Ningbo Thermal Power (600982) SWOT Analysis / TOWS Matrix / MBA Resources
Business Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Ningbo Thermal Power (China)
Based on various researches at Oak Spring University , Ningbo Thermal Power is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing energy prices,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Ningbo Thermal Power
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Ningbo Thermal Power can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ningbo Thermal Power, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ningbo Thermal Power 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 Ningbo Thermal Power can be done for the following purposes –
1. Strategic planning of Ningbo Thermal Power
2. Improving business portfolio management of Ningbo Thermal Power
3. Assessing feasibility of the new initiative in China
4. Making a Business Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Ningbo Thermal Power
Strengths of Ningbo Thermal Power | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ningbo Thermal Power are -
High switching costs
– The high switching costs that Ningbo Thermal Power 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.
Highly skilled collaborators
– Ningbo Thermal Power has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Business Services industry. Secondly the value chain collaborators of Ningbo Thermal Power have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Business Services industry
– Ningbo Thermal Power has clearly differentiated products in the market place. This has enabled Ningbo Thermal Power to fetch slight price premium compare to the competitors in the Business Services industry. The sustainable margins have also helped Ningbo Thermal Power to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Ningbo Thermal Power has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Ningbo Thermal Power staying ahead in the Business Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Ningbo Thermal Power in the Services sector have low bargaining power. Ningbo Thermal Power has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ningbo Thermal Power to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Ningbo Thermal Power has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ningbo Thermal Power to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Ningbo Thermal Power
– The covid-19 pandemic has put organizational resilience at the centre of everthing Ningbo Thermal Power does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Ningbo Thermal Power 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.
Strong track record of project management in the Business Services industry
– Ningbo Thermal Power is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Ningbo Thermal Power comprises – understanding the underlying the factors in the Business Services 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.
Ability to lead change in Business Services
– Ningbo Thermal Power is one of the leading players in the Business Services industry in China. Over the years it has not only transformed the business landscape in the Business Services industry in China but also across the existing markets. The ability to lead change has enabled Ningbo Thermal Power in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Ningbo Thermal Power has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ningbo Thermal Power 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.
Weaknesses of Ningbo Thermal Power | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Ningbo Thermal Power are -
Increasing silos among functional specialists
– The organizational structure of Ningbo Thermal Power is dominated by functional specialists. It is not different from other players in the Business Services industry, but Ningbo Thermal Power needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Ningbo Thermal Power to focus more on services in the Business Services industry rather than just following the product oriented approach.
High bargaining power of channel partners in Business Services industry
– because of the regulatory requirements in China, Ningbo Thermal Power 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 Business Services industry.
Ability to respond to the competition
– As the decision making is very deliberative at Ningbo Thermal Power, in the dynamic environment of Business Services industry it has struggled to respond to the nimble upstart competition. Ningbo Thermal Power 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 Ningbo Thermal Power has some of the most successful models in the Business Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Ningbo Thermal Power should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Ningbo Thermal Power 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 Business Services industry using digital technology.
Aligning sales with marketing
– From the outside it seems that Ningbo Thermal Power needs to have more collaboration between its sales team and marketing team. Sales professionals in the Business Services industry have deep experience in developing customer relationships. Marketing department at Ningbo Thermal Power can leverage the sales team experience to cultivate customer relationships as Ningbo Thermal Power is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Ningbo Thermal Power is just above the Business Services 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.
Employees’ less understanding of Ningbo Thermal Power strategy
– From the outside it seems that the employees of Ningbo Thermal Power 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.
Lack of clear differentiation of Ningbo Thermal Power products
– To increase the profitability and margins on the products, Ningbo Thermal Power needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Ningbo Thermal Power has a high cash cycle compare to other players in the Business Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Ningbo Thermal Power 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.
Ningbo Thermal Power Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Ningbo Thermal Power are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Ningbo Thermal Power can use these opportunities to build new business models that can help the communities that Ningbo Thermal Power operates in. Secondly it can use opportunities from government spending in Business Services sector.
Leveraging digital technologies
– Ningbo Thermal Power 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.
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. Ningbo Thermal Power can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Ningbo Thermal Power 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.
Using analytics as competitive advantage
– Ningbo Thermal Power has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Business Services sector. This continuous investment in analytics has enabled Ningbo Thermal Power to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ningbo Thermal Power to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions in Business Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Ningbo Thermal Power in the Business Services industry. Now Ningbo Thermal Power can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Ningbo Thermal Power is facing challenges because of the dominance of functional experts in the organization. Ningbo Thermal Power can utilize new technology in the field of Business Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ningbo Thermal Power 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 Ningbo Thermal Power to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ningbo Thermal Power 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Business Services industry, but it has also influenced the consumer preferences. Ningbo Thermal Power can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Ningbo Thermal Power 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 Business Services industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Ningbo Thermal Power can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Business Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Ningbo Thermal Power 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. Ningbo Thermal Power 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 Ningbo Thermal Power External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Ningbo Thermal Power are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ningbo Thermal Power in Business Services industry. The Business Services 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.
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.
Environmental challenges
– Ningbo Thermal Power 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. Ningbo Thermal Power can take advantage of this fund but it will also bring new competitors in the Business Services industry.
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 Ningbo Thermal Power in the Business Services sector and impact the bottomline 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 Ningbo Thermal Power.
Easy access to finance
– Easy access to finance in Business Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Ningbo Thermal Power can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Ningbo Thermal Power 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 Business Services industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Ningbo Thermal Power may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Business Services sector.
Increasing wage structure of Ningbo Thermal Power
– 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 Ningbo Thermal Power.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Ningbo Thermal Power 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 Ningbo Thermal Power prominent markets.
Regulatory challenges
– Ningbo Thermal Power 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 Business Services industry regulations.
High dependence on third party suppliers
– Ningbo Thermal Power 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.
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.
Weighted SWOT Analysis of Ningbo Thermal Power Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Ningbo Thermal Power 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 Ningbo Thermal Power 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 Ningbo Thermal Power 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 Ningbo Thermal Power 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 Ningbo Thermal Power needs to make to build a sustainable competitive advantage.