SWOT Analysis / TOWS Matrix for Beijing E-techstar (China)
Based on various researches at Oak Spring University , Beijing E-techstar is operating in a macro-environment that has been destablized by – technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
increasing energy prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Beijing E-techstar
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Beijing E-techstar can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Beijing E-techstar, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Beijing E-techstar 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 Beijing E-techstar can be done for the following purposes –
1. Strategic planning of Beijing E-techstar
2. Improving business portfolio management of Beijing E-techstar
3. Assessing feasibility of the new initiative in China
4. Making a Software & Programming sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Beijing E-techstar
Strengths of Beijing E-techstar | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Beijing E-techstar are -
High brand equity
– Beijing E-techstar has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Beijing E-techstar to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Beijing E-techstar is one of the most innovative firm in Software & Programming sector.
Digital Transformation in Software & Programming industry
- digital transformation varies from industry to industry. For Beijing E-techstar digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Beijing E-techstar 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.
Sustainable margins compare to other players in Software & Programming industry
– Beijing E-techstar has clearly differentiated products in the market place. This has enabled Beijing E-techstar to fetch slight price premium compare to the competitors in the Software & Programming industry. The sustainable margins have also helped Beijing E-techstar to invest into research and development (R&D) and innovation.
Learning organization
- Beijing E-techstar 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 Beijing E-techstar is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Beijing E-techstar emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Beijing E-techstar has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Beijing E-techstar staying ahead in the Software & Programming industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Beijing E-techstar 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.
Superior customer experience
– The customer experience strategy of Beijing E-techstar in Software & Programming industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Beijing E-techstar is present in almost all the verticals within the Software & Programming industry. This has provided Beijing E-techstar 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.
Training and development
– Beijing E-techstar has one of the best training and development program in Technology 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.
Low bargaining power of suppliers
– Suppliers of Beijing E-techstar in the Technology sector have low bargaining power. Beijing E-techstar has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Beijing E-techstar to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Beijing E-techstar is one of the leading players in the Software & Programming 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.
Weaknesses of Beijing E-techstar | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Beijing E-techstar are -
High dependence on Beijing E-techstar ‘s star products
– The top 2 products and services of Beijing E-techstar still accounts for major business revenue. This dependence on star products in Software & Programming industry has resulted into insufficient focus on developing new products, even though Beijing E-techstar has relatively successful track record of launching new products.
Products dominated business model
– Even though Beijing E-techstar has some of the most successful models in the Software & Programming industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Beijing E-techstar should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Beijing E-techstar has a high cash cycle compare to other players in the Software & Programming industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Beijing E-techstar has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Software & Programming industry over the last five years. Beijing E-techstar 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.
Increasing silos among functional specialists
– The organizational structure of Beijing E-techstar is dominated by functional specialists. It is not different from other players in the Software & Programming industry, but Beijing E-techstar needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Beijing E-techstar to focus more on services in the Software & Programming industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Beijing E-techstar is just above the Software & Programming 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, Beijing E-techstar has high operating costs in the Software & Programming industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Beijing E-techstar lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the Software & Programming industry, Beijing E-techstar 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.
Ability to respond to the competition
– As the decision making is very deliberative at Beijing E-techstar, in the dynamic environment of Software & Programming industry it has struggled to respond to the nimble upstart competition. Beijing E-techstar has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Beijing E-techstar products
– To increase the profitability and margins on the products, Beijing E-techstar needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Beijing E-techstar is one of the leading players in the Software & Programming industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Software & Programming industry in last five years.
Beijing E-techstar Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Beijing E-techstar are -
Using analytics as competitive advantage
– Beijing E-techstar has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Software & Programming sector. This continuous investment in analytics has enabled Beijing E-techstar to build a competitive advantage using analytics. The analytics driven competitive advantage can help Beijing E-techstar to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Software & Programming industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Beijing E-techstar 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. Beijing E-techstar 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Beijing E-techstar to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Better consumer reach
– The expansion of the 5G network will help Beijing E-techstar to increase its market reach. Beijing E-techstar 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.
Leveraging digital technologies
– Beijing E-techstar 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.
Learning at scale
– Online learning technologies has now opened space for Beijing E-techstar 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.
Manufacturing automation
– Beijing E-techstar can use the latest technology developments to improve its manufacturing and designing process in Software & Programming 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Beijing E-techstar can use these opportunities to build new business models that can help the communities that Beijing E-techstar operates in. Secondly it can use opportunities from government spending in Software & Programming sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Beijing E-techstar in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Software & Programming industry, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Beijing E-techstar 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 Software & Programming industry.
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. Beijing E-techstar can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Beijing E-techstar can improve the customer journey of consumers in the Software & Programming 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Beijing E-techstar 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.
Threats Beijing E-techstar External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Beijing E-techstar are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Software & Programming industry are lowering. It can presents Beijing E-techstar with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Software & Programming sector.
Easy access to finance
– Easy access to finance in Software & Programming industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Beijing E-techstar can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Beijing E-techstar may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Software & Programming sector.
Environmental challenges
– Beijing E-techstar 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. Beijing E-techstar can take advantage of this fund but it will also bring new competitors in the Software & Programming 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.
Increasing wage structure of Beijing E-techstar
– 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 Beijing E-techstar.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Beijing E-techstar in Software & Programming industry. The Software & Programming 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.
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 Beijing E-techstar in the Software & Programming sector and impact the bottomline of the organization.
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. Beijing E-techstar needs to understand the core reasons impacting the Software & Programming industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Beijing E-techstar 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.
Consumer confidence and its impact on Beijing E-techstar 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 Software & Programming industry and other sectors.
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 Beijing E-techstar.
Weighted SWOT Analysis of Beijing E-techstar Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Beijing E-techstar 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 Beijing E-techstar 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 Beijing E-techstar 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 Beijing E-techstar 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 Beijing E-techstar needs to make to build a sustainable competitive advantage.
