Gansu Ronghua Industry (600311) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Gansu Ronghua Industry (China)

Based on various researches at Oak Spring University , Gansu Ronghua Industry is operating in a macro-environment that has been destablized by – wage bills are increasing, cloud computing is disrupting traditional business models, there is backlash against globalization, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, increasing energy prices, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Gansu Ronghua Industry

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Gansu Ronghua Industry can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Gansu Ronghua Industry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Gansu Ronghua 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 Gansu Ronghua Industry can be done for the following purposes –
1. Strategic planning of Gansu Ronghua Industry
2. Improving business portfolio management of Gansu Ronghua Industry
3. Assessing feasibility of the new initiative in China
4. Making a Gold & Silver sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Gansu Ronghua Industry

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

The strengths of Gansu Ronghua Industry are -

Digital Transformation in Gold & Silver industry

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

Operational resilience

– The operational resilience strategy of Gansu Ronghua Industry comprises – understanding the underlying the factors in the Gold & Silver 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.

High switching costs

– The high switching costs that Gansu Ronghua 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.

Low bargaining power of suppliers

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

Effective Research and Development (R&D)

– Gansu Ronghua Industry has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Gansu Ronghua Industry staying ahead in the Gold & Silver industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Highly skilled collaborators

– Gansu Ronghua Industry has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Gold & Silver industry. Secondly the value chain collaborators of Gansu Ronghua Industry have helped the firm to develop new products and bring them quickly to the marketplace.

Learning organization

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

Cross disciplinary teams

– Horizontal connected teams at the Gansu Ronghua 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.

Ability to lead change in Gold & Silver

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

Ability to recruit top talent

– Gansu Ronghua Industry is one of the leading players in the Gold & Silver 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.

Successful track record of launching new products

– Gansu Ronghua Industry has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Gansu Ronghua Industry 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.

Diverse revenue streams

– Gansu Ronghua Industry is present in almost all the verticals within the Gold & Silver industry. This has provided Gansu Ronghua Industry 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.

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

The weaknesses of Gansu Ronghua Industry are -

Slow to strategic competitive environment developments

– As Gansu Ronghua Industry is one of the leading players in the Gold & Silver industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Gold & Silver industry in last five years.

Ability to respond to the competition

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

Products dominated business model

– Even though Gansu Ronghua Industry has some of the most successful models in the Gold & Silver industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Gansu Ronghua Industry should strive to include more intangible value offerings along with its core products and services.

Need for greater diversity

– Gansu Ronghua 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.

Interest costs

– Compare to the competition, Gansu Ronghua Industry has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.

High bargaining power of channel partners in Gold & Silver industry

– because of the regulatory requirements in China, Gansu Ronghua 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 Gold & Silver industry.

Compensation and incentives

– The revenue per employee of Gansu Ronghua Industry is just above the Gold & Silver 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 Gansu Ronghua Industry ‘s star products

– The top 2 products and services of Gansu Ronghua Industry still accounts for major business revenue. This dependence on star products in Gold & Silver industry has resulted into insufficient focus on developing new products, even though Gansu Ronghua Industry has relatively successful track record of launching new products.

Lack of clear differentiation of Gansu Ronghua Industry products

– To increase the profitability and margins on the products, Gansu Ronghua Industry needs to provide more differentiated products than what it is currently offering in the marketplace.

High operating costs

– Compare to the competitors, Gansu Ronghua Industry has high operating costs in the Gold & Silver industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Gansu Ronghua Industry lucrative customers.

Workers concerns about automation

– As automation is fast increasing in the Gold & Silver industry, Gansu Ronghua 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.

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

The opportunities of Gansu Ronghua Industry are -

Redefining models of collaboration and team work

– As explained in the weaknesses section, Gansu Ronghua Industry is facing challenges because of the dominance of functional experts in the organization. Gansu Ronghua Industry can utilize new technology in the field of Gold & Silver industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Gold & Silver industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Gansu Ronghua 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. Gansu Ronghua 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.

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. Gansu Ronghua Industry can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Using analytics as competitive advantage

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

Low interest rates

– Even though inflation is raising its head in most developed economies, Gansu Ronghua 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.

Building a culture of innovation

– managers at Gansu Ronghua 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 Gold & Silver 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, Gansu Ronghua Industry can use these opportunities to build new business models that can help the communities that Gansu Ronghua Industry operates in. Secondly it can use opportunities from government spending in Gold & Silver sector.

Developing new processes and practices

– Gansu Ronghua Industry can develop new processes and procedures in Gold & Silver 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Gansu Ronghua Industry 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 Gansu Ronghua Industry to hire the very best people irrespective of their geographical location.

Manufacturing automation

– Gansu Ronghua Industry can use the latest technology developments to improve its manufacturing and designing process in Gold & Silver 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.

Learning at scale

– Online learning technologies has now opened space for Gansu Ronghua Industry 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.

Reforming the budgeting process

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

Better consumer reach

– The expansion of the 5G network will help Gansu Ronghua Industry to increase its market reach. Gansu Ronghua Industry 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.

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Threats Gansu Ronghua Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Gansu Ronghua Industry are -

Consumer confidence and its impact on Gansu Ronghua 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 Gold & Silver industry and other sectors.

Environmental challenges

– Gansu Ronghua 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. Gansu Ronghua Industry can take advantage of this fund but it will also bring new competitors in the Gold & Silver industry.

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. Gansu Ronghua Industry 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.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Gansu Ronghua Industry in the Gold & Silver sector and impact the bottomline of the organization.

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.

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 Gansu Ronghua Industry.

Barriers of entry lowering

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

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 Gansu Ronghua Industry business can come under increasing regulations regarding data privacy, data security, etc.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Gansu Ronghua Industry in Gold & Silver industry. The Gold & Silver 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 dependence on third party suppliers

– Gansu Ronghua 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.

Stagnating economy with rate increase

– Gansu Ronghua Industry 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 Gold & Silver industry.

Regulatory challenges

– Gansu Ronghua 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 Gold & Silver 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.

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Weighted SWOT Analysis of Gansu Ronghua Industry Template, Example

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

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