Shenzhen SEG (200058) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Shenzhen SEG (China)

Based on various researches at Oak Spring University , Shenzhen SEG is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing commodity prices, increasing energy prices, wage bills are increasing, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Shenzhen SEG

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shenzhen SEG can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shenzhen SEG, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shenzhen SEG 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Shenzhen SEG can be done for the following purposes –
1. Strategic planning of Shenzhen SEG
2. Improving business portfolio management of Shenzhen SEG
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Technology) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shenzhen SEG

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Strengths of Shenzhen SEG | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Shenzhen SEG are -

Sustainable margins compare to other players in Retail (Technology) industry

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

Strong track record of project management in the Retail (Technology) industry

– Shenzhen SEG is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Ability to lead change in Retail (Technology)

– Shenzhen SEG is one of the leading players in the Retail (Technology) industry in China. Over the years it has not only transformed the business landscape in the Retail (Technology) industry in China but also across the existing markets. The ability to lead change has enabled Shenzhen SEG in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Diverse revenue streams

– Shenzhen SEG is present in almost all the verticals within the Retail (Technology) industry. This has provided Shenzhen SEG 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

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

Organizational Resilience of Shenzhen SEG

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

Highly skilled collaborators

– Shenzhen SEG has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Technology) industry. Secondly the value chain collaborators of Shenzhen SEG have helped the firm to develop new products and bring them quickly to the marketplace.

Innovation driven organization

– Shenzhen SEG is one of the most innovative firm in Retail (Technology) sector.

Ability to recruit top talent

– Shenzhen SEG is one of the leading players in the Retail (Technology) 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.

High switching costs

– The high switching costs that Shenzhen SEG 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.

Analytics focus

– Shenzhen SEG 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 Retail (Technology) 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.

Low bargaining power of suppliers

– Suppliers of Shenzhen SEG in the Services sector have low bargaining power. Shenzhen SEG has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shenzhen SEG to manage not only supply disruptions but also source products at highly competitive prices.

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Weaknesses of Shenzhen SEG | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Shenzhen SEG are -

High bargaining power of channel partners in Retail (Technology) industry

– because of the regulatory requirements in China, Shenzhen SEG 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 Retail (Technology) industry.

Slow to harness new channels of communication

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

Aligning sales with marketing

– From the outside it seems that Shenzhen SEG needs to have more collaboration between its sales team and marketing team. Sales professionals in the Retail (Technology) industry have deep experience in developing customer relationships. Marketing department at Shenzhen SEG can leverage the sales team experience to cultivate customer relationships as Shenzhen SEG is planning to shift buying processes online.

Increasing silos among functional specialists

– The organizational structure of Shenzhen SEG is dominated by functional specialists. It is not different from other players in the Retail (Technology) industry, but Shenzhen SEG needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shenzhen SEG to focus more on services in the Retail (Technology) industry rather than just following the product oriented approach.

High cash cycle compare to competitors

Shenzhen SEG has a high cash cycle compare to other players in the Retail (Technology) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

Slow to strategic competitive environment developments

– As Shenzhen SEG is one of the leading players in the Retail (Technology) industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Retail (Technology) industry in last five years.

Employees’ less understanding of Shenzhen SEG strategy

– From the outside it seems that the employees of Shenzhen SEG 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.

Lack of clear differentiation of Shenzhen SEG products

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

Skills based hiring in Retail (Technology) industry

– The stress on hiring functional specialists at Shenzhen SEG 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.

Need for greater diversity

– Shenzhen SEG has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Shenzhen SEG supply chain. Even after few cautionary changes, Shenzhen SEG is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shenzhen SEG vulnerable to further global disruptions in South East Asia.

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Shenzhen SEG Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Shenzhen SEG are -

Creating value in data economy

– The success of analytics program of Shenzhen SEG has opened avenues for new revenue streams for the organization in Retail (Technology) industry. This can help Shenzhen SEG to build a more holistic ecosystem for Shenzhen SEG products in the Retail (Technology) industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at Shenzhen SEG 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 Retail (Technology) industry.

Manufacturing automation

– Shenzhen SEG can use the latest technology developments to improve its manufacturing and designing process in Retail (Technology) 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.

Buying journey improvements

– Shenzhen SEG can improve the customer journey of consumers in the Retail (Technology) 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.

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. Shenzhen SEG 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, Shenzhen SEG 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 Shenzhen SEG to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Using analytics as competitive advantage

– Shenzhen SEG has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Technology) sector. This continuous investment in analytics has enabled Shenzhen SEG to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shenzhen SEG to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Low interest rates

– Even though inflation is raising its head in most developed economies, Shenzhen SEG 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.

Remote work and new talent hiring opportunities

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

Developing new processes and practices

– Shenzhen SEG can develop new processes and procedures in Retail (Technology) industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Shenzhen SEG is facing challenges because of the dominance of functional experts in the organization. Shenzhen SEG can utilize new technology in the field of Retail (Technology) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Better consumer reach

– The expansion of the 5G network will help Shenzhen SEG to increase its market reach. Shenzhen SEG 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.

Reforming the budgeting process

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

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Threats Shenzhen SEG External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Shenzhen SEG are -

High dependence on third party suppliers

– Shenzhen SEG 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.

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.

Stagnating economy with rate increase

– Shenzhen SEG 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 Retail (Technology) industry.

Increasing wage structure of Shenzhen SEG

– 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 Shenzhen SEG.

Consumer confidence and its impact on Shenzhen SEG 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 (Technology) industry and other sectors.

Shortening product life cycle

– it is one of the major threat that Shenzhen SEG is facing in Retail (Technology) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Shenzhen SEG 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 (Technology) sector.

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 Shenzhen SEG in the Retail (Technology) sector and impact the bottomline of the organization.

Environmental challenges

– Shenzhen SEG 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. Shenzhen SEG can take advantage of this fund but it will also bring new competitors in the Retail (Technology) industry.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Shenzhen SEG 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 Shenzhen SEG prominent markets.

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.

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 Shenzhen SEG business can come under increasing regulations regarding data privacy, data security, etc.

Technology acceleration in Forth Industrial Revolution

– Shenzhen SEG has witnessed rapid integration of technology during Covid-19 in the Retail (Technology) industry. As one of the leading players in the industry, Shenzhen SEG needs to keep up with the evolution of technology in the Retail (Technology) 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.

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Weighted SWOT Analysis of Shenzhen SEG Template, Example

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

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