SWOT Analysis / TOWS Matrix for L&K Engineering Suzhou (China)
Based on various researches at Oak Spring University , L&K Engineering Suzhou is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, supply chains are disrupted by pandemic , there is increasing trade war between United States & China,
increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, etc
Introduction to SWOT Analysis of L&K Engineering Suzhou
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that L&K Engineering Suzhou can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the L&K Engineering Suzhou, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which L&K Engineering Suzhou 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 L&K Engineering Suzhou can be done for the following purposes –
1. Strategic planning of L&K Engineering Suzhou
2. Improving business portfolio management of L&K Engineering Suzhou
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 L&K Engineering Suzhou
Strengths of L&K Engineering Suzhou | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of L&K Engineering Suzhou are -
Highly skilled collaborators
– L&K Engineering Suzhou has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Construction Services industry. Secondly the value chain collaborators of L&K Engineering Suzhou have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– L&K Engineering Suzhou is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Construction Services industry. The technology infrastructure of China is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to recruit top talent
– L&K Engineering Suzhou 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.
High brand equity
– L&K Engineering Suzhou has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled L&K Engineering Suzhou to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Construction Services
– L&K Engineering Suzhou 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 L&K Engineering Suzhou in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of L&K Engineering Suzhou in the Capital Goods sector have low bargaining power. L&K Engineering Suzhou has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps L&K Engineering Suzhou to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of L&K Engineering Suzhou 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.
Digital Transformation in Construction Services industry
- digital transformation varies from industry to industry. For L&K Engineering Suzhou digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. L&K Engineering Suzhou 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.
Training and development
– L&K Engineering Suzhou has one of the best training and development program in Capital Goods 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.
Sustainable margins compare to other players in Construction Services industry
– L&K Engineering Suzhou has clearly differentiated products in the market place. This has enabled L&K Engineering Suzhou to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped L&K Engineering Suzhou to invest into research and development (R&D) and innovation.
Diverse revenue streams
– L&K Engineering Suzhou is present in almost all the verticals within the Construction Services industry. This has provided L&K Engineering Suzhou 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.
Strong track record of project management in the Construction Services industry
– L&K Engineering Suzhou is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of L&K Engineering Suzhou | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of L&K Engineering Suzhou are -
Slow to strategic competitive environment developments
– As L&K Engineering Suzhou 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.
Slow decision making process
– As mentioned earlier in the report, L&K Engineering Suzhou 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. L&K Engineering Suzhou 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.
Capital Spending Reduction
– Even during the low interest decade, L&K Engineering Suzhou 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.
Employees’ less understanding of L&K Engineering Suzhou strategy
– From the outside it seems that the employees of L&K Engineering Suzhou don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee of L&K Engineering Suzhou 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.
High operating costs
– Compare to the competitors, L&K Engineering Suzhou 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 L&K Engineering Suzhou lucrative customers.
Aligning sales with marketing
– From the outside it seems that L&K Engineering Suzhou needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at L&K Engineering Suzhou can leverage the sales team experience to cultivate customer relationships as L&K Engineering Suzhou is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of L&K Engineering Suzhou is dominated by functional specialists. It is not different from other players in the Construction Services industry, but L&K Engineering Suzhou needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help L&K Engineering Suzhou to focus more on services in the Construction Services industry rather than just following the product oriented approach.
Need for greater diversity
– L&K Engineering Suzhou 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, L&K Engineering Suzhou is slow explore the new channels of communication. These new channels of communication can help L&K Engineering Suzhou to provide better information regarding Construction Services products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
L&K Engineering Suzhou has a high cash cycle compare to other players in the Construction Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
L&K Engineering Suzhou Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of L&K Engineering Suzhou are -
Low interest rates
– Even though inflation is raising its head in most developed economies, L&K Engineering Suzhou can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, L&K Engineering Suzhou is facing challenges because of the dominance of functional experts in the organization. L&K Engineering Suzhou 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.
Manufacturing automation
– L&K Engineering Suzhou 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, L&K Engineering Suzhou can use these opportunities to build new business models that can help the communities that L&K Engineering Suzhou operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Use of Bitcoin and other crypto currencies for transactions in Construction Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for L&K Engineering Suzhou in the Construction Services industry. Now L&K Engineering Suzhou can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. L&K Engineering Suzhou 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. L&K Engineering Suzhou 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, L&K Engineering Suzhou 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 L&K Engineering Suzhou 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 L&K Engineering Suzhou has opened avenues for new revenue streams for the organization in Construction Services industry. This can help L&K Engineering Suzhou to build a more holistic ecosystem for L&K Engineering Suzhou products in the Construction Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for L&K Engineering Suzhou 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 L&K Engineering Suzhou to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help L&K Engineering Suzhou to increase its market reach. L&K Engineering Suzhou 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
– L&K Engineering Suzhou has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Construction Services sector. This continuous investment in analytics has enabled L&K Engineering Suzhou to build a competitive advantage using analytics. The analytics driven competitive advantage can help L&K Engineering Suzhou to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. L&K Engineering Suzhou can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– L&K Engineering Suzhou 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.
Threats L&K Engineering Suzhou External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of L&K Engineering Suzhou are -
Consumer confidence and its impact on L&K Engineering Suzhou 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.
Regulatory challenges
– L&K Engineering Suzhou 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.
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.
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. L&K Engineering Suzhou needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– L&K Engineering Suzhou 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.
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.
Increasing wage structure of L&K Engineering Suzhou
– 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 L&K Engineering Suzhou.
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 L&K Engineering Suzhou business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, L&K Engineering Suzhou 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 L&K Engineering Suzhou prominent markets.
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. L&K Engineering Suzhou can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, L&K Engineering Suzhou 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.
Environmental challenges
– L&K Engineering Suzhou 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. L&K Engineering Suzhou can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
Shortening product life cycle
– it is one of the major threat that L&K Engineering Suzhou is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of L&K Engineering Suzhou Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at L&K Engineering Suzhou 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 L&K Engineering Suzhou 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 L&K Engineering Suzhou 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 L&K Engineering Suzhou 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 L&K Engineering Suzhou needs to make to build a sustainable competitive advantage.