Lanzhou LS Heavy Equipment (603169) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Lanzhou LS Heavy Equipment (China)

Based on various researches at Oak Spring University , Lanzhou LS Heavy Equipment is operating in a macro-environment that has been destablized by – increasing commodity prices, wage bills are increasing, there is backlash against globalization, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, etc

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Introduction to SWOT Analysis of Lanzhou LS Heavy Equipment

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Lanzhou LS Heavy Equipment can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lanzhou LS Heavy Equipment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment can be done for the following purposes –
1. Strategic planning of Lanzhou LS Heavy Equipment
2. Improving business portfolio management of Lanzhou LS Heavy Equipment
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 Lanzhou LS Heavy Equipment

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Strengths of Lanzhou LS Heavy Equipment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Lanzhou LS Heavy Equipment are -

Ability to lead change in Misc. Capital Goods

– Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Analytics focus

– Lanzhou LS Heavy Equipment 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.

High switching costs

– The high switching costs that Lanzhou LS Heavy Equipment 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.

Innovation driven organization

– Lanzhou LS Heavy Equipment is one of the most innovative firm in Misc. Capital Goods sector.

Diverse revenue streams

– Lanzhou LS Heavy Equipment is present in almost all the verticals within the Misc. Capital Goods industry. This has provided Lanzhou LS Heavy Equipment 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.

Learning organization

- Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Lanzhou LS Heavy Equipment emphasize – knowledge, initiative, and innovation.

Sustainable margins compare to other players in Misc. Capital Goods industry

– Lanzhou LS Heavy Equipment has clearly differentiated products in the market place. This has enabled Lanzhou LS Heavy Equipment to fetch slight price premium compare to the competitors in the Misc. Capital Goods industry. The sustainable margins have also helped Lanzhou LS Heavy Equipment to invest into research and development (R&D) and innovation.

Digital Transformation in Misc. Capital Goods industry

- digital transformation varies from industry to industry. For Lanzhou LS Heavy Equipment digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lanzhou LS Heavy Equipment 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.

Training and development

– Lanzhou LS Heavy Equipment 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.

Successful track record of launching new products

– Lanzhou LS Heavy Equipment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lanzhou LS Heavy Equipment 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.

High brand equity

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

Cross disciplinary teams

– Horizontal connected teams at the Lanzhou LS Heavy Equipment 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.

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Weaknesses of Lanzhou LS Heavy Equipment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Lanzhou LS Heavy Equipment are -

Compensation and incentives

– The revenue per employee of Lanzhou LS Heavy Equipment is just above the Misc. Capital Goods 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.

Need for greater diversity

– Lanzhou LS Heavy Equipment 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.

No frontier risks strategy

– From the 10K / annual statement of Lanzhou LS Heavy Equipment, it seems that company is thinking out the frontier risks that can impact Misc. Capital Goods 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.

Employees’ less understanding of Lanzhou LS Heavy Equipment strategy

– From the outside it seems that the employees of Lanzhou LS Heavy Equipment 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.

Interest costs

– Compare to the competition, Lanzhou LS Heavy Equipment has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

Increasing silos among functional specialists

– The organizational structure of Lanzhou LS Heavy Equipment is dominated by functional specialists. It is not different from other players in the Misc. Capital Goods industry, but Lanzhou LS Heavy Equipment needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lanzhou LS Heavy Equipment to focus more on services in the Misc. Capital Goods industry rather than just following the product oriented approach.

Lack of clear differentiation of Lanzhou LS Heavy Equipment products

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

High operating costs

– Compare to the competitors, Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment lucrative customers.

Aligning sales with marketing

– From the outside it seems that Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment can leverage the sales team experience to cultivate customer relationships as Lanzhou LS Heavy Equipment is planning to shift buying processes online.

High cash cycle compare to competitors

Lanzhou LS Heavy Equipment 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.

Ability to respond to the competition

– As the decision making is very deliberative at Lanzhou LS Heavy Equipment, in the dynamic environment of Misc. Capital Goods industry it has struggled to respond to the nimble upstart competition. Lanzhou LS Heavy Equipment has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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Lanzhou LS Heavy Equipment Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Lanzhou LS Heavy Equipment are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Lanzhou LS Heavy Equipment 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Lanzhou LS Heavy Equipment is facing challenges because of the dominance of functional experts in the organization. Lanzhou LS Heavy Equipment can utilize new technology in the field of Misc. Capital Goods industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Learning at scale

– Online learning technologies has now opened space for Lanzhou LS Heavy Equipment 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.

Building a culture of innovation

– managers at Lanzhou LS Heavy Equipment 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.

Remote work and new talent hiring opportunities

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

Better consumer reach

– The expansion of the 5G network will help Lanzhou LS Heavy Equipment to increase its market reach. Lanzhou LS Heavy Equipment 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.

Using analytics as competitive advantage

– Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lanzhou LS Heavy Equipment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Developing new processes and practices

– Lanzhou LS Heavy Equipment 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.

Use of Bitcoin and other crypto currencies for transactions in Misc. Capital Goods industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lanzhou LS Heavy Equipment in the Misc. Capital Goods industry. Now Lanzhou LS Heavy Equipment can target international markets with far fewer capital restrictions requirements than the existing system.

Creating value in data economy

– The success of analytics program of Lanzhou LS Heavy Equipment has opened avenues for new revenue streams for the organization in Misc. Capital Goods industry. This can help Lanzhou LS Heavy Equipment to build a more holistic ecosystem for Lanzhou LS Heavy Equipment products in the Misc. Capital Goods industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Reforming the budgeting process

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

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. Lanzhou LS Heavy Equipment can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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Threats Lanzhou LS Heavy Equipment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Lanzhou LS Heavy Equipment are -

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Misc. Capital Goods industry are lowering. It can presents Lanzhou LS Heavy Equipment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Misc. Capital Goods sector.

Consumer confidence and its impact on Lanzhou LS Heavy Equipment 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.

Technology acceleration in Forth Industrial Revolution

– Lanzhou LS Heavy Equipment has witnessed rapid integration of technology during Covid-19 in the Misc. Capital Goods industry. As one of the leading players in the industry, Lanzhou LS Heavy Equipment needs to keep up with the evolution of technology in the Misc. Capital Goods 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Lanzhou LS Heavy Equipment 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.

Shortening product life cycle

– it is one of the major threat that Lanzhou LS Heavy Equipment is facing in Misc. Capital Goods sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Regulatory challenges

– Lanzhou LS Heavy Equipment 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 Misc. Capital Goods industry regulations.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Lanzhou LS Heavy Equipment 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 Lanzhou LS Heavy Equipment prominent markets.

Increasing wage structure of Lanzhou LS Heavy Equipment

– 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 Lanzhou LS Heavy Equipment.

Environmental challenges

– Lanzhou LS Heavy Equipment 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. Lanzhou LS Heavy Equipment can take advantage of this fund but it will also bring new competitors in the Misc. Capital Goods industry.

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.

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.

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 Lanzhou LS Heavy Equipment.

Stagnating economy with rate increase

– Lanzhou LS Heavy Equipment 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 Misc. Capital Goods industry.

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Weighted SWOT Analysis of Lanzhou LS Heavy Equipment Template, Example

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

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