengyuan Coal and Electricity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Anhui Hengyuan Coal and Electricity can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Anhui Hengyuan Coal and Electricity, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity can be done for the following purposes –
1. Strategic planning of Anhui Hengyuan Coal and Electricity
2. Improving business portfolio management of Anhui Hengyuan Coal and Electricity
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 Anhui Hengyuan Coal and Electricity
Strengths of Anhui Hengyuan Coal and Electricity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Anhui Hengyuan Coal and Electricity are -
Ability to lead change in Coal
– Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Anhui Hengyuan Coal and Electricity 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.
Sustainable margins compare to other players in Coal industry
– Anhui Hengyuan Coal and Electricity has clearly differentiated products in the market place. This has enabled Anhui Hengyuan Coal and Electricity to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped Anhui Hengyuan Coal and Electricity to invest into research and development (R&D) and innovation.
High brand equity
– Anhui Hengyuan Coal and Electricity has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Anhui Hengyuan Coal and Electricity to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Anhui Hengyuan Coal and Electricity is one of the most innovative firm in Coal sector.
Effective Research and Development (R&D)
– Anhui Hengyuan Coal and Electricity has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Anhui Hengyuan Coal and Electricity 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.
High switching costs
– The high switching costs that Anhui Hengyuan Coal and Electricity 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.
Cross disciplinary teams
– Horizontal connected teams at the Anhui Hengyuan Coal and Electricity 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.
Superior customer experience
– The customer experience strategy of Anhui Hengyuan Coal and Electricity in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Anhui Hengyuan Coal and Electricity 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.
Diverse revenue streams
– Anhui Hengyuan Coal and Electricity is present in almost all the verticals within the Coal industry. This has provided Anhui Hengyuan Coal and Electricity 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.
Weaknesses of Anhui Hengyuan Coal and Electricity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Anhui Hengyuan Coal and Electricity are -
Compensation and incentives
– The revenue per employee of Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity 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. Anhui Hengyuan Coal and Electricity should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Anhui Hengyuan Coal and Electricity 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.
Slow to strategic competitive environment developments
– As Anhui Hengyuan Coal and Electricity is one of the leading players in the Coal industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Coal industry in last five years.
No frontier risks strategy
– From the 10K / annual statement of Anhui Hengyuan Coal and Electricity, 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.
Workers concerns about automation
– As automation is fast increasing in the Coal industry, Anhui Hengyuan Coal and Electricity 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.
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 Anhui Hengyuan Coal and Electricity supply chain. Even after few cautionary changes, Anhui Hengyuan Coal and Electricity is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Anhui Hengyuan Coal and Electricity vulnerable to further global disruptions in South East Asia.
Employees’ less understanding of Anhui Hengyuan Coal and Electricity strategy
– From the outside it seems that the employees of Anhui Hengyuan Coal and Electricity 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.
Slow decision making process
– As mentioned earlier in the report, Anhui Hengyuan Coal and Electricity 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. Anhui Hengyuan Coal and Electricity 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Anhui Hengyuan Coal and Electricity is slow explore the new channels of communication. These new channels of communication can help Anhui Hengyuan Coal and Electricity 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, Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity lucrative customers.
Anhui Hengyuan Coal and Electricity Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Anhui Hengyuan Coal and Electricity are -
Better consumer reach
– The expansion of the 5G network will help Anhui Hengyuan Coal and Electricity to increase its market reach. Anhui Hengyuan Coal and Electricity 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Anhui Hengyuan Coal and Electricity 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.
Buying journey improvements
– Anhui Hengyuan Coal and Electricity 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Coal industry, but it has also influenced the consumer preferences. Anhui Hengyuan Coal and Electricity can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Anhui Hengyuan Coal and Electricity can use these opportunities to build new business models that can help the communities that Anhui Hengyuan Coal and Electricity operates in. Secondly it can use opportunities from government spending in Coal sector.
Creating value in data economy
– The success of analytics program of Anhui Hengyuan Coal and Electricity has opened avenues for new revenue streams for the organization in Coal industry. This can help Anhui Hengyuan Coal and Electricity to build a more holistic ecosystem for Anhui Hengyuan Coal and Electricity products in the Coal industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity to hire the very best people irrespective of their geographical location.
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. Anhui Hengyuan Coal and Electricity can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Anhui Hengyuan Coal and Electricity 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
– Anhui Hengyuan Coal and Electricity 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.
Manufacturing automation
– Anhui Hengyuan Coal and Electricity 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.
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 Anhui Hengyuan Coal and Electricity 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.
Threats Anhui Hengyuan Coal and Electricity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Anhui Hengyuan Coal and Electricity are -
Environmental challenges
– Anhui Hengyuan Coal and Electricity 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. Anhui Hengyuan Coal and Electricity can take advantage of this fund but it will also bring new competitors in the Coal industry.
Technology acceleration in Forth Industrial Revolution
– Anhui Hengyuan Coal and Electricity has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, Anhui Hengyuan Coal and Electricity 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.
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 Anhui Hengyuan Coal and Electricity in the Coal sector and impact the bottomline of the organization.
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 Anhui Hengyuan Coal and Electricity 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, Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity prominent markets.
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. Anhui Hengyuan Coal and Electricity 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.
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. Anhui Hengyuan Coal and Electricity needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.
Consumer confidence and its impact on Anhui Hengyuan Coal and Electricity 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Coal industry are lowering. It can presents Anhui Hengyuan Coal and Electricity with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Coal sector.
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. Anhui Hengyuan Coal and Electricity can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Anhui Hengyuan Coal and Electricity
– 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 Anhui Hengyuan Coal and Electricity.
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 Anhui Hengyuan Coal and Electricity business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Anhui Hengyuan Coal and Electricity Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity 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 Anhui Hengyuan Coal and Electricity needs to make to build a sustainable competitive advantage.
