Liaoning Fu-An Heavy Industry (603315) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Liaoning Fu-An Heavy Industry (China)

Based on various researches at Oak Spring University , Liaoning Fu-An Heavy 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, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing commodity prices, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, etc

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Introduction to SWOT Analysis of Liaoning Fu-An Heavy Industry

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Liaoning Fu-An Heavy Industry can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Liaoning Fu-An Heavy Industry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Liaoning Fu-An Heavy 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 Liaoning Fu-An Heavy Industry can be done for the following purposes –
1. Strategic planning of Liaoning Fu-An Heavy Industry
2. Improving business portfolio management of Liaoning Fu-An Heavy Industry
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 Liaoning Fu-An Heavy Industry

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Strengths of Liaoning Fu-An Heavy Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Liaoning Fu-An Heavy Industry are -

Highly skilled collaborators

– Liaoning Fu-An Heavy Industry has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Iron & Steel industry. Secondly the value chain collaborators of Liaoning Fu-An Heavy Industry have helped the firm to develop new products and bring them quickly to the marketplace.

Ability to recruit top talent

– Liaoning Fu-An Heavy Industry is one of the leading players in the Iron & Steel 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.

Sustainable margins compare to other players in Iron & Steel industry

– Liaoning Fu-An Heavy Industry has clearly differentiated products in the market place. This has enabled Liaoning Fu-An Heavy Industry to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped Liaoning Fu-An Heavy Industry to invest into research and development (R&D) and innovation.

Successful track record of launching new products

– Liaoning Fu-An Heavy Industry has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Liaoning Fu-An Heavy 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.

Innovation driven organization

– Liaoning Fu-An Heavy Industry is one of the most innovative firm in Iron & Steel sector.

High switching costs

– The high switching costs that Liaoning Fu-An Heavy 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.

Training and development

– Liaoning Fu-An Heavy Industry 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.

Diverse revenue streams

– Liaoning Fu-An Heavy Industry is present in almost all the verticals within the Iron & Steel industry. This has provided Liaoning Fu-An Heavy 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.

Superior customer experience

– The customer experience strategy of Liaoning Fu-An Heavy Industry in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Analytics focus

– Liaoning Fu-An Heavy 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 Iron & Steel 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.

High brand equity

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

Learning organization

- Liaoning Fu-An Heavy 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 Liaoning Fu-An Heavy Industry is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Liaoning Fu-An Heavy Industry emphasize – knowledge, initiative, and innovation.

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Weaknesses of Liaoning Fu-An Heavy Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Liaoning Fu-An Heavy Industry are -

Capital Spending Reduction

– Even during the low interest decade, Liaoning Fu-An Heavy Industry 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.

Lack of clear differentiation of Liaoning Fu-An Heavy Industry products

– To increase the profitability and margins on the products, Liaoning Fu-An Heavy Industry needs to provide more differentiated products than what it is currently offering in the marketplace.

Slow decision making process

– As mentioned earlier in the report, Liaoning Fu-An Heavy Industry has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Iron & Steel industry over the last five years. Liaoning Fu-An Heavy Industry 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.

High operating costs

– Compare to the competitors, Liaoning Fu-An Heavy Industry 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 Liaoning Fu-An Heavy Industry lucrative customers.

Need for greater diversity

– Liaoning Fu-An Heavy 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.

Products dominated business model

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

Ability to respond to the competition

– As the decision making is very deliberative at Liaoning Fu-An Heavy Industry, in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. Liaoning Fu-An Heavy 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 Iron & Steel industry, Liaoning Fu-An Heavy 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.

Aligning sales with marketing

– From the outside it seems that Liaoning Fu-An Heavy Industry 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 Liaoning Fu-An Heavy Industry can leverage the sales team experience to cultivate customer relationships as Liaoning Fu-An Heavy Industry is planning to shift buying processes online.

Increasing silos among functional specialists

– The organizational structure of Liaoning Fu-An Heavy Industry is dominated by functional specialists. It is not different from other players in the Iron & Steel industry, but Liaoning Fu-An Heavy Industry needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Liaoning Fu-An Heavy Industry to focus more on services in the Iron & Steel industry rather than just following the product oriented approach.

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 Liaoning Fu-An Heavy Industry supply chain. Even after few cautionary changes, Liaoning Fu-An Heavy Industry is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Liaoning Fu-An Heavy Industry vulnerable to further global disruptions in South East Asia.

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Liaoning Fu-An Heavy Industry Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Liaoning Fu-An Heavy Industry are -

Manufacturing automation

– Liaoning Fu-An Heavy Industry can use the latest technology developments to improve its manufacturing and designing process in Iron & Steel 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.

Reforming the budgeting process

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

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Liaoning Fu-An Heavy Industry 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 Liaoning Fu-An Heavy Industry to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Creating value in data economy

– The success of analytics program of Liaoning Fu-An Heavy Industry has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help Liaoning Fu-An Heavy Industry to build a more holistic ecosystem for Liaoning Fu-An Heavy Industry products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Leveraging digital technologies

– Liaoning Fu-An Heavy Industry can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Remote work and new talent hiring opportunities

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

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. Liaoning Fu-An Heavy 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. Liaoning Fu-An Heavy 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.

Using analytics as competitive advantage

– Liaoning Fu-An Heavy Industry 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 Liaoning Fu-An Heavy Industry to build a competitive advantage using analytics. The analytics driven competitive advantage can help Liaoning Fu-An Heavy Industry 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, Liaoning Fu-An Heavy Industry can use these opportunities to build new business models that can help the communities that Liaoning Fu-An Heavy Industry operates in. Secondly it can use opportunities from government spending in Iron & Steel sector.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Liaoning Fu-An Heavy 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 Iron & Steel industry, and it will provide faster access to the consumers.

Learning at scale

– Online learning technologies has now opened space for Liaoning Fu-An Heavy 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.

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 Liaoning Fu-An Heavy Industry 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.

Better consumer reach

– The expansion of the 5G network will help Liaoning Fu-An Heavy Industry to increase its market reach. Liaoning Fu-An Heavy 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 Liaoning Fu-An Heavy Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Liaoning Fu-An Heavy Industry are -

Consumer confidence and its impact on Liaoning Fu-An Heavy 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 Iron & Steel industry and other sectors.

Technology acceleration in Forth Industrial Revolution

– Liaoning Fu-An Heavy Industry has witnessed rapid integration of technology during Covid-19 in the Iron & Steel industry. As one of the leading players in the industry, Liaoning Fu-An Heavy Industry 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.

High dependence on third party suppliers

– Liaoning Fu-An Heavy 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

– Liaoning Fu-An Heavy 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 Iron & Steel industry.

Environmental challenges

– Liaoning Fu-An Heavy 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. Liaoning Fu-An Heavy Industry can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.

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. Liaoning Fu-An Heavy Industry can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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. Liaoning Fu-An Heavy Industry needs to understand the core reasons impacting the Iron & Steel industry. This will help it in building a better workplace.

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.

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 Liaoning Fu-An Heavy Industry.

Increasing wage structure of Liaoning Fu-An Heavy Industry

– 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 Liaoning Fu-An Heavy Industry.

Regulatory challenges

– Liaoning Fu-An Heavy 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 Iron & Steel industry regulations.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Iron & Steel industry are lowering. It can presents Liaoning Fu-An Heavy Industry with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Iron & Steel sector.

Shortening product life cycle

– it is one of the major threat that Liaoning Fu-An Heavy Industry is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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Weighted SWOT Analysis of Liaoning Fu-An Heavy Industry Template, Example

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

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