Anhui Zhongyuan New Materials (603527) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Anhui Zhongyuan New Materials (China)

Based on various researches at Oak Spring University , Anhui Zhongyuan New Materials is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions, technology disruption, etc

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Introduction to SWOT Analysis of Anhui Zhongyuan New Materials

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Anhui Zhongyuan New Materials can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Anhui Zhongyuan New Materials, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Anhui Zhongyuan New Materials 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Anhui Zhongyuan New Materials can be done for the following purposes –
1. Strategic planning of Anhui Zhongyuan New Materials
2. Improving business portfolio management of Anhui Zhongyuan New Materials
3. Assessing feasibility of the new initiative in China
4. Making a Misc. Fabricated Products sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Anhui Zhongyuan New Materials

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Strengths of Anhui Zhongyuan New Materials | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Anhui Zhongyuan New Materials are -

Ability to recruit top talent

– Anhui Zhongyuan New Materials is one of the leading players in the Misc. Fabricated Products 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.

High switching costs

– The high switching costs that Anhui Zhongyuan New Materials 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.

Cross disciplinary teams

– Horizontal connected teams at the Anhui Zhongyuan New Materials 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.

Diverse revenue streams

– Anhui Zhongyuan New Materials is present in almost all the verticals within the Misc. Fabricated Products industry. This has provided Anhui Zhongyuan New Materials 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.

Operational resilience

– The operational resilience strategy of Anhui Zhongyuan New Materials comprises – understanding the underlying the factors in the Misc. Fabricated Products 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.

High brand equity

– Anhui Zhongyuan New Materials has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Anhui Zhongyuan New Materials to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Innovation driven organization

– Anhui Zhongyuan New Materials is one of the most innovative firm in Misc. Fabricated Products sector.

Learning organization

- Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Anhui Zhongyuan New Materials emphasize – knowledge, initiative, and innovation.

Effective Research and Development (R&D)

– Anhui Zhongyuan New Materials has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Anhui Zhongyuan New Materials staying ahead in the Misc. Fabricated Products industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Organizational Resilience of Anhui Zhongyuan New Materials

– The covid-19 pandemic has put organizational resilience at the centre of everthing Anhui Zhongyuan New Materials does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Superior customer experience

– The customer experience strategy of Anhui Zhongyuan New Materials in Misc. Fabricated Products industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

– Suppliers of Anhui Zhongyuan New Materials in the Basic Materials sector have low bargaining power. Anhui Zhongyuan New Materials has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Anhui Zhongyuan New Materials to manage not only supply disruptions but also source products at highly competitive prices.

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Weaknesses of Anhui Zhongyuan New Materials | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Anhui Zhongyuan New Materials are -

High operating costs

– Compare to the competitors, Anhui Zhongyuan New Materials has high operating costs in the Misc. Fabricated Products industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Anhui Zhongyuan New Materials lucrative customers.

Workers concerns about automation

– As automation is fast increasing in the Misc. Fabricated Products industry, Anhui Zhongyuan New Materials 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.

High dependence on Anhui Zhongyuan New Materials ‘s star products

– The top 2 products and services of Anhui Zhongyuan New Materials still accounts for major business revenue. This dependence on star products in Misc. Fabricated Products industry has resulted into insufficient focus on developing new products, even though Anhui Zhongyuan New Materials has relatively successful track record of launching new products.

Skills based hiring in Misc. Fabricated Products industry

– The stress on hiring functional specialists at Anhui Zhongyuan New Materials 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.

Aligning sales with marketing

– From the outside it seems that Anhui Zhongyuan New Materials needs to have more collaboration between its sales team and marketing team. Sales professionals in the Misc. Fabricated Products industry have deep experience in developing customer relationships. Marketing department at Anhui Zhongyuan New Materials can leverage the sales team experience to cultivate customer relationships as Anhui Zhongyuan New Materials is planning to shift buying processes online.

Employees’ less understanding of Anhui Zhongyuan New Materials strategy

– From the outside it seems that the employees of Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials products

– To increase the profitability and margins on the products, Anhui Zhongyuan New Materials needs to provide more differentiated products than what it is currently offering in the marketplace.

Compensation and incentives

– The revenue per employee of Anhui Zhongyuan New Materials is just above the Misc. Fabricated Products 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.

Capital Spending Reduction

– Even during the low interest decade, Anhui Zhongyuan New Materials 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 Misc. Fabricated Products industry using digital technology.

Products dominated business model

– Even though Anhui Zhongyuan New Materials has some of the most successful models in the Misc. Fabricated Products industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Anhui Zhongyuan New Materials should strive to include more intangible value offerings along with its core products and services.

High bargaining power of channel partners in Misc. Fabricated Products industry

– because of the regulatory requirements in China, Anhui Zhongyuan New Materials 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 Misc. Fabricated Products industry.

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Anhui Zhongyuan New Materials Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Anhui Zhongyuan New Materials are -

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Misc. Fabricated Products industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Anhui Zhongyuan New Materials 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. Anhui Zhongyuan New Materials 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.

Learning at scale

– Online learning technologies has now opened space for Anhui Zhongyuan New Materials 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials to hire the very best people irrespective of their geographical location.

Loyalty marketing

– Anhui Zhongyuan New Materials 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.

Use of Bitcoin and other crypto currencies for transactions in Misc. Fabricated Products industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Anhui Zhongyuan New Materials in the Misc. Fabricated Products industry. Now Anhui Zhongyuan New Materials can target international markets with far fewer capital restrictions requirements than the existing system.

Manufacturing automation

– Anhui Zhongyuan New Materials can use the latest technology developments to improve its manufacturing and designing process in Misc. Fabricated Products 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Misc. Fabricated Products industry, but it has also influenced the consumer preferences. Anhui Zhongyuan New Materials can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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. Anhui Zhongyuan New Materials can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Low interest rates

– Even though inflation is raising its head in most developed economies, Anhui Zhongyuan New Materials 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Anhui Zhongyuan New Materials in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Misc. Fabricated Products industry, and it will provide faster access to the consumers.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Anhui Zhongyuan New Materials can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Building a culture of innovation

– managers at Anhui Zhongyuan New Materials 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 Misc. Fabricated Products industry.

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Threats Anhui Zhongyuan New Materials External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Anhui Zhongyuan New Materials are -

Consumer confidence and its impact on Anhui Zhongyuan New Materials 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 Misc. Fabricated Products 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. Anhui Zhongyuan New Materials needs to understand the core reasons impacting the Misc. Fabricated Products industry. This will help it in building a better workplace.

Technology acceleration in Forth Industrial Revolution

– Anhui Zhongyuan New Materials has witnessed rapid integration of technology during Covid-19 in the Misc. Fabricated Products industry. As one of the leading players in the industry, Anhui Zhongyuan New Materials needs to keep up with the evolution of technology in the Misc. Fabricated Products 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.

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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Misc. Fabricated Products industry are lowering. It can presents Anhui Zhongyuan New Materials with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Misc. Fabricated Products sector.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Anhui Zhongyuan New Materials in Misc. Fabricated Products industry. The Misc. Fabricated Products 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.

Increasing wage structure of Anhui Zhongyuan New Materials

– 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 Anhui Zhongyuan New Materials.

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.

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. Anhui Zhongyuan New Materials 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.

High dependence on third party suppliers

– Anhui Zhongyuan New Materials 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.

Shortening product life cycle

– it is one of the major threat that Anhui Zhongyuan New Materials is facing in Misc. Fabricated Products sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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 Anhui Zhongyuan New Materials.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Anhui Zhongyuan New Materials may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Misc. Fabricated Products sector.

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Weighted SWOT Analysis of Anhui Zhongyuan New Materials Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials 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 Anhui Zhongyuan New Materials needs to make to build a sustainable competitive advantage.

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