Taiyuan Heavy Industry (600169) SWOT Analysis / TOWS Matrix / MBA Resources
Misc. Capital Goods
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Taiyuan Heavy Industry (China)
Based on various researches at Oak Spring University , Taiyuan Heavy Industry is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, wage bills are increasing, increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs,
supply chains are disrupted by pandemic , technology disruption, etc
Introduction to SWOT Analysis of Taiyuan Heavy Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Taiyuan Heavy Industry can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Taiyuan Heavy Industry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Taiyuan Heavy Industry 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 Taiyuan Heavy Industry can be done for the following purposes –
1. Strategic planning of Taiyuan Heavy Industry
2. Improving business portfolio management of Taiyuan Heavy Industry
3. Assessing feasibility of the new initiative in China
4. Making a Misc. Capital Goods sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Taiyuan Heavy Industry
Strengths of Taiyuan Heavy Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Taiyuan Heavy Industry are -
Successful track record of launching new products
– Taiyuan Heavy Industry has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Taiyuan Heavy Industry 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.
Analytics focus
– Taiyuan Heavy Industry 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 Misc. Capital Goods 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.
Digital Transformation in Misc. Capital Goods industry
- digital transformation varies from industry to industry. For Taiyuan Heavy Industry digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Taiyuan Heavy Industry 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.
High brand equity
– Taiyuan Heavy Industry has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Taiyuan Heavy Industry to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Misc. Capital Goods industry
– Taiyuan Heavy Industry has clearly differentiated products in the market place. This has enabled Taiyuan Heavy Industry to fetch slight price premium compare to the competitors in the Misc. Capital Goods industry. The sustainable margins have also helped Taiyuan Heavy Industry to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Taiyuan Heavy Industry is present in almost all the verticals within the Misc. Capital Goods industry. This has provided Taiyuan Heavy Industry 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.
Operational resilience
– The operational resilience strategy of Taiyuan Heavy Industry comprises – understanding the underlying the factors in the Misc. Capital Goods 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.
Learning organization
- Taiyuan Heavy Industry 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 Taiyuan Heavy Industry is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Taiyuan Heavy Industry emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Taiyuan Heavy Industry is one of the most innovative firm in Misc. Capital Goods sector.
Ability to lead change in Misc. Capital Goods
– Taiyuan Heavy Industry is one of the leading players in the Misc. Capital Goods industry in China. Over the years it has not only transformed the business landscape in the Misc. Capital Goods industry in China but also across the existing markets. The ability to lead change has enabled Taiyuan Heavy Industry in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Taiyuan Heavy Industry has one of the best training and development program in Capital Goods 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.
High switching costs
– The high switching costs that Taiyuan Heavy Industry 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.
Weaknesses of Taiyuan Heavy Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taiyuan Heavy Industry are -
Low market penetration in new markets
– Outside its home market of China, Taiyuan Heavy Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, Taiyuan Heavy Industry has high operating costs in the Misc. Capital Goods industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Taiyuan Heavy Industry lucrative customers.
Slow to strategic competitive environment developments
– As Taiyuan Heavy Industry is one of the leading players in the Misc. Capital Goods industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Misc. Capital Goods industry in last five years.
Products dominated business model
– Even though Taiyuan Heavy Industry has some of the most successful models in the Misc. Capital Goods industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Taiyuan Heavy Industry should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Taiyuan Heavy Industry has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Misc. Capital Goods industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Taiyuan Heavy Industry is dominated by functional specialists. It is not different from other players in the Misc. Capital Goods industry, but Taiyuan Heavy Industry needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Taiyuan Heavy Industry to focus more on services in the Misc. Capital Goods industry rather than just following the product oriented approach.
Skills based hiring in Misc. Capital Goods industry
– The stress on hiring functional specialists at Taiyuan Heavy Industry 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.
Aligning sales with marketing
– From the outside it seems that Taiyuan Heavy Industry needs to have more collaboration between its sales team and marketing team. Sales professionals in the Misc. Capital Goods industry have deep experience in developing customer relationships. Marketing department at Taiyuan Heavy Industry can leverage the sales team experience to cultivate customer relationships as Taiyuan Heavy Industry is planning to shift buying processes online.
Need for greater diversity
– Taiyuan Heavy Industry 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Taiyuan Heavy Industry is slow explore the new channels of communication. These new channels of communication can help Taiyuan Heavy Industry to provide better information regarding Misc. Capital Goods products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Taiyuan Heavy Industry has a high cash cycle compare to other players in the Misc. Capital Goods industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Taiyuan Heavy Industry Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Taiyuan Heavy Industry are -
Using analytics as competitive advantage
– Taiyuan Heavy Industry has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Capital Goods sector. This continuous investment in analytics has enabled Taiyuan Heavy Industry to build a competitive advantage using analytics. The analytics driven competitive advantage can help Taiyuan Heavy Industry to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Taiyuan Heavy Industry has opened avenues for new revenue streams for the organization in Misc. Capital Goods industry. This can help Taiyuan Heavy Industry to build a more holistic ecosystem for Taiyuan Heavy Industry products in the Misc. Capital Goods industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Misc. Capital Goods industry, but it has also influenced the consumer preferences. Taiyuan Heavy Industry can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Taiyuan Heavy Industry 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 Misc. Capital Goods industry.
Better consumer reach
– The expansion of the 5G network will help Taiyuan Heavy Industry to increase its market reach. Taiyuan Heavy Industry 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Taiyuan Heavy Industry 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 Taiyuan Heavy Industry to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Taiyuan Heavy Industry 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Taiyuan Heavy Industry 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Taiyuan Heavy Industry 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 Taiyuan Heavy Industry to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Taiyuan Heavy Industry can develop new processes and procedures in Misc. Capital Goods 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Taiyuan Heavy Industry in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Capital Goods industry, and it will provide faster access to the consumers.
Leveraging digital technologies
– Taiyuan Heavy Industry 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 Taiyuan Heavy Industry can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Taiyuan Heavy Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Taiyuan Heavy Industry are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Taiyuan Heavy Industry may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Capital Goods sector.
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 Taiyuan Heavy Industry business can come under increasing regulations regarding data privacy, data security, etc.
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.
Consumer confidence and its impact on Taiyuan Heavy Industry 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 Misc. Capital Goods industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Taiyuan Heavy Industry in Misc. Capital Goods industry. The Misc. Capital Goods 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 wage structure of Taiyuan Heavy Industry
– 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 Taiyuan Heavy Industry.
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 Taiyuan Heavy Industry.
Environmental challenges
– Taiyuan Heavy Industry 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. Taiyuan Heavy Industry can take advantage of this fund but it will also bring new competitors in the Misc. Capital Goods industry.
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.
Easy access to finance
– Easy access to finance in Misc. Capital Goods industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Taiyuan Heavy Industry can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Taiyuan Heavy Industry 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Taiyuan Heavy Industry 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 Taiyuan Heavy Industry 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. Taiyuan Heavy Industry 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.
Weighted SWOT Analysis of Taiyuan Heavy Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Taiyuan Heavy Industry 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 Taiyuan Heavy Industry 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 Taiyuan Heavy Industry 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 Taiyuan Heavy Industry 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 Taiyuan Heavy Industry needs to make to build a sustainable competitive advantage.