SWOT Analysis / TOWS Matrix for A-Zenith Furniture (China)
Based on various researches at Oak Spring University , A-Zenith Furniture is operating in a macro-environment that has been destablized by – technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing commodity prices, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of A-Zenith Furniture
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that A-Zenith Furniture can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the A-Zenith Furniture, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which A-Zenith Furniture 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 A-Zenith Furniture can be done for the following purposes –
1. Strategic planning of A-Zenith Furniture
2. Improving business portfolio management of A-Zenith Furniture
3. Assessing feasibility of the new initiative in China
4. Making a Furniture & Fixtures sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of A-Zenith Furniture
Strengths of A-Zenith Furniture | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of A-Zenith Furniture are -
Cross disciplinary teams
– Horizontal connected teams at the A-Zenith Furniture 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.
Highly skilled collaborators
– A-Zenith Furniture has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Furniture & Fixtures industry. Secondly the value chain collaborators of A-Zenith Furniture have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– A-Zenith Furniture is one of the most innovative firm in Furniture & Fixtures sector.
High switching costs
– The high switching costs that A-Zenith Furniture 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.
High brand equity
– A-Zenith Furniture has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled A-Zenith Furniture to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- A-Zenith Furniture 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 A-Zenith Furniture is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at A-Zenith Furniture emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Furniture & Fixtures industry
– A-Zenith Furniture has clearly differentiated products in the market place. This has enabled A-Zenith Furniture to fetch slight price premium compare to the competitors in the Furniture & Fixtures industry. The sustainable margins have also helped A-Zenith Furniture to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of A-Zenith Furniture in the Consumer Cyclical sector have low bargaining power. A-Zenith Furniture has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps A-Zenith Furniture to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– A-Zenith Furniture is present in almost all the verticals within the Furniture & Fixtures industry. This has provided A-Zenith Furniture 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 recruit top talent
– A-Zenith Furniture is one of the leading players in the Furniture & Fixtures 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.
Effective Research and Development (R&D)
– A-Zenith Furniture has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – A-Zenith Furniture staying ahead in the Furniture & Fixtures industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of A-Zenith Furniture in Furniture & Fixtures industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses of A-Zenith Furniture | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of A-Zenith Furniture are -
High operating costs
– Compare to the competitors, A-Zenith Furniture has high operating costs in the Furniture & Fixtures industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract A-Zenith Furniture lucrative customers.
Slow decision making process
– As mentioned earlier in the report, A-Zenith Furniture has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Furniture & Fixtures industry over the last five years. A-Zenith Furniture 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.
Capital Spending Reduction
– Even during the low interest decade, A-Zenith Furniture 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 Furniture & Fixtures industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, A-Zenith Furniture is slow explore the new channels of communication. These new channels of communication can help A-Zenith Furniture to provide better information regarding Furniture & Fixtures products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– A-Zenith Furniture 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.
Lack of clear differentiation of A-Zenith Furniture products
– To increase the profitability and margins on the products, A-Zenith Furniture 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 A-Zenith Furniture, it seems that company is thinking out the frontier risks that can impact Furniture & Fixtures 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 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 A-Zenith Furniture supply chain. Even after few cautionary changes, A-Zenith Furniture is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left A-Zenith Furniture vulnerable to further global disruptions in South East Asia.
Skills based hiring in Furniture & Fixtures industry
– The stress on hiring functional specialists at A-Zenith Furniture has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on A-Zenith Furniture ‘s star products
– The top 2 products and services of A-Zenith Furniture still accounts for major business revenue. This dependence on star products in Furniture & Fixtures industry has resulted into insufficient focus on developing new products, even though A-Zenith Furniture has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, A-Zenith Furniture has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
A-Zenith Furniture Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of A-Zenith Furniture are -
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 A-Zenith Furniture 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for A-Zenith Furniture in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Furniture & Fixtures industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of A-Zenith Furniture has opened avenues for new revenue streams for the organization in Furniture & Fixtures industry. This can help A-Zenith Furniture to build a more holistic ecosystem for A-Zenith Furniture products in the Furniture & Fixtures industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– A-Zenith Furniture has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Furniture & Fixtures sector. This continuous investment in analytics has enabled A-Zenith Furniture to build a competitive advantage using analytics. The analytics driven competitive advantage can help A-Zenith Furniture 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, A-Zenith Furniture can use these opportunities to build new business models that can help the communities that A-Zenith Furniture operates in. Secondly it can use opportunities from government spending in Furniture & Fixtures sector.
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. A-Zenith Furniture can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– A-Zenith Furniture can use the latest technology developments to improve its manufacturing and designing process in Furniture & Fixtures 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
– A-Zenith Furniture 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.
Building a culture of innovation
– managers at A-Zenith Furniture 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 Furniture & Fixtures industry.
Buying journey improvements
– A-Zenith Furniture can improve the customer journey of consumers in the Furniture & Fixtures industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for A-Zenith Furniture 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 A-Zenith Furniture to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, A-Zenith Furniture is facing challenges because of the dominance of functional experts in the organization. A-Zenith Furniture can utilize new technology in the field of Furniture & Fixtures industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help A-Zenith Furniture to increase its market reach. A-Zenith Furniture 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 A-Zenith Furniture External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of A-Zenith Furniture are -
Environmental challenges
– A-Zenith Furniture 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. A-Zenith Furniture can take advantage of this fund but it will also bring new competitors in the Furniture & Fixtures industry.
Technology acceleration in Forth Industrial Revolution
– A-Zenith Furniture has witnessed rapid integration of technology during Covid-19 in the Furniture & Fixtures industry. As one of the leading players in the industry, A-Zenith Furniture needs to keep up with the evolution of technology in the Furniture & Fixtures 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.
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.
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 A-Zenith Furniture business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Furniture & Fixtures industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. A-Zenith Furniture can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– A-Zenith Furniture 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for A-Zenith Furniture in Furniture & Fixtures industry. The Furniture & Fixtures 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, A-Zenith Furniture may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Furniture & Fixtures sector.
Regulatory challenges
– A-Zenith Furniture 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 Furniture & Fixtures industry regulations.
Shortening product life cycle
– it is one of the major threat that A-Zenith Furniture is facing in Furniture & Fixtures sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on A-Zenith Furniture 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 Furniture & Fixtures industry and other sectors.
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. A-Zenith Furniture needs to understand the core reasons impacting the Furniture & Fixtures industry. This will help it in building a better workplace.
Weighted SWOT Analysis of A-Zenith Furniture Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at A-Zenith Furniture 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 A-Zenith Furniture 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 A-Zenith Furniture 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 A-Zenith Furniture 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 A-Zenith Furniture needs to make to build a sustainable competitive advantage.