Lianfa Textile A (2394) SWOT Analysis / TOWS Matrix / MBA Resources
Textiles - Non Apparel
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Lianfa Textile A (China)
Based on various researches at Oak Spring University , Lianfa Textile A is operating in a macro-environment that has been destablized by – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google,
increasing transportation and logistics costs, increasing commodity prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Lianfa Textile A can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lianfa Textile A, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lianfa Textile 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 Lianfa Textile A can be done for the following purposes –
1. Strategic planning of Lianfa Textile A
2. Improving business portfolio management of Lianfa Textile A
3. Assessing feasibility of the new initiative in China
4. Making a Textiles - Non Apparel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lianfa Textile A
Strengths of Lianfa Textile A | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lianfa Textile A are -
High switching costs
– The high switching costs that Lianfa Textile 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.
Learning organization
- Lianfa Textile 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 Lianfa Textile A is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Lianfa Textile A emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Lianfa Textile A are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Lianfa Textile A in the Consumer Cyclical sector have low bargaining power. Lianfa Textile A has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lianfa Textile A to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Lianfa Textile A has one of the best training and development program in Consumer Cyclical 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 Textiles - Non Apparel industry
– Lianfa Textile A has clearly differentiated products in the market place. This has enabled Lianfa Textile A to fetch slight price premium compare to the competitors in the Textiles - Non Apparel industry. The sustainable margins have also helped Lianfa Textile A to invest into research and development (R&D) and innovation.
Strong track record of project management in the Textiles - Non Apparel industry
– Lianfa Textile A is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Lianfa Textile A 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 Textiles - Non Apparel 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
– Lianfa Textile A is one of the leading players in the Textiles - Non Apparel 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.
Organizational Resilience of Lianfa Textile A
– The covid-19 pandemic has put organizational resilience at the centre of everthing Lianfa Textile A does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Textiles - Non Apparel
– Lianfa Textile A is one of the leading players in the Textiles - Non Apparel industry in China. Over the years it has not only transformed the business landscape in the Textiles - Non Apparel industry in China but also across the existing markets. The ability to lead change has enabled Lianfa Textile A in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Textiles - Non Apparel industry
- digital transformation varies from industry to industry. For Lianfa Textile A digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lianfa Textile A has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses of Lianfa Textile A | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lianfa Textile A are -
Ability to respond to the competition
– As the decision making is very deliberative at Lianfa Textile A, in the dynamic environment of Textiles - Non Apparel industry it has struggled to respond to the nimble upstart competition. Lianfa Textile A has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Lianfa Textile A supply chain. Even after few cautionary changes, Lianfa Textile A is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lianfa Textile A vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Lianfa Textile A needs to have more collaboration between its sales team and marketing team. Sales professionals in the Textiles - Non Apparel industry have deep experience in developing customer relationships. Marketing department at Lianfa Textile A can leverage the sales team experience to cultivate customer relationships as Lianfa Textile A is planning to shift buying processes online.
High bargaining power of channel partners in Textiles - Non Apparel industry
– because of the regulatory requirements in China, Lianfa Textile A is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Textiles - Non Apparel industry.
High cash cycle compare to competitors
Lianfa Textile A has a high cash cycle compare to other players in the Textiles - Non Apparel 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 Lianfa Textile A ‘s star products
– The top 2 products and services of Lianfa Textile A still accounts for major business revenue. This dependence on star products in Textiles - Non Apparel industry has resulted into insufficient focus on developing new products, even though Lianfa Textile A has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Lianfa Textile 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 Textiles - Non Apparel industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Lianfa Textile 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 Textiles - Non Apparel industry over the last five years. Lianfa Textile 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.
Employees’ less understanding of Lianfa Textile A strategy
– From the outside it seems that the employees of Lianfa Textile A 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.
Skills based hiring in Textiles - Non Apparel industry
– The stress on hiring functional specialists at Lianfa Textile 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lianfa Textile A is slow explore the new channels of communication. These new channels of communication can help Lianfa Textile A to provide better information regarding Textiles - Non Apparel products and services. It can also build an online community to further reach out to potential customers.
Lianfa Textile A Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Lianfa Textile A are -
Learning at scale
– Online learning technologies has now opened space for Lianfa Textile A to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Lianfa Textile 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.
Manufacturing automation
– Lianfa Textile A can use the latest technology developments to improve its manufacturing and designing process in Textiles - Non Apparel 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.
Creating value in data economy
– The success of analytics program of Lianfa Textile A has opened avenues for new revenue streams for the organization in Textiles - Non Apparel industry. This can help Lianfa Textile A to build a more holistic ecosystem for Lianfa Textile A products in the Textiles - Non Apparel industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Lianfa Textile A has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Textiles - Non Apparel sector. This continuous investment in analytics has enabled Lianfa Textile A to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lianfa Textile A to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Lianfa Textile A 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, Lianfa Textile A is facing challenges because of the dominance of functional experts in the organization. Lianfa Textile A can utilize new technology in the field of Textiles - Non Apparel industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lianfa Textile A can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Lianfa Textile A can develop new processes and procedures in Textiles - Non Apparel 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lianfa Textile 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 Textiles - Non Apparel industry, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Lianfa Textile 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 Textiles - Non Apparel industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lianfa Textile A can use these opportunities to build new business models that can help the communities that Lianfa Textile A operates in. Secondly it can use opportunities from government spending in Textiles - Non Apparel sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lianfa Textile A 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 Lianfa Textile A to hire the very best people irrespective of their geographical location.
Threats Lianfa Textile A External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Lianfa Textile A are -
Consumer confidence and its impact on Lianfa Textile 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 Textiles - Non Apparel industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lianfa Textile 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 Lianfa Textile A prominent markets.
Easy access to finance
– Easy access to finance in Textiles - Non Apparel industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lianfa Textile A can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Lianfa Textile A high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lianfa Textile A in Textiles - Non Apparel industry. The Textiles - Non Apparel 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 Lianfa Textile 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 Lianfa Textile A.
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. Lianfa Textile 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.
Stagnating economy with rate increase
– Lianfa Textile 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 Textiles - Non Apparel 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.
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 Lianfa Textile A business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Lianfa Textile 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 Textiles - Non Apparel industry regulations.
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 Lianfa Textile A.
Weighted SWOT Analysis of Lianfa Textile A Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Lianfa Textile 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 Lianfa Textile 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 Lianfa Textile 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 Lianfa Textile 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 Lianfa Textile A needs to make to build a sustainable competitive advantage.
