Guangdong Rongtai Industry (600589) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Guangdong Rongtai Industry (China)

Based on various researches at Oak Spring University , Guangdong Rongtai Industry is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, wage bills are increasing, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, technology disruption, increasing government debt because of Covid-19 spendings, etc

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Introduction to SWOT Analysis of Guangdong Rongtai Industry

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Guangdong Rongtai Industry can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Guangdong Rongtai Industry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Guangdong Rongtai Industry 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Guangdong Rongtai Industry can be done for the following purposes –
1. Strategic planning of Guangdong Rongtai Industry
2. Improving business portfolio management of Guangdong Rongtai Industry
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 Guangdong Rongtai Industry

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Strengths of Guangdong Rongtai Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Guangdong Rongtai Industry are -

High brand equity

– Guangdong Rongtai Industry has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Guangdong Rongtai Industry to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Operational resilience

– The operational resilience strategy of Guangdong Rongtai Industry 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.

Sustainable margins compare to other players in Chemical Manufacturing industry

– Guangdong Rongtai Industry has clearly differentiated products in the market place. This has enabled Guangdong Rongtai Industry to fetch slight price premium compare to the competitors in the Chemical Manufacturing industry. The sustainable margins have also helped Guangdong Rongtai Industry to invest into research and development (R&D) and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Guangdong Rongtai Industry 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.

Organizational Resilience of Guangdong Rongtai Industry

– The covid-19 pandemic has put organizational resilience at the centre of everthing Guangdong Rongtai Industry does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Analytics focus

– Guangdong Rongtai Industry 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 Chemical Manufacturing 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.

Low bargaining power of suppliers

– Suppliers of Guangdong Rongtai Industry in the Basic Materials sector have low bargaining power. Guangdong Rongtai Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Guangdong Rongtai Industry to manage not only supply disruptions but also source products at highly competitive prices.

Learning organization

- Guangdong Rongtai Industry 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 Guangdong Rongtai Industry is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Guangdong Rongtai Industry emphasize – knowledge, initiative, and innovation.

Ability to lead change in Chemical Manufacturing

– Guangdong Rongtai Industry is one of the leading players in the Chemical Manufacturing industry in China. Over the years it has not only transformed the business landscape in the Chemical Manufacturing industry in China but also across the existing markets. The ability to lead change has enabled Guangdong Rongtai Industry in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Effective Research and Development (R&D)

– Guangdong Rongtai Industry has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Guangdong Rongtai Industry 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.

Digital Transformation in Chemical Manufacturing industry

- digital transformation varies from industry to industry. For Guangdong Rongtai Industry digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Guangdong Rongtai Industry 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.

High switching costs

– The high switching costs that Guangdong Rongtai Industry 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.

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Weaknesses of Guangdong Rongtai Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Guangdong Rongtai Industry are -

Compensation and incentives

– The revenue per employee of Guangdong Rongtai Industry is just above the Chemical Manufacturing 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.

No frontier risks strategy

– From the 10K / annual statement of Guangdong Rongtai Industry, 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.

Aligning sales with marketing

– From the outside it seems that Guangdong Rongtai Industry 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 Guangdong Rongtai Industry can leverage the sales team experience to cultivate customer relationships as Guangdong Rongtai Industry is planning to shift buying processes online.

Ability to respond to the competition

– As the decision making is very deliberative at Guangdong Rongtai Industry, in the dynamic environment of Chemical Manufacturing industry it has struggled to respond to the nimble upstart competition. Guangdong Rongtai Industry has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Workers concerns about automation

– As automation is fast increasing in the Chemical Manufacturing industry, Guangdong Rongtai Industry 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 to strategic competitive environment developments

– As Guangdong Rongtai Industry 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.

Skills based hiring in Chemical Manufacturing industry

– The stress on hiring functional specialists at Guangdong Rongtai Industry 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, Guangdong Rongtai Industry is slow explore the new channels of communication. These new channels of communication can help Guangdong Rongtai Industry to provide better information regarding Chemical Manufacturing products and services. It can also build an online community to further reach out to potential customers.

High cash cycle compare to competitors

Guangdong Rongtai Industry 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.

Need for greater diversity

– Guangdong Rongtai Industry has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

High bargaining power of channel partners in Chemical Manufacturing industry

– because of the regulatory requirements in China, Guangdong Rongtai Industry 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 Chemical Manufacturing industry.

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Guangdong Rongtai Industry Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Guangdong Rongtai Industry 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. Guangdong Rongtai Industry 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. Guangdong Rongtai Industry 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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Guangdong Rongtai Industry can use these opportunities to build new business models that can help the communities that Guangdong Rongtai Industry operates in. Secondly it can use opportunities from government spending in Chemical Manufacturing sector.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Chemical Manufacturing industry, but it has also influenced the consumer preferences. Guangdong Rongtai Industry can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Manufacturing automation

– Guangdong Rongtai Industry can use the latest technology developments to improve its manufacturing and designing process in Chemical Manufacturing 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.

Building a culture of innovation

– managers at Guangdong Rongtai Industry 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.

Buying journey improvements

– Guangdong Rongtai Industry can improve the customer journey of consumers in the Chemical Manufacturing 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.

Developing new processes and practices

– Guangdong Rongtai Industry 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.

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. Guangdong Rongtai Industry can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Low interest rates

– Even though inflation is raising its head in most developed economies, Guangdong Rongtai Industry 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.

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 Guangdong Rongtai Industry in the Chemical Manufacturing industry. Now Guangdong Rongtai Industry can target international markets with far fewer capital restrictions requirements than the existing system.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Guangdong Rongtai Industry in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Chemical Manufacturing industry, and it will provide faster access to the consumers.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Guangdong Rongtai Industry can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Using analytics as competitive advantage

– Guangdong Rongtai Industry has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Chemical Manufacturing sector. This continuous investment in analytics has enabled Guangdong Rongtai Industry to build a competitive advantage using analytics. The analytics driven competitive advantage can help Guangdong Rongtai Industry to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

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Threats Guangdong Rongtai Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Guangdong Rongtai Industry are -

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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Chemical Manufacturing industry are lowering. It can presents Guangdong Rongtai Industry with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Chemical Manufacturing sector.

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 Guangdong Rongtai Industry.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Guangdong Rongtai Industry 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.

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. Guangdong Rongtai Industry needs to understand the core reasons impacting the Chemical Manufacturing industry. This will help it in building a better workplace.

Regulatory challenges

– Guangdong Rongtai Industry 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.

Environmental challenges

– Guangdong Rongtai Industry 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. Guangdong Rongtai Industry can take advantage of this fund but it will also bring new competitors in the Chemical Manufacturing industry.

Consumer confidence and its impact on Guangdong Rongtai Industry 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.

High dependence on third party suppliers

– Guangdong Rongtai Industry 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Guangdong Rongtai Industry 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.

Technology acceleration in Forth Industrial Revolution

– Guangdong Rongtai Industry has witnessed rapid integration of technology during Covid-19 in the Chemical Manufacturing industry. As one of the leading players in the industry, Guangdong Rongtai Industry 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Guangdong Rongtai Industry 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 Guangdong Rongtai Industry prominent markets.

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. Guangdong Rongtai Industry can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of Guangdong Rongtai Industry Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Guangdong Rongtai Industry 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 Guangdong Rongtai Industry 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 Guangdong Rongtai Industry 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 Guangdong Rongtai Industry 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 Guangdong Rongtai Industry needs to make to build a sustainable competitive advantage.

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