Danhua Chemical Tech A (600844) SWOT Analysis / TOWS Matrix / MBA Resources
Chemical Manufacturing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Danhua Chemical Tech A (China)
Based on various researches at Oak Spring University , Danhua Chemical Tech A is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Danhua Chemical Tech A
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Danhua Chemical Tech A can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Danhua Chemical Tech A, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Danhua Chemical Tech A 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 Danhua Chemical Tech A can be done for the following purposes –
1. Strategic planning of Danhua Chemical Tech A
2. Improving business portfolio management of Danhua Chemical Tech A
3. Assessing feasibility of the new initiative in China
4. Making a Chemical Manufacturing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Danhua Chemical Tech A
Strengths of Danhua Chemical Tech A | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Danhua Chemical Tech A are -
Cross disciplinary teams
– Horizontal connected teams at the Danhua Chemical Tech A 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.
Learning organization
- Danhua Chemical Tech A 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 Danhua Chemical Tech A is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Danhua Chemical Tech A emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Chemical Manufacturing industry
– Danhua Chemical Tech A has clearly differentiated products in the market place. This has enabled Danhua Chemical Tech A to fetch slight price premium compare to the competitors in the Chemical Manufacturing industry. The sustainable margins have also helped Danhua Chemical Tech A to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Danhua Chemical Tech A has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Danhua Chemical Tech A staying ahead in the Chemical Manufacturing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Chemical Manufacturing
– Danhua Chemical Tech A is one of the leading players in the Chemical Manufacturing industry in China. Over the years it has not only transformed the business landscape in the Chemical Manufacturing industry in China but also across the existing markets. The ability to lead change has enabled Danhua Chemical Tech A in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Danhua Chemical Tech A comprises – understanding the underlying the factors in the Chemical Manufacturing industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Danhua Chemical Tech A has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Danhua Chemical Tech A 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.
Low bargaining power of suppliers
– Suppliers of Danhua Chemical Tech A in the Basic Materials sector have low bargaining power. Danhua Chemical Tech A has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Danhua Chemical Tech A to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Danhua Chemical Tech A
– The covid-19 pandemic has put organizational resilience at the centre of everthing Danhua Chemical Tech A does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Chemical Manufacturing industry
- digital transformation varies from industry to industry. For Danhua Chemical Tech A digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Danhua Chemical Tech A 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.
Innovation driven organization
– Danhua Chemical Tech A is one of the most innovative firm in Chemical Manufacturing sector.
Highly skilled collaborators
– Danhua Chemical Tech A has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Chemical Manufacturing industry. Secondly the value chain collaborators of Danhua Chemical Tech A have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Danhua Chemical Tech A | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Danhua Chemical Tech A are -
High dependence on Danhua Chemical Tech A ‘s star products
– The top 2 products and services of Danhua Chemical Tech A still accounts for major business revenue. This dependence on star products in Chemical Manufacturing industry has resulted into insufficient focus on developing new products, even though Danhua Chemical Tech A has relatively successful track record of launching new products.
Skills based hiring in Chemical Manufacturing industry
– The stress on hiring functional specialists at Danhua Chemical Tech A 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.
Workers concerns about automation
– As automation is fast increasing in the Chemical Manufacturing industry, Danhua Chemical Tech A 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.
Need for greater diversity
– Danhua Chemical Tech A 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.
High cash cycle compare to competitors
Danhua Chemical Tech A has a high cash cycle compare to other players in the Chemical Manufacturing 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 to strategic competitive environment developments
– As Danhua Chemical Tech A is one of the leading players in the Chemical Manufacturing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Chemical Manufacturing industry in last five years.
Lack of clear differentiation of Danhua Chemical Tech A products
– To increase the profitability and margins on the products, Danhua Chemical Tech A needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Danhua Chemical Tech A supply chain. Even after few cautionary changes, Danhua Chemical Tech A is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Danhua Chemical Tech A vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners in Chemical Manufacturing industry
– because of the regulatory requirements in China, Danhua Chemical Tech A is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Chemical Manufacturing industry.
High operating costs
– Compare to the competitors, Danhua Chemical Tech A has high operating costs in the Chemical Manufacturing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Danhua Chemical Tech A lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Danhua Chemical Tech A is slow explore the new channels of communication. These new channels of communication can help Danhua Chemical Tech A to provide better information regarding Chemical Manufacturing products and services. It can also build an online community to further reach out to potential customers.
Danhua Chemical Tech A Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Danhua Chemical Tech A are -
Buying journey improvements
– Danhua Chemical Tech A can improve the customer journey of consumers in the Chemical Manufacturing 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Chemical Manufacturing industry, but it has also influenced the consumer preferences. Danhua Chemical Tech A 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
– Danhua Chemical Tech A has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Chemical Manufacturing sector. This continuous investment in analytics has enabled Danhua Chemical Tech A to build a competitive advantage using analytics. The analytics driven competitive advantage can help Danhua Chemical Tech A to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions in Chemical Manufacturing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Danhua Chemical Tech A in the Chemical Manufacturing industry. Now Danhua Chemical Tech A can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Danhua Chemical Tech A 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.
Building a culture of innovation
– managers at Danhua Chemical Tech A 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 Chemical Manufacturing industry.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Danhua Chemical Tech A 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 Danhua Chemical Tech A to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Danhua Chemical Tech A has opened avenues for new revenue streams for the organization in Chemical Manufacturing industry. This can help Danhua Chemical Tech A to build a more holistic ecosystem for Danhua Chemical Tech A products in the Chemical Manufacturing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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 Danhua Chemical Tech A 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Chemical Manufacturing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Danhua Chemical Tech A 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. Danhua Chemical Tech A 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.
Learning at scale
– Online learning technologies has now opened space for Danhua Chemical Tech A 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.
Better consumer reach
– The expansion of the 5G network will help Danhua Chemical Tech A to increase its market reach. Danhua Chemical Tech A 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Danhua Chemical Tech A can use these opportunities to build new business models that can help the communities that Danhua Chemical Tech A operates in. Secondly it can use opportunities from government spending in Chemical Manufacturing sector.
Threats Danhua Chemical Tech A External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Danhua Chemical Tech A are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Chemical Manufacturing industry are lowering. It can presents Danhua Chemical Tech A with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Chemical Manufacturing sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Danhua Chemical Tech A 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 Danhua Chemical Tech A prominent markets.
Technology acceleration in Forth Industrial Revolution
– Danhua Chemical Tech A has witnessed rapid integration of technology during Covid-19 in the Chemical Manufacturing industry. As one of the leading players in the industry, Danhua Chemical Tech A needs to keep up with the evolution of technology in the Chemical Manufacturing 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
– Danhua Chemical Tech A 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. Danhua Chemical Tech A can take advantage of this fund but it will also bring new competitors in the Chemical Manufacturing industry.
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 Danhua Chemical Tech A.
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.
Stagnating economy with rate increase
– Danhua Chemical Tech A 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 Chemical Manufacturing industry.
Shortening product life cycle
– it is one of the major threat that Danhua Chemical Tech A is facing in Chemical Manufacturing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Danhua Chemical Tech A in Chemical Manufacturing industry. The Chemical Manufacturing 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Danhua Chemical Tech A may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Chemical Manufacturing sector.
High dependence on third party suppliers
– Danhua Chemical Tech A 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 Danhua Chemical Tech A 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 Chemical Manufacturing industry and other sectors.
Easy access to finance
– Easy access to finance in Chemical Manufacturing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Danhua Chemical Tech A can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Danhua Chemical Tech A Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Danhua Chemical Tech A 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 Danhua Chemical Tech A 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 Danhua Chemical Tech A 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 Danhua Chemical Tech A 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 Danhua Chemical Tech A needs to make to build a sustainable competitive advantage.
