SWOT Analysis / TOWS Matrix for Shaanxi Yanchang (China)
Based on various researches at Oak Spring University , Shaanxi Yanchang is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing energy prices, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing,
customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shaanxi Yanchang can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shaanxi Yanchang, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shaanxi Yanchang 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 Shaanxi Yanchang can be done for the following purposes –
1. Strategic planning of Shaanxi Yanchang
2. Improving business portfolio management of Shaanxi Yanchang
3. Assessing feasibility of the new initiative in China
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shaanxi Yanchang
Strengths of Shaanxi Yanchang | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shaanxi Yanchang are -
Strong track record of project management in the Construction Services industry
– Shaanxi Yanchang is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Shaanxi Yanchang in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Shaanxi Yanchang is one of the most innovative firm in Construction Services sector.
Analytics focus
– Shaanxi Yanchang 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 Construction Services 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.
Low bargaining power of suppliers
– Suppliers of Shaanxi Yanchang in the Capital Goods sector have low bargaining power. Shaanxi Yanchang has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shaanxi Yanchang to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Shaanxi Yanchang is present in almost all the verticals within the Construction Services industry. This has provided Shaanxi Yanchang 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.
Effective Research and Development (R&D)
– Shaanxi Yanchang has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Shaanxi Yanchang staying ahead in the Construction Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Shaanxi Yanchang is one of the leading players in the Construction Services 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.
Sustainable margins compare to other players in Construction Services industry
– Shaanxi Yanchang has clearly differentiated products in the market place. This has enabled Shaanxi Yanchang to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped Shaanxi Yanchang to invest into research and development (R&D) and innovation.
High brand equity
– Shaanxi Yanchang has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shaanxi Yanchang to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Shaanxi Yanchang has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shaanxi Yanchang 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.
Learning organization
- Shaanxi Yanchang 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 Shaanxi Yanchang is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shaanxi Yanchang emphasize – knowledge, initiative, and innovation.
Weaknesses of Shaanxi Yanchang | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shaanxi Yanchang are -
Employees’ less understanding of Shaanxi Yanchang strategy
– From the outside it seems that the employees of Shaanxi Yanchang 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.
Need for greater diversity
– Shaanxi Yanchang 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.
Lack of clear differentiation of Shaanxi Yanchang products
– To increase the profitability and margins on the products, Shaanxi Yanchang needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that Shaanxi Yanchang needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at Shaanxi Yanchang can leverage the sales team experience to cultivate customer relationships as Shaanxi Yanchang is planning to shift buying processes online.
High cash cycle compare to competitors
Shaanxi Yanchang has a high cash cycle compare to other players in the Construction Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
No frontier risks strategy
– From the 10K / annual statement of Shaanxi Yanchang, it seems that company is thinking out the frontier risks that can impact Construction Services 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.
Skills based hiring in Construction Services industry
– The stress on hiring functional specialists at Shaanxi Yanchang 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.
Ability to respond to the competition
– As the decision making is very deliberative at Shaanxi Yanchang, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. Shaanxi Yanchang has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Shaanxi Yanchang has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction Services industry over the last five years. Shaanxi Yanchang 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 operating costs
– Compare to the competitors, Shaanxi Yanchang has high operating costs in the Construction Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shaanxi Yanchang lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shaanxi Yanchang is slow explore the new channels of communication. These new channels of communication can help Shaanxi Yanchang to provide better information regarding Construction Services products and services. It can also build an online community to further reach out to potential customers.
Shaanxi Yanchang Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shaanxi Yanchang are -
Building a culture of innovation
– managers at Shaanxi Yanchang 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 Construction Services industry.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shaanxi Yanchang 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. Shaanxi Yanchang 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shaanxi Yanchang 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 Shaanxi Yanchang to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Construction Services industry, but it has also influenced the consumer preferences. Shaanxi Yanchang can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shaanxi Yanchang 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shaanxi Yanchang is facing challenges because of the dominance of functional experts in the organization. Shaanxi Yanchang can utilize new technology in the field of Construction Services 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, Shaanxi Yanchang 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 Shaanxi Yanchang to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Shaanxi Yanchang 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.
Developing new processes and practices
– Shaanxi Yanchang can develop new processes and procedures in Construction Services 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 Construction Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shaanxi Yanchang in the Construction Services industry. Now Shaanxi Yanchang 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 Shaanxi Yanchang has opened avenues for new revenue streams for the organization in Construction Services industry. This can help Shaanxi Yanchang to build a more holistic ecosystem for Shaanxi Yanchang products in the Construction Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Shaanxi Yanchang 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.
Leveraging digital technologies
– Shaanxi Yanchang 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.
Threats Shaanxi Yanchang External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shaanxi Yanchang are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shaanxi Yanchang may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Construction Services sector.
Shortening product life cycle
– it is one of the major threat that Shaanxi Yanchang is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Shaanxi Yanchang 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.
Stagnating economy with rate increase
– Shaanxi Yanchang 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 Construction Services industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shaanxi Yanchang in Construction Services industry. The Construction Services 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 Shaanxi Yanchang in the Construction Services sector and impact the bottomline of the organization.
Increasing wage structure of Shaanxi Yanchang
– 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 Shaanxi Yanchang.
Easy access to finance
– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shaanxi Yanchang can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shaanxi Yanchang 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 Shaanxi Yanchang 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 Shaanxi Yanchang.
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. Shaanxi Yanchang needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction Services industry are lowering. It can presents Shaanxi Yanchang with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction Services sector.
Consumer confidence and its impact on Shaanxi Yanchang 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 Construction Services industry and other sectors.
Weighted SWOT Analysis of Shaanxi Yanchang Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shaanxi Yanchang 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 Shaanxi Yanchang 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 Shaanxi Yanchang 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 Shaanxi Yanchang 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 Shaanxi Yanchang needs to make to build a sustainable competitive advantage.