SWOT Analysis / TOWS Matrix for Jiangsu Hongtu Hi-Tech (China)
Based on various researches at Oak Spring University , Jiangsu Hongtu Hi-Tech is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, increasing commodity prices, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, there is backlash against globalization,
supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Jiangsu Hongtu Hi-Tech
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Jiangsu Hongtu Hi-Tech can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jiangsu Hongtu Hi-Tech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech can be done for the following purposes –
1. Strategic planning of Jiangsu Hongtu Hi-Tech
2. Improving business portfolio management of Jiangsu Hongtu Hi-Tech
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 Jiangsu Hongtu Hi-Tech
Strengths of Jiangsu Hongtu Hi-Tech | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jiangsu Hongtu Hi-Tech are -
Sustainable margins compare to other players in Retail (Technology) industry
– Jiangsu Hongtu Hi-Tech has clearly differentiated products in the market place. This has enabled Jiangsu Hongtu Hi-Tech to fetch slight price premium compare to the competitors in the Retail (Technology) industry. The sustainable margins have also helped Jiangsu Hongtu Hi-Tech to invest into research and development (R&D) and innovation.
Digital Transformation in Retail (Technology) industry
- digital transformation varies from industry to industry. For Jiangsu Hongtu Hi-Tech digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jiangsu Hongtu Hi-Tech 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.
Effective Research and Development (R&D)
– Jiangsu Hongtu Hi-Tech has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Jiangsu Hongtu Hi-Tech staying ahead in the Retail (Technology) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Jiangsu Hongtu Hi-Tech emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Jiangsu Hongtu Hi-Tech 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.
Highly skilled collaborators
– Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Retail (Technology)
– Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Jiangsu Hongtu Hi-Tech comprises – understanding the underlying the factors in the Retail (Technology) 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.
Innovation driven organization
– Jiangsu Hongtu Hi-Tech is one of the most innovative firm in Retail (Technology) sector.
High brand equity
– Jiangsu Hongtu Hi-Tech has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jiangsu Hongtu Hi-Tech to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Jiangsu Hongtu Hi-Tech
– The covid-19 pandemic has put organizational resilience at the centre of everthing Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech in the Services sector have low bargaining power. Jiangsu Hongtu Hi-Tech has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jiangsu Hongtu Hi-Tech to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of Jiangsu Hongtu Hi-Tech | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Jiangsu Hongtu Hi-Tech are -
High operating costs
– Compare to the competitors, Jiangsu Hongtu Hi-Tech has high operating costs in the Retail (Technology) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Jiangsu Hongtu Hi-Tech lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Jiangsu Hongtu Hi-Tech has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Retail (Technology) industry over the last five years. Jiangsu Hongtu Hi-Tech 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.
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 Jiangsu Hongtu Hi-Tech supply chain. Even after few cautionary changes, Jiangsu Hongtu Hi-Tech is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Jiangsu Hongtu Hi-Tech vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee of Jiangsu Hongtu Hi-Tech is just above the Retail (Technology) 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.
Skills based hiring in Retail (Technology) industry
– The stress on hiring functional specialists at Jiangsu Hongtu Hi-Tech 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.
Capital Spending Reduction
– Even during the low interest decade, Jiangsu Hongtu Hi-Tech 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 Retail (Technology) industry using digital technology.
High bargaining power of channel partners in Retail (Technology) industry
– because of the regulatory requirements in China, Jiangsu Hongtu Hi-Tech 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.
Increasing silos among functional specialists
– The organizational structure of Jiangsu Hongtu Hi-Tech is dominated by functional specialists. It is not different from other players in the Retail (Technology) industry, but Jiangsu Hongtu Hi-Tech needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jiangsu Hongtu Hi-Tech to focus more on services in the Retail (Technology) industry rather than just following the product oriented approach.
Aligning sales with marketing
– From the outside it seems that Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech can leverage the sales team experience to cultivate customer relationships as Jiangsu Hongtu Hi-Tech is planning to shift buying processes online.
No frontier risks strategy
– From the 10K / annual statement of Jiangsu Hongtu Hi-Tech, it seems that company is thinking out the frontier risks that can impact Retail (Technology) 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.
Low market penetration in new markets
– Outside its home market of China, Jiangsu Hongtu Hi-Tech needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Jiangsu Hongtu Hi-Tech Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Jiangsu Hongtu Hi-Tech are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jiangsu Hongtu Hi-Tech can use these opportunities to build new business models that can help the communities that Jiangsu Hongtu Hi-Tech operates in. Secondly it can use opportunities from government spending in Retail (Technology) sector.
Learning at scale
– Online learning technologies has now opened space for Jiangsu Hongtu Hi-Tech 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.
Developing new processes and practices
– Jiangsu Hongtu Hi-Tech 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.
Using analytics as competitive advantage
– Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech has opened avenues for new revenue streams for the organization in Retail (Technology) industry. This can help Jiangsu Hongtu Hi-Tech to build a more holistic ecosystem for Jiangsu Hongtu Hi-Tech products in the Retail (Technology) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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. Jiangsu Hongtu Hi-Tech can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jiangsu Hongtu Hi-Tech in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Retail (Technology) industry, and it will provide faster access to the consumers.
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 Jiangsu Hongtu Hi-Tech 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.
Leveraging digital technologies
– Jiangsu Hongtu Hi-Tech 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jiangsu Hongtu Hi-Tech is facing challenges because of the dominance of functional experts in the organization. Jiangsu Hongtu Hi-Tech 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Jiangsu Hongtu Hi-Tech can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Jiangsu Hongtu Hi-Tech 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.
Use of Bitcoin and other crypto currencies for transactions in Retail (Technology) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Jiangsu Hongtu Hi-Tech in the Retail (Technology) industry. Now Jiangsu Hongtu Hi-Tech can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Jiangsu Hongtu Hi-Tech External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Jiangsu Hongtu Hi-Tech are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech prominent markets.
Stagnating economy with rate increase
– Jiangsu Hongtu Hi-Tech 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.
Consumer confidence and its impact on Jiangsu Hongtu Hi-Tech 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.
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 Jiangsu Hongtu Hi-Tech business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Retail (Technology) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech
– 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 Jiangsu Hongtu Hi-Tech.
Regulatory challenges
– Jiangsu Hongtu Hi-Tech needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Retail (Technology) industry regulations.
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 Jiangsu Hongtu Hi-Tech.
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.
Environmental challenges
– Jiangsu Hongtu Hi-Tech 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. Jiangsu Hongtu Hi-Tech can take advantage of this fund but it will also bring new competitors in the Retail (Technology) industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jiangsu Hongtu Hi-Tech in Retail (Technology) industry. The Retail (Technology) 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 Retail (Technology) industry are lowering. It can presents Jiangsu Hongtu Hi-Tech with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Technology) sector.
Technology acceleration in Forth Industrial Revolution
– Jiangsu Hongtu Hi-Tech has witnessed rapid integration of technology during Covid-19 in the Retail (Technology) industry. As one of the leading players in the industry, Jiangsu Hongtu Hi-Tech 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.
Weighted SWOT Analysis of Jiangsu Hongtu Hi-Tech Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech 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 Jiangsu Hongtu Hi-Tech needs to make to build a sustainable competitive advantage.
