SWOT Analysis / TOWS Matrix for Shanghai Shenhua (China)
Based on various researches at Oak Spring University , Shanghai Shenhua is operating in a macro-environment that has been destablized by – wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, there is backlash against globalization, technology disruption,
customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanghai Shenhua can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanghai Shenhua, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanghai Shenhua 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 Shanghai Shenhua can be done for the following purposes –
1. Strategic planning of Shanghai Shenhua
2. Improving business portfolio management of Shanghai Shenhua
3. Assessing feasibility of the new initiative in China
4. Making a Retail (Specialty) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shanghai Shenhua
Strengths of Shanghai Shenhua | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shanghai Shenhua are -
Learning organization
- Shanghai Shenhua 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 Shanghai Shenhua is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shanghai Shenhua emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Shanghai Shenhua in Retail (Specialty) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Retail (Specialty) industry
– Shanghai Shenhua has clearly differentiated products in the market place. This has enabled Shanghai Shenhua to fetch slight price premium compare to the competitors in the Retail (Specialty) industry. The sustainable margins have also helped Shanghai Shenhua to invest into research and development (R&D) and innovation.
Strong track record of project management in the Retail (Specialty) industry
– Shanghai Shenhua is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Shanghai Shenhua is one of the most innovative firm in Retail (Specialty) sector.
Ability to lead change in Retail (Specialty)
– Shanghai Shenhua is one of the leading players in the Retail (Specialty) industry in China. Over the years it has not only transformed the business landscape in the Retail (Specialty) industry in China but also across the existing markets. The ability to lead change has enabled Shanghai Shenhua in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Shanghai Shenhua is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Retail (Specialty) 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.
Ability to recruit top talent
– Shanghai Shenhua is one of the leading players in the Retail (Specialty) industry in China. It is in a position to attract the best talent available in China. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Shanghai Shenhua 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.
High brand equity
– Shanghai Shenhua has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanghai Shenhua to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Shanghai Shenhua in the Services sector have low bargaining power. Shanghai Shenhua has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shanghai Shenhua to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Shanghai Shenhua has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Retail (Specialty) industry. Secondly the value chain collaborators of Shanghai Shenhua have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Shanghai Shenhua | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanghai Shenhua are -
High dependence on Shanghai Shenhua ‘s star products
– The top 2 products and services of Shanghai Shenhua still accounts for major business revenue. This dependence on star products in Retail (Specialty) industry has resulted into insufficient focus on developing new products, even though Shanghai Shenhua has relatively successful track record of launching new products.
Lack of clear differentiation of Shanghai Shenhua products
– To increase the profitability and margins on the products, Shanghai Shenhua needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at Shanghai Shenhua, in the dynamic environment of Retail (Specialty) industry it has struggled to respond to the nimble upstart competition. Shanghai Shenhua has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Retail (Specialty) industry, Shanghai Shenhua needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of China, Shanghai Shenhua needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ less understanding of Shanghai Shenhua strategy
– From the outside it seems that the employees of Shanghai Shenhua 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.
Increasing silos among functional specialists
– The organizational structure of Shanghai Shenhua is dominated by functional specialists. It is not different from other players in the Retail (Specialty) industry, but Shanghai Shenhua needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shanghai Shenhua to focus more on services in the Retail (Specialty) industry rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, Shanghai Shenhua has high operating costs in the Retail (Specialty) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shanghai Shenhua lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shanghai Shenhua is slow explore the new channels of communication. These new channels of communication can help Shanghai Shenhua to provide better information regarding Retail (Specialty) products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Shanghai Shenhua has a high cash cycle compare to other players in the Retail (Specialty) industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Retail (Specialty) industry
– The stress on hiring functional specialists at Shanghai Shenhua 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.
Shanghai Shenhua Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shanghai Shenhua are -
Use of Bitcoin and other crypto currencies for transactions in Retail (Specialty) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shanghai Shenhua in the Retail (Specialty) industry. Now Shanghai Shenhua 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 Shanghai Shenhua has opened avenues for new revenue streams for the organization in Retail (Specialty) industry. This can help Shanghai Shenhua to build a more holistic ecosystem for Shanghai Shenhua products in the Retail (Specialty) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Shanghai Shenhua can develop new processes and procedures in Retail (Specialty) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shanghai Shenhua 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
– Shanghai Shenhua 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.
Manufacturing automation
– Shanghai Shenhua can use the latest technology developments to improve its manufacturing and designing process in Retail (Specialty) sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Building a culture of innovation
– managers at Shanghai Shenhua can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Retail (Specialty) industry.
Buying journey improvements
– Shanghai Shenhua can improve the customer journey of consumers in the Retail (Specialty) 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shanghai Shenhua 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 (Specialty) industry, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shanghai Shenhua 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 Shanghai Shenhua to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Shanghai Shenhua to increase its market reach. Shanghai Shenhua 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Retail (Specialty) industry, but it has also influenced the consumer preferences. Shanghai Shenhua can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Shanghai Shenhua has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Specialty) sector. This continuous investment in analytics has enabled Shanghai Shenhua to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shanghai Shenhua to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Shanghai Shenhua External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shanghai Shenhua are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Specialty) industry are lowering. It can presents Shanghai Shenhua with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Specialty) sector.
Consumer confidence and its impact on Shanghai Shenhua 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 (Specialty) industry and other sectors.
Technology acceleration in Forth Industrial Revolution
– Shanghai Shenhua has witnessed rapid integration of technology during Covid-19 in the Retail (Specialty) industry. As one of the leading players in the industry, Shanghai Shenhua needs to keep up with the evolution of technology in the Retail (Specialty) 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.
Environmental challenges
– Shanghai Shenhua 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. Shanghai Shenhua can take advantage of this fund but it will also bring new competitors in the Retail (Specialty) industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shanghai Shenhua in Retail (Specialty) industry. The Retail (Specialty) 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. Shanghai Shenhua 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.
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. Shanghai Shenhua needs to understand the core reasons impacting the Retail (Specialty) industry. This will help it in building a better workplace.
Regulatory challenges
– Shanghai Shenhua 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 (Specialty) industry regulations.
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 Shanghai Shenhua in the Retail (Specialty) sector and impact the bottomline of the organization.
Increasing wage structure of Shanghai Shenhua
– 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 Shanghai Shenhua.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shanghai Shenhua may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Retail (Specialty) sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shanghai Shenhua 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 Shanghai Shenhua prominent markets.
Stagnating economy with rate increase
– Shanghai Shenhua 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 (Specialty) industry.
Weighted SWOT Analysis of Shanghai Shenhua Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanghai Shenhua 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 Shanghai Shenhua 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 Shanghai Shenhua 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 Shanghai Shenhua 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 Shanghai Shenhua needs to make to build a sustainable competitive advantage.
