Lucky Film (600135) SWOT Analysis / TOWS Matrix / MBA Resources
Photography
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Lucky Film (China)
Based on various researches at Oak Spring University , Lucky Film is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, wage bills are increasing, increasing government debt because of Covid-19 spendings,
geopolitical disruptions, increasing commodity prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Lucky Film can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lucky Film, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lucky Film 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 Lucky Film can be done for the following purposes –
1. Strategic planning of Lucky Film
2. Improving business portfolio management of Lucky Film
3. Assessing feasibility of the new initiative in China
4. Making a Photography sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lucky Film
Strengths of Lucky Film | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lucky Film are -
Innovation driven organization
– Lucky Film is one of the most innovative firm in Photography sector.
Highly skilled collaborators
– Lucky Film has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Photography industry. Secondly the value chain collaborators of Lucky Film have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Photography industry
- digital transformation varies from industry to industry. For Lucky Film digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lucky Film 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.
Effective Research and Development (R&D)
– Lucky Film has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Lucky Film staying ahead in the Photography 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 Lucky Film in the Consumer Cyclical sector have low bargaining power. Lucky Film has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lucky Film to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Lucky Film is present in almost all the verticals within the Photography industry. This has provided Lucky Film 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.
Ability to lead change in Photography
– Lucky Film is one of the leading players in the Photography industry in China. Over the years it has not only transformed the business landscape in the Photography industry in China but also across the existing markets. The ability to lead change has enabled Lucky Film in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Photography industry
– Lucky Film has clearly differentiated products in the market place. This has enabled Lucky Film to fetch slight price premium compare to the competitors in the Photography industry. The sustainable margins have also helped Lucky Film to invest into research and development (R&D) and innovation.
Analytics focus
– Lucky Film 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 Photography 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.
Strong track record of project management in the Photography industry
– Lucky Film is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Lucky Film has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lucky Film to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Lucky Film 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.
Weaknesses of Lucky Film | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lucky Film are -
Increasing silos among functional specialists
– The organizational structure of Lucky Film is dominated by functional specialists. It is not different from other players in the Photography industry, but Lucky Film needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lucky Film to focus more on services in the Photography industry rather than just following the product oriented approach.
High dependence on Lucky Film ‘s star products
– The top 2 products and services of Lucky Film still accounts for major business revenue. This dependence on star products in Photography industry has resulted into insufficient focus on developing new products, even though Lucky Film has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of Lucky Film is just above the Photography 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 to strategic competitive environment developments
– As Lucky Film is one of the leading players in the Photography industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Photography industry in last five years.
Lack of clear differentiation of Lucky Film products
– To increase the profitability and margins on the products, Lucky Film needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of Lucky Film, it seems that company is thinking out the frontier risks that can impact Photography 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.
Slow decision making process
– As mentioned earlier in the report, Lucky Film has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Photography industry over the last five years. Lucky Film 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.
Products dominated business model
– Even though Lucky Film has some of the most successful models in the Photography industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Lucky Film should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Lucky Film 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.
Capital Spending Reduction
– Even during the low interest decade, Lucky Film 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 Photography industry using digital technology.
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 Lucky Film supply chain. Even after few cautionary changes, Lucky Film is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lucky Film vulnerable to further global disruptions in South East Asia.
Lucky Film Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Lucky Film are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lucky Film is facing challenges because of the dominance of functional experts in the organization. Lucky Film can utilize new technology in the field of Photography 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 Lucky Film can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions in Photography industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Lucky Film in the Photography industry. Now Lucky Film can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lucky Film 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 Lucky Film to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Lucky Film 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 Photography industry.
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 Lucky Film 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.
Learning at scale
– Online learning technologies has now opened space for Lucky Film 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.
Using analytics as competitive advantage
– Lucky Film has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Photography sector. This continuous investment in analytics has enabled Lucky Film to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lucky Film to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Photography industry, but it has also influenced the consumer preferences. Lucky Film can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Lucky Film 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lucky Film in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Photography industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Lucky Film has opened avenues for new revenue streams for the organization in Photography industry. This can help Lucky Film to build a more holistic ecosystem for Lucky Film products in the Photography industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lucky Film can use these opportunities to build new business models that can help the communities that Lucky Film operates in. Secondly it can use opportunities from government spending in Photography sector.
Threats Lucky Film External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Lucky Film are -
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. Lucky Film 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Photography industry are lowering. It can presents Lucky Film with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Photography sector.
Increasing wage structure of Lucky Film
– 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 Lucky Film.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lucky Film in Photography industry. The Photography 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Lucky Film may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Photography sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lucky Film 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 Lucky Film prominent markets.
Regulatory challenges
– Lucky Film 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 Photography industry regulations.
High dependence on third party suppliers
– Lucky Film 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.
Easy access to finance
– Easy access to finance in Photography industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lucky Film can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Lucky Film 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. Lucky Film can take advantage of this fund but it will also bring new competitors in the Photography industry.
Stagnating economy with rate increase
– Lucky Film 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 Photography industry.
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.
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 Lucky Film Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Lucky Film 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 Lucky Film 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 Lucky Film 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 Lucky Film 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 Lucky Film needs to make to build a sustainable competitive advantage.