SWOT Analysis / TOWS Matrix for Guangdong LingXiao (China)
Based on various researches at Oak Spring University , Guangdong LingXiao is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, geopolitical disruptions, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies,
technology disruption, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Guangdong LingXiao
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Guangdong LingXiao can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Guangdong LingXiao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Guangdong LingXiao 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 Guangdong LingXiao can be done for the following purposes –
1. Strategic planning of Guangdong LingXiao
2. Improving business portfolio management of Guangdong LingXiao
3. Assessing feasibility of the new initiative in China
4. Making a Misc. Capital Goods sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Guangdong LingXiao
Strengths of Guangdong LingXiao | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Guangdong LingXiao are -
Highly skilled collaborators
– Guangdong LingXiao has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Misc. Capital Goods industry. Secondly the value chain collaborators of Guangdong LingXiao have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Guangdong LingXiao is one of the most innovative firm in Misc. Capital Goods sector.
Successful track record of launching new products
– Guangdong LingXiao has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Guangdong LingXiao 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.
Superior customer experience
– The customer experience strategy of Guangdong LingXiao in Misc. Capital Goods industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Guangdong LingXiao has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Guangdong LingXiao to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Guangdong LingXiao is one of the leading players in the Misc. Capital Goods 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.
Diverse revenue streams
– Guangdong LingXiao is present in almost all the verticals within the Misc. Capital Goods industry. This has provided Guangdong LingXiao a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management in the Misc. Capital Goods industry
– Guangdong LingXiao is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Misc. Capital Goods industry
- digital transformation varies from industry to industry. For Guangdong LingXiao digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Guangdong LingXiao 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.
Sustainable margins compare to other players in Misc. Capital Goods industry
– Guangdong LingXiao has clearly differentiated products in the market place. This has enabled Guangdong LingXiao to fetch slight price premium compare to the competitors in the Misc. Capital Goods industry. The sustainable margins have also helped Guangdong LingXiao to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Guangdong LingXiao in the Capital Goods sector have low bargaining power. Guangdong LingXiao has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Guangdong LingXiao to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy of Guangdong LingXiao comprises – understanding the underlying the factors in the Misc. Capital Goods 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.
Weaknesses of Guangdong LingXiao | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Guangdong LingXiao are -
Lack of clear differentiation of Guangdong LingXiao products
– To increase the profitability and margins on the products, Guangdong LingXiao needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the Misc. Capital Goods industry, Guangdong LingXiao 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.
High operating costs
– Compare to the competitors, Guangdong LingXiao has high operating costs in the Misc. Capital Goods industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Guangdong LingXiao lucrative customers.
Need for greater diversity
– Guangdong LingXiao 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.
Ability to respond to the competition
– As the decision making is very deliberative at Guangdong LingXiao, in the dynamic environment of Misc. Capital Goods industry it has struggled to respond to the nimble upstart competition. Guangdong LingXiao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– From the 10K / annual statement of Guangdong LingXiao, it seems that company is thinking out the frontier risks that can impact Misc. Capital Goods 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.
Increasing silos among functional specialists
– The organizational structure of Guangdong LingXiao is dominated by functional specialists. It is not different from other players in the Misc. Capital Goods industry, but Guangdong LingXiao needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Guangdong LingXiao to focus more on services in the Misc. Capital Goods industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Guangdong LingXiao has a high cash cycle compare to other players in the Misc. Capital Goods industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of Guangdong LingXiao strategy
– From the outside it seems that the employees of Guangdong LingXiao 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.
Slow to strategic competitive environment developments
– As Guangdong LingXiao is one of the leading players in the Misc. Capital Goods industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Misc. Capital Goods industry in last five years.
High bargaining power of channel partners in Misc. Capital Goods industry
– because of the regulatory requirements in China, Guangdong LingXiao 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 Misc. Capital Goods industry.
Guangdong LingXiao Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Guangdong LingXiao are -
Buying journey improvements
– Guangdong LingXiao can improve the customer journey of consumers in the Misc. Capital Goods 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Guangdong LingXiao in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Capital Goods industry, and it will provide faster access to the consumers.
Use of Bitcoin and other crypto currencies for transactions in Misc. Capital Goods industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Guangdong LingXiao in the Misc. Capital Goods industry. Now Guangdong LingXiao can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Guangdong LingXiao can develop new processes and procedures in Misc. Capital Goods 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Guangdong LingXiao 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.
Using analytics as competitive advantage
– Guangdong LingXiao has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Misc. Capital Goods sector. This continuous investment in analytics has enabled Guangdong LingXiao to build a competitive advantage using analytics. The analytics driven competitive advantage can help Guangdong LingXiao to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Guangdong LingXiao can use the latest technology developments to improve its manufacturing and designing process in Misc. Capital Goods 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Guangdong LingXiao is facing challenges because of the dominance of functional experts in the organization. Guangdong LingXiao can utilize new technology in the field of Misc. Capital Goods 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 Guangdong LingXiao 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 Guangdong LingXiao to increase its market reach. Guangdong LingXiao 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.
Learning at scale
– Online learning technologies has now opened space for Guangdong LingXiao 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Guangdong LingXiao 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 Guangdong LingXiao to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Misc. Capital Goods industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Guangdong LingXiao 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 LingXiao 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.
Threats Guangdong LingXiao External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Guangdong LingXiao are -
Technology acceleration in Forth Industrial Revolution
– Guangdong LingXiao has witnessed rapid integration of technology during Covid-19 in the Misc. Capital Goods industry. As one of the leading players in the industry, Guangdong LingXiao needs to keep up with the evolution of technology in the Misc. Capital Goods 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Guangdong LingXiao in Misc. Capital Goods industry. The Misc. Capital Goods 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 LingXiao needs to understand the core reasons impacting the Misc. Capital Goods industry. This will help it in building a better workplace.
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 Guangdong LingXiao in the Misc. Capital Goods sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Guangdong LingXiao 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 LingXiao prominent markets.
Consumer confidence and its impact on Guangdong LingXiao 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 Misc. Capital Goods industry and other sectors.
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 LingXiao.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Guangdong LingXiao may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Capital Goods sector.
Easy access to finance
– Easy access to finance in Misc. Capital Goods industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Guangdong LingXiao can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Guangdong LingXiao business can come under increasing regulations regarding data privacy, data security, 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.
Stagnating economy with rate increase
– Guangdong LingXiao 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 Misc. Capital Goods industry.
Weighted SWOT Analysis of Guangdong LingXiao Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Guangdong LingXiao 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 LingXiao 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 LingXiao 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 LingXiao 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 LingXiao needs to make to build a sustainable competitive advantage.
