SWOT Analysis / TOWS Matrix for Shanxi Antai (China)
Based on various researches at Oak Spring University , Shanxi Antai is operating in a macro-environment that has been destablized by – technology disruption, increasing energy prices, there is increasing trade war between United States & China, increasing household debt because of falling income levels, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models,
there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shanxi Antai can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shanxi Antai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shanxi Antai 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 Shanxi Antai can be done for the following purposes –
1. Strategic planning of Shanxi Antai
2. Improving business portfolio management of Shanxi Antai
3. Assessing feasibility of the new initiative in China
4. Making a Iron & Steel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shanxi Antai
Strengths of Shanxi Antai | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shanxi Antai are -
Diverse revenue streams
– Shanxi Antai is present in almost all the verticals within the Iron & Steel industry. This has provided Shanxi Antai 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.
Digital Transformation in Iron & Steel industry
- digital transformation varies from industry to industry. For Shanxi Antai digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shanxi Antai 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.
Cross disciplinary teams
– Horizontal connected teams at the Shanxi Antai 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.
Successful track record of launching new products
– Shanxi Antai has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shanxi Antai 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
- Shanxi Antai 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 Shanxi Antai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Shanxi Antai emphasize – knowledge, initiative, and innovation.
High brand equity
– Shanxi Antai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shanxi Antai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Iron & Steel industry
– Shanxi Antai has clearly differentiated products in the market place. This has enabled Shanxi Antai to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped Shanxi Antai to invest into research and development (R&D) and innovation.
Training and development
– Shanxi Antai has one of the best training and development program in Basic Materials industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Shanxi Antai is one of the most innovative firm in Iron & Steel sector.
High switching costs
– The high switching costs that Shanxi Antai 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.
Low bargaining power of suppliers
– Suppliers of Shanxi Antai in the Basic Materials sector have low bargaining power. Shanxi Antai has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shanxi Antai to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Iron & Steel
– Shanxi Antai is one of the leading players in the Iron & Steel industry in China. Over the years it has not only transformed the business landscape in the Iron & Steel industry in China but also across the existing markets. The ability to lead change has enabled Shanxi Antai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Shanxi Antai | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanxi Antai are -
Lack of clear differentiation of Shanxi Antai products
– To increase the profitability and margins on the products, Shanxi Antai needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Shanxi Antai 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.
Capital Spending Reduction
– Even during the low interest decade, Shanxi Antai 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 Iron & Steel industry using digital technology.
Compensation and incentives
– The revenue per employee of Shanxi Antai is just above the Iron & Steel 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 dependence on Shanxi Antai ‘s star products
– The top 2 products and services of Shanxi Antai still accounts for major business revenue. This dependence on star products in Iron & Steel industry has resulted into insufficient focus on developing new products, even though Shanxi Antai has relatively successful track record of launching new products.
Skills based hiring in Iron & Steel industry
– The stress on hiring functional specialists at Shanxi Antai 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, Shanxi Antai is slow explore the new channels of communication. These new channels of communication can help Shanxi Antai to provide better information regarding Iron & Steel products and services. It can also build an online community to further reach out to potential customers.
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 Shanxi Antai supply chain. Even after few cautionary changes, Shanxi Antai is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shanxi Antai vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Shanxi Antai needs to have more collaboration between its sales team and marketing team. Sales professionals in the Iron & Steel industry have deep experience in developing customer relationships. Marketing department at Shanxi Antai can leverage the sales team experience to cultivate customer relationships as Shanxi Antai is planning to shift buying processes online.
High operating costs
– Compare to the competitors, Shanxi Antai has high operating costs in the Iron & Steel industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shanxi Antai lucrative customers.
High cash cycle compare to competitors
Shanxi Antai has a high cash cycle compare to other players in the Iron & Steel industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Shanxi Antai Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shanxi Antai are -
Using analytics as competitive advantage
– Shanxi Antai has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Iron & Steel sector. This continuous investment in analytics has enabled Shanxi Antai to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shanxi Antai to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shanxi Antai can use these opportunities to build new business models that can help the communities that Shanxi Antai operates in. Secondly it can use opportunities from government spending in Iron & Steel sector.
Use of Bitcoin and other crypto currencies for transactions in Iron & Steel industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Shanxi Antai in the Iron & Steel industry. Now Shanxi Antai can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Shanxi Antai 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.
Building a culture of innovation
– managers at Shanxi Antai 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 Iron & Steel industry.
Developing new processes and practices
– Shanxi Antai can develop new processes and procedures in Iron & Steel 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Iron & Steel industry, but it has also influenced the consumer preferences. Shanxi Antai can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shanxi Antai is facing challenges because of the dominance of functional experts in the organization. Shanxi Antai can utilize new technology in the field of Iron & Steel industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Shanxi Antai to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shanxi Antai 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.
Buying journey improvements
– Shanxi Antai can improve the customer journey of consumers in the Iron & Steel 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Iron & Steel industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shanxi Antai 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. Shanxi Antai 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, Shanxi Antai 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 Shanxi Antai to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Shanxi Antai External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shanxi Antai are -
Technology acceleration in Forth Industrial Revolution
– Shanxi Antai has witnessed rapid integration of technology during Covid-19 in the Iron & Steel industry. As one of the leading players in the industry, Shanxi Antai needs to keep up with the evolution of technology in the Iron & Steel 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.
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 Shanxi Antai business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Iron & Steel industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shanxi Antai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Shanxi Antai.
High dependence on third party suppliers
– Shanxi Antai 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Iron & Steel industry are lowering. It can presents Shanxi Antai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Iron & Steel sector.
Regulatory challenges
– Shanxi Antai 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 Iron & Steel industry regulations.
Shortening product life cycle
– it is one of the major threat that Shanxi Antai is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Shanxi Antai in Iron & Steel industry. The Iron & Steel 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. Shanxi Antai needs to understand the core reasons impacting the Iron & Steel industry. This will help it in building a better workplace.
Environmental challenges
– Shanxi Antai 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. Shanxi Antai can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.
Weighted SWOT Analysis of Shanxi Antai Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shanxi Antai 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 Shanxi Antai 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 Shanxi Antai 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 Shanxi Antai 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 Shanxi Antai needs to make to build a sustainable competitive advantage.