Guangzhou Pearl River (600684) SWOT Analysis / TOWS Matrix / MBA Resources
Construction Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Guangzhou Pearl River (China)
Based on various researches at Oak Spring University , Guangzhou Pearl River is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Guangzhou Pearl River
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Guangzhou Pearl River can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Guangzhou Pearl River, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Guangzhou Pearl River 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 Guangzhou Pearl River can be done for the following purposes –
1. Strategic planning of Guangzhou Pearl River
2. Improving business portfolio management of Guangzhou Pearl River
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 Guangzhou Pearl River
Strengths of Guangzhou Pearl River | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Guangzhou Pearl River are -
Superior customer experience
– The customer experience strategy of Guangzhou Pearl River in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management in the Construction Services industry
– Guangzhou Pearl River is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Guangzhou Pearl River in the Capital Goods sector have low bargaining power. Guangzhou Pearl River has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Guangzhou Pearl River to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Guangzhou Pearl River comprises – understanding the underlying the factors in the Construction Services 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.
Effective Research and Development (R&D)
– Guangzhou Pearl River has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Guangzhou Pearl River 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.
Sustainable margins compare to other players in Construction Services industry
– Guangzhou Pearl River has clearly differentiated products in the market place. This has enabled Guangzhou Pearl River to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped Guangzhou Pearl River to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Guangzhou Pearl River 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.
High brand equity
– Guangzhou Pearl River has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Guangzhou Pearl River to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Guangzhou Pearl River has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Guangzhou Pearl River 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
- Guangzhou Pearl River 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 Guangzhou Pearl River is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Guangzhou Pearl River emphasize – knowledge, initiative, and innovation.
Ability to lead change in Construction Services
– Guangzhou Pearl River is one of the leading players in the Construction Services industry in China. Over the years it has not only transformed the business landscape in the Construction Services industry in China but also across the existing markets. The ability to lead change has enabled Guangzhou Pearl River in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Guangzhou Pearl River 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.
Weaknesses of Guangzhou Pearl River | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Guangzhou Pearl River are -
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 Guangzhou Pearl River supply chain. Even after few cautionary changes, Guangzhou Pearl River is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Guangzhou Pearl River vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee of Guangzhou Pearl River is just above the Construction Services industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Guangzhou Pearl River 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 Construction Services industry using digital technology.
High operating costs
– Compare to the competitors, Guangzhou Pearl River 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 Guangzhou Pearl River lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at Guangzhou Pearl River, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. Guangzhou Pearl River has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners in Construction Services industry
– because of the regulatory requirements in China, Guangzhou Pearl River 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 Construction Services industry.
Slow decision making process
– As mentioned earlier in the report, Guangzhou Pearl River 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. Guangzhou Pearl River 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.
Interest costs
– Compare to the competition, Guangzhou Pearl River has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Guangzhou Pearl River is one of the leading players in the Construction Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Construction Services industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the Construction Services industry, Guangzhou Pearl River 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.
Lack of clear differentiation of Guangzhou Pearl River products
– To increase the profitability and margins on the products, Guangzhou Pearl River needs to provide more differentiated products than what it is currently offering in the marketplace.
Guangzhou Pearl River Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Guangzhou Pearl River are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Guangzhou Pearl River 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 Guangzhou Pearl River to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Guangzhou Pearl River 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 Guangzhou Pearl River to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Guangzhou Pearl River in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Construction Services industry, and it will provide faster access to the consumers.
Buying journey improvements
– Guangzhou Pearl River can improve the customer journey of consumers in the Construction Services 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Guangzhou Pearl River can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Guangzhou Pearl River is facing challenges because of the dominance of functional experts in the organization. Guangzhou Pearl River 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.
Creating value in data economy
– The success of analytics program of Guangzhou Pearl River has opened avenues for new revenue streams for the organization in Construction Services industry. This can help Guangzhou Pearl River to build a more holistic ecosystem for Guangzhou Pearl River products in the Construction Services industry by providing – data insight services, data privacy related products, data based consulting services, 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, Guangzhou Pearl River can use these opportunities to build new business models that can help the communities that Guangzhou Pearl River operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Better consumer reach
– The expansion of the 5G network will help Guangzhou Pearl River to increase its market reach. Guangzhou Pearl River 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.
Building a culture of innovation
– managers at Guangzhou Pearl River 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.
Developing new processes and practices
– Guangzhou Pearl River 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.
Manufacturing automation
– Guangzhou Pearl River can use the latest technology developments to improve its manufacturing and designing process in Construction Services sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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. Guangzhou Pearl River can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Guangzhou Pearl River External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Guangzhou Pearl River are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Guangzhou Pearl River 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction Services industry are lowering. It can presents Guangzhou Pearl River with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction Services sector.
Environmental challenges
– Guangzhou Pearl River 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. Guangzhou Pearl River can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
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. Guangzhou Pearl River needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Guangzhou Pearl River is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Guangzhou Pearl River in the Construction Services sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Guangzhou Pearl River 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.
Regulatory challenges
– Guangzhou Pearl River 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 Construction Services industry regulations.
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. Guangzhou Pearl River can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Guangzhou Pearl River 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 Guangzhou Pearl River 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.
Increasing wage structure of Guangzhou Pearl River
– 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 Guangzhou Pearl River.
Consumer confidence and its impact on Guangzhou Pearl River 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 Guangzhou Pearl River Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Guangzhou Pearl River 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 Guangzhou Pearl River 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 Guangzhou Pearl River 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 Guangzhou Pearl River 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 Guangzhou Pearl River needs to make to build a sustainable competitive advantage.