Liaoning Hongyang Energy (600758) SWOT Analysis / TOWS Matrix / MBA Resources
Electric Utilities
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Liaoning Hongyang Energy (China)
Based on various researches at Oak Spring University , Liaoning Hongyang Energy is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, technology disruption, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization,
increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Liaoning Hongyang Energy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Liaoning Hongyang Energy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Liaoning Hongyang Energy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Liaoning Hongyang Energy operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Liaoning Hongyang Energy can be done for the following purposes –
1. Strategic planning of Liaoning Hongyang Energy
2. Improving business portfolio management of Liaoning Hongyang Energy
3. Assessing feasibility of the new initiative in China
4. Making a Electric Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Liaoning Hongyang Energy
Strengths of Liaoning Hongyang Energy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Liaoning Hongyang Energy are -
High brand equity
– Liaoning Hongyang Energy has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Liaoning Hongyang Energy to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Liaoning Hongyang Energy has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Liaoning Hongyang Energy staying ahead in the Electric Utilities industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Liaoning Hongyang Energy is present in almost all the verticals within the Electric Utilities industry. This has provided Liaoning Hongyang Energy a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Operational resilience
– The operational resilience strategy of Liaoning Hongyang Energy comprises – understanding the underlying the factors in the Electric Utilities 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.
Digital Transformation in Electric Utilities industry
- digital transformation varies from industry to industry. For Liaoning Hongyang Energy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Liaoning Hongyang Energy 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.
Innovation driven organization
– Liaoning Hongyang Energy is one of the most innovative firm in Electric Utilities sector.
Superior customer experience
– The customer experience strategy of Liaoning Hongyang Energy in Electric Utilities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Liaoning Hongyang Energy 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.
Training and development
– Liaoning Hongyang Energy has one of the best training and development program in Utilities 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.
Cross disciplinary teams
– Horizontal connected teams at the Liaoning Hongyang Energy are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Liaoning Hongyang Energy is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Electric Utilities 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 Electric Utilities industry
– Liaoning Hongyang Energy has clearly differentiated products in the market place. This has enabled Liaoning Hongyang Energy to fetch slight price premium compare to the competitors in the Electric Utilities industry. The sustainable margins have also helped Liaoning Hongyang Energy to invest into research and development (R&D) and innovation.
Weaknesses of Liaoning Hongyang Energy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Liaoning Hongyang Energy are -
High dependence on Liaoning Hongyang Energy ‘s star products
– The top 2 products and services of Liaoning Hongyang Energy still accounts for major business revenue. This dependence on star products in Electric Utilities industry has resulted into insufficient focus on developing new products, even though Liaoning Hongyang Energy has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of Liaoning Hongyang Energy is just above the Electric Utilities 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.
Aligning sales with marketing
– From the outside it seems that Liaoning Hongyang Energy needs to have more collaboration between its sales team and marketing team. Sales professionals in the Electric Utilities industry have deep experience in developing customer relationships. Marketing department at Liaoning Hongyang Energy can leverage the sales team experience to cultivate customer relationships as Liaoning Hongyang Energy is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Liaoning Hongyang Energy is one of the leading players in the Electric Utilities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Electric Utilities industry in last five years.
Need for greater diversity
– Liaoning Hongyang Energy 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.
Skills based hiring in Electric Utilities industry
– The stress on hiring functional specialists at Liaoning Hongyang Energy has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High operating costs
– Compare to the competitors, Liaoning Hongyang Energy has high operating costs in the Electric Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Liaoning Hongyang Energy lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at Liaoning Hongyang Energy, in the dynamic environment of Electric Utilities industry it has struggled to respond to the nimble upstart competition. Liaoning Hongyang Energy has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Liaoning Hongyang Energy has a high cash cycle compare to other players in the Electric Utilities industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Liaoning Hongyang Energy products
– To increase the profitability and margins on the products, Liaoning Hongyang Energy needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Liaoning Hongyang Energy is dominated by functional specialists. It is not different from other players in the Electric Utilities industry, but Liaoning Hongyang Energy needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Liaoning Hongyang Energy to focus more on services in the Electric Utilities industry rather than just following the product oriented approach.
Liaoning Hongyang Energy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Liaoning Hongyang Energy are -
Creating value in data economy
– The success of analytics program of Liaoning Hongyang Energy has opened avenues for new revenue streams for the organization in Electric Utilities industry. This can help Liaoning Hongyang Energy to build a more holistic ecosystem for Liaoning Hongyang Energy products in the Electric Utilities industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Liaoning Hongyang Energy can use these opportunities to build new business models that can help the communities that Liaoning Hongyang Energy operates in. Secondly it can use opportunities from government spending in Electric Utilities sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Liaoning Hongyang Energy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Electric Utilities industry, and it will provide faster access to the consumers.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Electric Utilities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Liaoning Hongyang Energy can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Liaoning Hongyang Energy can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Developing new processes and practices
– Liaoning Hongyang Energy can develop new processes and procedures in Electric Utilities 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.
Learning at scale
– Online learning technologies has now opened space for Liaoning Hongyang Energy to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Liaoning Hongyang Energy to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Liaoning Hongyang Energy to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Liaoning Hongyang Energy to increase its market reach. Liaoning Hongyang Energy will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Liaoning Hongyang Energy can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Liaoning Hongyang Energy 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, Liaoning Hongyang Energy is facing challenges because of the dominance of functional experts in the organization. Liaoning Hongyang Energy can utilize new technology in the field of Electric Utilities industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Liaoning Hongyang Energy 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Electric Utilities industry, but it has also influenced the consumer preferences. Liaoning Hongyang Energy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Liaoning Hongyang Energy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Liaoning Hongyang Energy are -
Regulatory challenges
– Liaoning Hongyang Energy needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Electric Utilities industry regulations.
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.
Increasing wage structure of Liaoning Hongyang Energy
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Liaoning Hongyang Energy.
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.
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 Liaoning Hongyang Energy in the Electric Utilities sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Liaoning Hongyang Energy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Electric Utilities sector.
Shortening product life cycle
– it is one of the major threat that Liaoning Hongyang Energy is facing in Electric Utilities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Electric Utilities industry are lowering. It can presents Liaoning Hongyang Energy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Electric Utilities sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Liaoning Hongyang Energy 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 Liaoning Hongyang Energy prominent markets.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Liaoning Hongyang Energy in Electric Utilities industry. The Electric Utilities 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.
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. Liaoning Hongyang Energy will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Electric Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Liaoning Hongyang Energy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Liaoning Hongyang Energy 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. Liaoning Hongyang Energy can take advantage of this fund but it will also bring new competitors in the Electric Utilities industry.
Weighted SWOT Analysis of Liaoning Hongyang Energy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Liaoning Hongyang Energy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Liaoning Hongyang Energy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Liaoning Hongyang Energy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Liaoning Hongyang Energy to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Liaoning Hongyang Energy needs to make to build a sustainable competitive advantage.
