SWOT Analysis / TOWS Matrix for Hengtong Logistics (China)
Based on various researches at Oak Spring University , Hengtong Logistics is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, challanges to central banks by blockchain based private currencies,
there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Hengtong Logistics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hengtong Logistics can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hengtong Logistics, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hengtong Logistics 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 Hengtong Logistics can be done for the following purposes –
1. Strategic planning of Hengtong Logistics
2. Improving business portfolio management of Hengtong Logistics
3. Assessing feasibility of the new initiative in China
4. Making a Trucking sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hengtong Logistics
Strengths of Hengtong Logistics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hengtong Logistics are -
Successful track record of launching new products
– Hengtong Logistics has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hengtong Logistics 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.
Diverse revenue streams
– Hengtong Logistics is present in almost all the verticals within the Trucking industry. This has provided Hengtong Logistics 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.
High brand equity
– Hengtong Logistics has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hengtong Logistics to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Hengtong Logistics 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 Trucking industry
– Hengtong Logistics is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Hengtong Logistics in Trucking industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Hengtong Logistics in the Transportation sector have low bargaining power. Hengtong Logistics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hengtong Logistics to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Hengtong Logistics 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 Trucking 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.
Training and development
– Hengtong Logistics has one of the best training and development program in Transportation 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.
Ability to recruit top talent
– Hengtong Logistics is one of the leading players in the Trucking 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.
Ability to lead change in Trucking
– Hengtong Logistics is one of the leading players in the Trucking industry in China. Over the years it has not only transformed the business landscape in the Trucking industry in China but also across the existing markets. The ability to lead change has enabled Hengtong Logistics in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Trucking industry
- digital transformation varies from industry to industry. For Hengtong Logistics digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hengtong Logistics 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.
Weaknesses of Hengtong Logistics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hengtong Logistics are -
Capital Spending Reduction
– Even during the low interest decade, Hengtong Logistics 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 Trucking industry using digital technology.
Lack of clear differentiation of Hengtong Logistics products
– To increase the profitability and margins on the products, Hengtong Logistics needs to provide more differentiated products than what it is currently offering in the marketplace.
High bargaining power of channel partners in Trucking industry
– because of the regulatory requirements in China, Hengtong Logistics 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 Trucking industry.
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 Hengtong Logistics supply chain. Even after few cautionary changes, Hengtong Logistics is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hengtong Logistics vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Hengtong Logistics 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.
Employees’ less understanding of Hengtong Logistics strategy
– From the outside it seems that the employees of Hengtong Logistics 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.
High cash cycle compare to competitors
Hengtong Logistics has a high cash cycle compare to other players in the Trucking industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Workers concerns about automation
– As automation is fast increasing in the Trucking industry, Hengtong Logistics 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hengtong Logistics is slow explore the new channels of communication. These new channels of communication can help Hengtong Logistics to provide better information regarding Trucking products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of China, Hengtong Logistics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Hengtong Logistics, in the dynamic environment of Trucking industry it has struggled to respond to the nimble upstart competition. Hengtong Logistics has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Hengtong Logistics Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Hengtong Logistics are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Trucking industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hengtong Logistics 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. Hengtong Logistics 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.
Creating value in data economy
– The success of analytics program of Hengtong Logistics has opened avenues for new revenue streams for the organization in Trucking industry. This can help Hengtong Logistics to build a more holistic ecosystem for Hengtong Logistics products in the Trucking industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hengtong Logistics in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Trucking industry, and it will provide faster access to the consumers.
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. Hengtong Logistics can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hengtong Logistics is facing challenges because of the dominance of functional experts in the organization. Hengtong Logistics can utilize new technology in the field of Trucking industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hengtong Logistics 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.
Developing new processes and practices
– Hengtong Logistics can develop new processes and procedures in Trucking 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Trucking industry, but it has also influenced the consumer preferences. Hengtong Logistics can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hengtong Logistics 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 Hengtong Logistics to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Hengtong Logistics can use the latest technology developments to improve its manufacturing and designing process in Trucking 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.
Leveraging digital technologies
– Hengtong Logistics 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.
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 Hengtong Logistics 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hengtong Logistics 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 Hengtong Logistics to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Hengtong Logistics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Hengtong Logistics are -
Increasing wage structure of Hengtong Logistics
– 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 Hengtong Logistics.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Trucking industry are lowering. It can presents Hengtong Logistics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Trucking sector.
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 Hengtong Logistics.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hengtong Logistics in Trucking industry. The Trucking 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.
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 Hengtong Logistics in the Trucking sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Hengtong Logistics may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Trucking sector.
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. Hengtong Logistics needs to understand the core reasons impacting the Trucking industry. This will help it in building a better workplace.
Environmental challenges
– Hengtong Logistics 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. Hengtong Logistics can take advantage of this fund but it will also bring new competitors in the Trucking industry.
Regulatory challenges
– Hengtong Logistics 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 Trucking industry regulations.
Technology acceleration in Forth Industrial Revolution
– Hengtong Logistics has witnessed rapid integration of technology during Covid-19 in the Trucking industry. As one of the leading players in the industry, Hengtong Logistics needs to keep up with the evolution of technology in the Trucking 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hengtong Logistics 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 Hengtong Logistics prominent markets.
Stagnating economy with rate increase
– Hengtong Logistics 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 Trucking industry.
Weighted SWOT Analysis of Hengtong Logistics Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hengtong Logistics 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 Hengtong Logistics 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 Hengtong Logistics 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 Hengtong Logistics 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 Hengtong Logistics needs to make to build a sustainable competitive advantage.
