SWOT Analysis / TOWS Matrix for SVG Optronics (China)
Based on various researches at Oak Spring University , SVG Optronics is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, technology disruption, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, supply chains are disrupted by pandemic ,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that SVG Optronics can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the SVG Optronics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which SVG Optronics 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 SVG Optronics can be done for the following purposes –
1. Strategic planning of SVG Optronics
2. Improving business portfolio management of SVG Optronics
3. Assessing feasibility of the new initiative in China
4. Making a Containers & Packaging sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of SVG Optronics
Strengths of SVG Optronics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of SVG Optronics are -
Strong track record of project management in the Containers & Packaging industry
– SVG Optronics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Containers & Packaging industry
– SVG Optronics has clearly differentiated products in the market place. This has enabled SVG Optronics to fetch slight price premium compare to the competitors in the Containers & Packaging industry. The sustainable margins have also helped SVG Optronics to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of SVG Optronics in the Basic Materials sector have low bargaining power. SVG Optronics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps SVG Optronics to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– SVG Optronics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled SVG Optronics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– SVG Optronics 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.
Learning organization
- SVG Optronics 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 SVG Optronics is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at SVG Optronics emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that SVG Optronics 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.
Organizational Resilience of SVG Optronics
– The covid-19 pandemic has put organizational resilience at the centre of everthing SVG Optronics does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– SVG Optronics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. SVG Optronics 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.
Innovation driven organization
– SVG Optronics is one of the most innovative firm in Containers & Packaging sector.
Effective Research and Development (R&D)
– SVG Optronics has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – SVG Optronics staying ahead in the Containers & Packaging industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– SVG Optronics is present in almost all the verticals within the Containers & Packaging industry. This has provided SVG Optronics 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.
Weaknesses of SVG Optronics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SVG Optronics are -
High bargaining power of channel partners in Containers & Packaging industry
– because of the regulatory requirements in China, SVG Optronics 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 Containers & Packaging industry.
High operating costs
– Compare to the competitors, SVG Optronics has high operating costs in the Containers & Packaging industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract SVG Optronics lucrative customers.
Increasing silos among functional specialists
– The organizational structure of SVG Optronics is dominated by functional specialists. It is not different from other players in the Containers & Packaging industry, but SVG Optronics needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help SVG Optronics to focus more on services in the Containers & Packaging industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of SVG Optronics is just above the Containers & Packaging 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.
Slow decision making process
– As mentioned earlier in the report, SVG Optronics has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Containers & Packaging industry over the last five years. SVG Optronics even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, SVG Optronics is slow explore the new channels of communication. These new channels of communication can help SVG Optronics to provide better information regarding Containers & Packaging products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that SVG Optronics needs to have more collaboration between its sales team and marketing team. Sales professionals in the Containers & Packaging industry have deep experience in developing customer relationships. Marketing department at SVG Optronics can leverage the sales team experience to cultivate customer relationships as SVG Optronics is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, SVG Optronics 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 Containers & Packaging industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative at SVG Optronics, in the dynamic environment of Containers & Packaging industry it has struggled to respond to the nimble upstart competition. SVG Optronics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of SVG Optronics supply chain. Even after few cautionary changes, SVG Optronics is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SVG Optronics vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
SVG Optronics has a high cash cycle compare to other players in the Containers & Packaging industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
SVG Optronics Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SVG Optronics are -
Building a culture of innovation
– managers at SVG Optronics 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 Containers & Packaging industry.
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. SVG Optronics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects SVG Optronics can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Containers & Packaging industry, but it has also influenced the consumer preferences. SVG Optronics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– SVG Optronics can develop new processes and procedures in Containers & Packaging industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for SVG Optronics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Containers & Packaging industry, and it will provide faster access to the consumers.
Buying journey improvements
– SVG Optronics can improve the customer journey of consumers in the Containers & Packaging 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.
Loyalty marketing
– SVG Optronics has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
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 SVG Optronics 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, SVG Optronics can use these opportunities to build new business models that can help the communities that SVG Optronics operates in. Secondly it can use opportunities from government spending in Containers & Packaging sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, SVG Optronics 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 SVG Optronics to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions in Containers & Packaging industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for SVG Optronics in the Containers & Packaging industry. Now SVG Optronics can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for SVG Optronics 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 SVG Optronics to hire the very best people irrespective of their geographical location.
Threats SVG Optronics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SVG Optronics are -
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 SVG Optronics business can come under increasing regulations regarding data privacy, data security, etc.
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 SVG Optronics in the Containers & Packaging sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that SVG Optronics is facing in Containers & Packaging sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, SVG Optronics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Containers & Packaging sector.
High dependence on third party suppliers
– SVG Optronics 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.
Regulatory challenges
– SVG Optronics 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 Containers & Packaging industry regulations.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of SVG Optronics.
Consumer confidence and its impact on SVG Optronics 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 Containers & Packaging industry and other sectors.
Stagnating economy with rate increase
– SVG Optronics 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 Containers & Packaging industry.
Increasing wage structure of SVG Optronics
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of SVG Optronics.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for SVG Optronics in Containers & Packaging industry. The Containers & Packaging industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, SVG Optronics 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 SVG Optronics prominent markets.
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. SVG Optronics needs to understand the core reasons impacting the Containers & Packaging industry. This will help it in building a better workplace.
Weighted SWOT Analysis of SVG Optronics Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at SVG Optronics 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 SVG Optronics 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 SVG Optronics 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 SVG Optronics 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 SVG Optronics needs to make to build a sustainable competitive advantage.