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 commodity prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, technology disruption, supply chains are disrupted by pandemic , increasing transportation and logistics costs,
cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, 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 -
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.
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.
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.
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.
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.
Training and development
– Danhua Chemical Tech A has one of the best training and development program in Basic Materials 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.
High brand equity
– Danhua Chemical Tech A has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Danhua Chemical Tech A to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Danhua Chemical Tech A is one of the leading players in the Chemical Manufacturing 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.
Innovation driven organization
– Danhua Chemical Tech A is one of the most innovative firm in Chemical Manufacturing sector.
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.
High switching costs
– The high switching costs that Danhua Chemical Tech A 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.
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 -
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.
Slow decision making process
– As mentioned earlier in the report, Danhua Chemical Tech A has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Chemical Manufacturing industry over the last five years. Danhua Chemical Tech A 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 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.
Ability to respond to the competition
– As the decision making is very deliberative at Danhua Chemical Tech A, in the dynamic environment of Chemical Manufacturing industry it has struggled to respond to the nimble upstart competition. Danhua Chemical Tech A has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– From the outside it seems that Danhua Chemical Tech A needs to have more collaboration between its sales team and marketing team. Sales professionals in the Chemical Manufacturing industry have deep experience in developing customer relationships. Marketing department at Danhua Chemical Tech A can leverage the sales team experience to cultivate customer relationships as Danhua Chemical Tech A is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Danhua Chemical Tech A is dominated by functional specialists. It is not different from other players in the Chemical Manufacturing industry, but Danhua Chemical Tech A needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Danhua Chemical Tech A to focus more on services in the Chemical Manufacturing industry rather than just following the product oriented approach.
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.
Capital Spending Reduction
– Even during the low interest decade, Danhua Chemical Tech A has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Chemical Manufacturing industry using digital technology.
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.
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.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Danhua Chemical Tech A is facing challenges because of the dominance of functional experts in the organization. Danhua Chemical Tech A can utilize new technology in the field of Chemical Manufacturing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Developing new processes and practices
– Danhua Chemical Tech A can develop new processes and procedures in Chemical Manufacturing 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.
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.
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.
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.
Loyalty marketing
– Danhua Chemical Tech A 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.
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.
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.
Leveraging digital technologies
– Danhua Chemical Tech A 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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Danhua Chemical Tech A in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Chemical Manufacturing industry, and it will provide faster access to the consumers.
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 -
Increasing wage structure of Danhua Chemical Tech A
– 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 Danhua Chemical Tech A.
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.
Regulatory challenges
– Danhua Chemical Tech A 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 Chemical Manufacturing industry regulations.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Danhua Chemical Tech A business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
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.
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.
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. Danhua Chemical Tech A 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.
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 Danhua Chemical Tech A in the Chemical Manufacturing 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. Danhua Chemical Tech A needs to understand the core reasons impacting the Chemical Manufacturing industry. This will help it in building a better workplace.
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.