Jiangxi Hongcheng Water (600461) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Jiangxi Hongcheng Water (China)

Based on various researches at Oak Spring University , Jiangxi Hongcheng Water is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, etc

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Introduction to SWOT Analysis of Jiangxi Hongcheng Water

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Jiangxi Hongcheng Water can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jiangxi Hongcheng Water, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jiangxi Hongcheng Water 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 Jiangxi Hongcheng Water can be done for the following purposes –
1. Strategic planning of Jiangxi Hongcheng Water
2. Improving business portfolio management of Jiangxi Hongcheng Water
3. Assessing feasibility of the new initiative in China
4. Making a Water Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Jiangxi Hongcheng Water

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Strengths of Jiangxi Hongcheng Water | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Jiangxi Hongcheng Water are -

Learning organization

- Jiangxi Hongcheng Water 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 Jiangxi Hongcheng Water is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Jiangxi Hongcheng Water emphasize – knowledge, initiative, and innovation.

Diverse revenue streams

– Jiangxi Hongcheng Water is present in almost all the verticals within the Water Utilities industry. This has provided Jiangxi Hongcheng Water 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.

Highly skilled collaborators

– Jiangxi Hongcheng Water has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Water Utilities industry. Secondly the value chain collaborators of Jiangxi Hongcheng Water have helped the firm to develop new products and bring them quickly to the marketplace.

Sustainable margins compare to other players in Water Utilities industry

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

Low bargaining power of suppliers

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

Innovation driven organization

– Jiangxi Hongcheng Water is one of the most innovative firm in Water Utilities sector.

Digital Transformation in Water Utilities industry

- digital transformation varies from industry to industry. For Jiangxi Hongcheng Water digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jiangxi Hongcheng Water 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.

Successful track record of launching new products

– Jiangxi Hongcheng Water has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jiangxi Hongcheng Water 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.

Ability to recruit top talent

– Jiangxi Hongcheng Water is one of the leading players in the Water Utilities 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.

Training and development

– Jiangxi Hongcheng Water 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.

Strong track record of project management in the Water Utilities industry

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

Cross disciplinary teams

– Horizontal connected teams at the Jiangxi Hongcheng Water 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 Jiangxi Hongcheng Water | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Jiangxi Hongcheng Water are -

Products dominated business model

– Even though Jiangxi Hongcheng Water has some of the most successful models in the Water Utilities industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Jiangxi Hongcheng Water should strive to include more intangible value offerings along with its core products and services.

Ability to respond to the competition

– As the decision making is very deliberative at Jiangxi Hongcheng Water, in the dynamic environment of Water Utilities industry it has struggled to respond to the nimble upstart competition. Jiangxi Hongcheng Water has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Slow to harness new channels of communication

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

High dependence on Jiangxi Hongcheng Water ‘s star products

– The top 2 products and services of Jiangxi Hongcheng Water still accounts for major business revenue. This dependence on star products in Water Utilities industry has resulted into insufficient focus on developing new products, even though Jiangxi Hongcheng Water has relatively successful track record of launching new products.

Employees’ less understanding of Jiangxi Hongcheng Water strategy

– From the outside it seems that the employees of Jiangxi Hongcheng Water 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.

Compensation and incentives

– The revenue per employee of Jiangxi Hongcheng Water is just above the Water 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.

High operating costs

– Compare to the competitors, Jiangxi Hongcheng Water has high operating costs in the Water Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Jiangxi Hongcheng Water lucrative customers.

Skills based hiring in Water Utilities industry

– The stress on hiring functional specialists at Jiangxi Hongcheng Water 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.

Interest costs

– Compare to the competition, Jiangxi Hongcheng Water 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.

Slow decision making process

– As mentioned earlier in the report, Jiangxi Hongcheng Water has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Water Utilities industry over the last five years. Jiangxi Hongcheng Water 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 cash cycle compare to competitors

Jiangxi Hongcheng Water has a high cash cycle compare to other players in the Water 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.

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Jiangxi Hongcheng Water Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Jiangxi Hongcheng Water are -

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Water Utilities industry, but it has also influenced the consumer preferences. Jiangxi Hongcheng Water can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Creating value in data economy

– The success of analytics program of Jiangxi Hongcheng Water has opened avenues for new revenue streams for the organization in Water Utilities industry. This can help Jiangxi Hongcheng Water to build a more holistic ecosystem for Jiangxi Hongcheng Water products in the Water Utilities 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. Jiangxi Hongcheng Water can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Building a culture of innovation

– managers at Jiangxi Hongcheng Water 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 Water Utilities industry.

Learning at scale

– Online learning technologies has now opened space for Jiangxi Hongcheng Water 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Jiangxi Hongcheng Water is facing challenges because of the dominance of functional experts in the organization. Jiangxi Hongcheng Water can utilize new technology in the field of Water Utilities 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, Jiangxi Hongcheng Water 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 Jiangxi Hongcheng Water to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jiangxi Hongcheng Water can use these opportunities to build new business models that can help the communities that Jiangxi Hongcheng Water operates in. Secondly it can use opportunities from government spending in Water Utilities sector.

Remote work and new talent hiring opportunities

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

Use of Bitcoin and other crypto currencies for transactions in Water Utilities industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Jiangxi Hongcheng Water in the Water Utilities industry. Now Jiangxi Hongcheng Water can target international markets with far fewer capital restrictions requirements than the existing system.

Better consumer reach

– The expansion of the 5G network will help Jiangxi Hongcheng Water to increase its market reach. Jiangxi Hongcheng Water 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.

Loyalty marketing

– Jiangxi Hongcheng Water has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.

Low interest rates

– Even though inflation is raising its head in most developed economies, Jiangxi Hongcheng Water 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.

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Threats Jiangxi Hongcheng Water External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Jiangxi Hongcheng Water are -

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Water Utilities industry are lowering. It can presents Jiangxi Hongcheng Water with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Water Utilities sector.

Easy access to finance

– Easy access to finance in Water Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jiangxi Hongcheng Water can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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. Jiangxi Hongcheng Water 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.

Increasing wage structure of Jiangxi Hongcheng Water

– 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 Jiangxi Hongcheng Water.

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.

High dependence on third party suppliers

– Jiangxi Hongcheng Water 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Jiangxi Hongcheng Water in Water Utilities industry. The Water 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.

Consumer confidence and its impact on Jiangxi Hongcheng Water 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 Water Utilities industry and other sectors.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Jiangxi Hongcheng Water 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 Jiangxi Hongcheng Water prominent markets.

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 Jiangxi Hongcheng Water.

Technology acceleration in Forth Industrial Revolution

– Jiangxi Hongcheng Water has witnessed rapid integration of technology during Covid-19 in the Water Utilities industry. As one of the leading players in the industry, Jiangxi Hongcheng Water needs to keep up with the evolution of technology in the Water Utilities 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.

High level of anxiety and lack of motivation

– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Jiangxi Hongcheng Water needs to understand the core reasons impacting the Water Utilities industry. This will help it in building a better workplace.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Jiangxi Hongcheng Water may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Water Utilities sector.

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Weighted SWOT Analysis of Jiangxi Hongcheng Water Template, Example

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

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