Danhua Chemical Tech B (900921) SWOT Analysis / TOWS Matrix / MBA Resources
Chemical Manufacturing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Danhua Chemical Tech B (China)
Based on various researches at Oak Spring University , Danhua Chemical Tech B is operating in a macro-environment that has been destablized by – digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, there is backlash against globalization, supply chains are disrupted by pandemic , geopolitical disruptions, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Danhua Chemical Tech B
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Danhua Chemical Tech B can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Danhua Chemical Tech B, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Danhua Chemical Tech B 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 B can be done for the following purposes –
1. Strategic planning of Danhua Chemical Tech B
2. Improving business portfolio management of Danhua Chemical Tech B
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 B
Strengths of Danhua Chemical Tech B | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Danhua Chemical Tech B are -
Innovation driven organization
– Danhua Chemical Tech B is one of the most innovative firm in Chemical Manufacturing sector.
High switching costs
– The high switching costs that Danhua Chemical Tech B 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.
Training and development
– Danhua Chemical Tech B 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.
Organizational Resilience of Danhua Chemical Tech B
– The covid-19 pandemic has put organizational resilience at the centre of everthing Danhua Chemical Tech B does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– Danhua Chemical Tech B has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Danhua Chemical Tech B to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Danhua Chemical Tech B 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.
Sustainable margins compare to other players in Chemical Manufacturing industry
– Danhua Chemical Tech B has clearly differentiated products in the market place. This has enabled Danhua Chemical Tech B to fetch slight price premium compare to the competitors in the Chemical Manufacturing industry. The sustainable margins have also helped Danhua Chemical Tech B to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Danhua Chemical Tech B in the Basic Materials sector have low bargaining power. Danhua Chemical Tech B has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Danhua Chemical Tech B to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Danhua Chemical Tech B is present in almost all the verticals within the Chemical Manufacturing industry. This has provided Danhua Chemical Tech B 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)
– Danhua Chemical Tech B 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 B 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.
Operational resilience
– The operational resilience strategy of Danhua Chemical Tech B 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.
Highly skilled collaborators
– Danhua Chemical Tech B 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 B have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Danhua Chemical Tech B | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Danhua Chemical Tech B are -
Aligning sales with marketing
– From the outside it seems that Danhua Chemical Tech B 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 B can leverage the sales team experience to cultivate customer relationships as Danhua Chemical Tech B is planning to shift buying processes online.
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 B supply chain. Even after few cautionary changes, Danhua Chemical Tech B 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 B vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Danhua Chemical Tech B 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.
Increasing silos among functional specialists
– The organizational structure of Danhua Chemical Tech B is dominated by functional specialists. It is not different from other players in the Chemical Manufacturing industry, but Danhua Chemical Tech B 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 B to focus more on services in the Chemical Manufacturing industry rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the Chemical Manufacturing industry, Danhua Chemical Tech B 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 B 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 B 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.
Ability to respond to the competition
– As the decision making is very deliberative at Danhua Chemical Tech B, in the dynamic environment of Chemical Manufacturing industry it has struggled to respond to the nimble upstart competition. Danhua Chemical Tech B has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– From the 10K / annual statement of Danhua Chemical Tech B, it seems that company is thinking out the frontier risks that can impact Chemical Manufacturing 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.
High cash cycle compare to competitors
Danhua Chemical Tech B 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Danhua Chemical Tech B is slow explore the new channels of communication. These new channels of communication can help Danhua Chemical Tech B to provide better information regarding Chemical Manufacturing products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Danhua Chemical Tech B has some of the most successful models in the Chemical Manufacturing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Danhua Chemical Tech B should strive to include more intangible value offerings along with its core products and services.
Danhua Chemical Tech B Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Danhua Chemical Tech B are -
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 B 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 B 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 B 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 B to increase its market reach. Danhua Chemical Tech B 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.
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 B 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
– Danhua Chemical Tech B 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.
Creating value in data economy
– The success of analytics program of Danhua Chemical Tech B has opened avenues for new revenue streams for the organization in Chemical Manufacturing industry. This can help Danhua Chemical Tech B to build a more holistic ecosystem for Danhua Chemical Tech B products in the Chemical Manufacturing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Danhua Chemical Tech B 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Danhua Chemical Tech B is facing challenges because of the dominance of functional experts in the organization. Danhua Chemical Tech B 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.
Building a culture of innovation
– managers at Danhua Chemical Tech B 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Danhua Chemical Tech B can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Danhua Chemical Tech B 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 B to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Danhua Chemical Tech B 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 Danhua Chemical Tech B to hire the very best people irrespective of their geographical location.
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 B in the Chemical Manufacturing industry. Now Danhua Chemical Tech B can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Danhua Chemical Tech B External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Danhua Chemical Tech B are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Danhua Chemical Tech B 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.
Regulatory challenges
– Danhua Chemical Tech B 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.
Technology acceleration in Forth Industrial Revolution
– Danhua Chemical Tech B 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 B 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.
Stagnating economy with rate increase
– Danhua Chemical Tech B 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.
Consumer confidence and its impact on Danhua Chemical Tech B 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.
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 B with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Chemical Manufacturing sector.
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 B 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.
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 B can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Danhua Chemical Tech B
– 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 B.
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 B.
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.
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.
Environmental challenges
– Danhua Chemical Tech B 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 B can take advantage of this fund but it will also bring new competitors in the Chemical Manufacturing industry.
Weighted SWOT Analysis of Danhua Chemical Tech B 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 B 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 B 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 B 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 B 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 B needs to make to build a sustainable competitive advantage.