Lanfeng Chemical A (2513) SWOT Analysis / TOWS Matrix / MBA Resources
Chemical Manufacturing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Lanfeng Chemical A (China)
Based on various researches at Oak Spring University , Lanfeng Chemical A is operating in a macro-environment that has been destablized by – wage bills are increasing, there is backlash against globalization, increasing commodity prices, technology disruption, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, there is increasing trade war between United States & China,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Lanfeng Chemical A
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Lanfeng Chemical A can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lanfeng Chemical A, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lanfeng Chemical A 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 Lanfeng Chemical A can be done for the following purposes –
1. Strategic planning of Lanfeng Chemical A
2. Improving business portfolio management of Lanfeng Chemical A
3. Assessing feasibility of the new initiative in China
4. Making a Chemical Manufacturing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lanfeng Chemical A
Strengths of Lanfeng Chemical A | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lanfeng Chemical A are -
Innovation driven organization
– Lanfeng Chemical A is one of the most innovative firm in Chemical Manufacturing sector.
Operational resilience
– The operational resilience strategy of Lanfeng Chemical A comprises – understanding the underlying the factors in the Chemical Manufacturing 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.
Training and development
– Lanfeng Chemical A 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.
Strong track record of project management in the Chemical Manufacturing industry
– Lanfeng Chemical A is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Lanfeng Chemical A
– The covid-19 pandemic has put organizational resilience at the centre of everthing Lanfeng Chemical A does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Chemical Manufacturing industry
- digital transformation varies from industry to industry. For Lanfeng Chemical A digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lanfeng Chemical A 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.
Cross disciplinary teams
– Horizontal connected teams at the Lanfeng Chemical A 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.
Superior customer experience
– The customer experience strategy of Lanfeng Chemical A in Chemical Manufacturing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Lanfeng Chemical A 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 Lanfeng Chemical A is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Lanfeng Chemical A emphasize – knowledge, initiative, and innovation.
Ability to lead change in Chemical Manufacturing
– Lanfeng Chemical A is one of the leading players in the Chemical Manufacturing industry in China. Over the years it has not only transformed the business landscape in the Chemical Manufacturing industry in China but also across the existing markets. The ability to lead change has enabled Lanfeng Chemical A in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Lanfeng Chemical A in the Basic Materials sector have low bargaining power. Lanfeng Chemical A has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lanfeng Chemical A to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Lanfeng Chemical A has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Chemical Manufacturing industry. Secondly the value chain collaborators of Lanfeng Chemical A have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Lanfeng Chemical A | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lanfeng Chemical A are -
High operating costs
– Compare to the competitors, Lanfeng Chemical A has high operating costs in the Chemical Manufacturing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lanfeng Chemical A lucrative customers.
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 Lanfeng Chemical A supply chain. Even after few cautionary changes, Lanfeng Chemical A is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lanfeng Chemical A vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– From the 10K / annual statement of Lanfeng Chemical A, it seems that company is thinking out the frontier risks that can impact Chemical Manufacturing 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.
High dependence on Lanfeng Chemical A ‘s star products
– The top 2 products and services of Lanfeng Chemical A still accounts for major business revenue. This dependence on star products in Chemical Manufacturing industry has resulted into insufficient focus on developing new products, even though Lanfeng Chemical A has relatively successful track record of launching new products.
Products dominated business model
– Even though Lanfeng Chemical A has some of the most successful models in the Chemical Manufacturing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Lanfeng Chemical A should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Lanfeng Chemical A is one of the leading players in the Chemical Manufacturing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Chemical Manufacturing industry in last five years.
Need for greater diversity
– Lanfeng Chemical A 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.
Increasing silos among functional specialists
– The organizational structure of Lanfeng Chemical A is dominated by functional specialists. It is not different from other players in the Chemical Manufacturing industry, but Lanfeng Chemical A needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lanfeng Chemical A to focus more on services in the Chemical Manufacturing industry rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of China, Lanfeng Chemical A needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Chemical Manufacturing industry
– because of the regulatory requirements in China, Lanfeng Chemical A 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 Chemical Manufacturing industry.
Capital Spending Reduction
– Even during the low interest decade, Lanfeng Chemical A 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 Chemical Manufacturing industry using digital technology.
Lanfeng Chemical A Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Lanfeng Chemical A are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Chemical Manufacturing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lanfeng Chemical A 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. Lanfeng Chemical A 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.
Building a culture of innovation
– managers at Lanfeng Chemical A 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 Chemical Manufacturing industry.
Learning at scale
– Online learning technologies has now opened space for Lanfeng Chemical A 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 Lanfeng Chemical A 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, Lanfeng Chemical A can use these opportunities to build new business models that can help the communities that Lanfeng Chemical A operates in. Secondly it can use opportunities from government spending in Chemical Manufacturing sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lanfeng Chemical A 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 Lanfeng Chemical A to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Chemical Manufacturing industry, but it has also influenced the consumer preferences. Lanfeng Chemical A can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lanfeng Chemical A is facing challenges because of the dominance of functional experts in the organization. Lanfeng Chemical A can utilize new technology in the field of Chemical Manufacturing 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 Lanfeng Chemical A can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Lanfeng Chemical A can develop new processes and procedures in Chemical Manufacturing 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.
Use of Bitcoin and other crypto currencies for transactions in Chemical Manufacturing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lanfeng Chemical A in the Chemical Manufacturing industry. Now Lanfeng Chemical A can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lanfeng Chemical A in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Chemical Manufacturing industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help Lanfeng Chemical A to increase its market reach. Lanfeng Chemical A 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.
Threats Lanfeng Chemical A External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Lanfeng Chemical A are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lanfeng Chemical A in Chemical Manufacturing industry. The Chemical Manufacturing 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.
Consumer confidence and its impact on Lanfeng Chemical A 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 Chemical Manufacturing 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 Lanfeng Chemical A.
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 Lanfeng Chemical A in the Chemical Manufacturing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Lanfeng Chemical A 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 Chemical Manufacturing industry.
Shortening product life cycle
– it is one of the major threat that Lanfeng Chemical A is facing in Chemical Manufacturing 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, Lanfeng Chemical A may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Chemical Manufacturing sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lanfeng Chemical A 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 Lanfeng Chemical A prominent markets.
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 Lanfeng Chemical A business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Lanfeng Chemical A will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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.
Environmental challenges
– Lanfeng Chemical A 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. Lanfeng Chemical A can take advantage of this fund but it will also bring new competitors in the Chemical Manufacturing industry.
High dependence on third party suppliers
– Lanfeng Chemical A 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.
Weighted SWOT Analysis of Lanfeng Chemical A Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Lanfeng Chemical A 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 Lanfeng Chemical A 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 Lanfeng Chemical A 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 Lanfeng Chemical A 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 Lanfeng Chemical A needs to make to build a sustainable competitive advantage.