Aeolus Tyre (600469) SWOT Analysis / TOWS Matrix / MBA Resources
Tires
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Aeolus Tyre (China)
Based on various researches at Oak Spring University , Aeolus Tyre is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, supply chains are disrupted by pandemic , technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%,
wage bills are increasing, increasing energy prices, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Aeolus Tyre can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aeolus Tyre, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aeolus Tyre 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 Aeolus Tyre can be done for the following purposes –
1. Strategic planning of Aeolus Tyre
2. Improving business portfolio management of Aeolus Tyre
3. Assessing feasibility of the new initiative in China
4. Making a Tires sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Aeolus Tyre
Strengths of Aeolus Tyre | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aeolus Tyre are -
Organizational Resilience of Aeolus Tyre
– The covid-19 pandemic has put organizational resilience at the centre of everthing Aeolus Tyre does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Aeolus Tyre in the Consumer Cyclical sector have low bargaining power. Aeolus Tyre has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Aeolus Tyre to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Aeolus Tyre 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.
High brand equity
– Aeolus Tyre has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aeolus Tyre to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Tires
– Aeolus Tyre is one of the leading players in the Tires industry in China. Over the years it has not only transformed the business landscape in the Tires industry in China but also across the existing markets. The ability to lead change has enabled Aeolus Tyre in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Ability to recruit top talent
– Aeolus Tyre is one of the leading players in the Tires 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.
Highly skilled collaborators
– Aeolus Tyre has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Tires industry. Secondly the value chain collaborators of Aeolus Tyre have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Aeolus Tyre is present in almost all the verticals within the Tires industry. This has provided Aeolus Tyre 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.
Training and development
– Aeolus Tyre has one of the best training and development program in Consumer Cyclical 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.
Digital Transformation in Tires industry
- digital transformation varies from industry to industry. For Aeolus Tyre digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Aeolus Tyre 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.
Operational resilience
– The operational resilience strategy of Aeolus Tyre comprises – understanding the underlying the factors in the Tires 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 switching costs
– The high switching costs that Aeolus Tyre 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 Aeolus Tyre | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Aeolus Tyre are -
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 Aeolus Tyre supply chain. Even after few cautionary changes, Aeolus Tyre is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Aeolus Tyre vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Aeolus Tyre is slow explore the new channels of communication. These new channels of communication can help Aeolus Tyre to provide better information regarding Tires 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, Aeolus Tyre needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– From the 10K / annual statement of Aeolus Tyre, it seems that company is thinking out the frontier risks that can impact Tires 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 Aeolus Tyre ‘s star products
– The top 2 products and services of Aeolus Tyre still accounts for major business revenue. This dependence on star products in Tires industry has resulted into insufficient focus on developing new products, even though Aeolus Tyre has relatively successful track record of launching new products.
Lack of clear differentiation of Aeolus Tyre products
– To increase the profitability and margins on the products, Aeolus Tyre needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Aeolus Tyre is one of the leading players in the Tires industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Tires industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Aeolus Tyre has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Tires industry over the last five years. Aeolus Tyre 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.
High operating costs
– Compare to the competitors, Aeolus Tyre has high operating costs in the Tires industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Aeolus Tyre lucrative customers.
Products dominated business model
– Even though Aeolus Tyre has some of the most successful models in the Tires industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Aeolus Tyre should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– From the outside it seems that Aeolus Tyre needs to have more collaboration between its sales team and marketing team. Sales professionals in the Tires industry have deep experience in developing customer relationships. Marketing department at Aeolus Tyre can leverage the sales team experience to cultivate customer relationships as Aeolus Tyre is planning to shift buying processes online.
Aeolus Tyre Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Aeolus Tyre are -
Using analytics as competitive advantage
– Aeolus Tyre has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Tires sector. This continuous investment in analytics has enabled Aeolus Tyre to build a competitive advantage using analytics. The analytics driven competitive advantage can help Aeolus Tyre to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Aeolus Tyre 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Aeolus Tyre can use these opportunities to build new business models that can help the communities that Aeolus Tyre operates in. Secondly it can use opportunities from government spending in Tires sector.
Building a culture of innovation
– managers at Aeolus Tyre 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 Tires industry.
Leveraging digital technologies
– Aeolus Tyre 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.
Better consumer reach
– The expansion of the 5G network will help Aeolus Tyre to increase its market reach. Aeolus Tyre 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.
Creating value in data economy
– The success of analytics program of Aeolus Tyre has opened avenues for new revenue streams for the organization in Tires industry. This can help Aeolus Tyre to build a more holistic ecosystem for Aeolus Tyre products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Tires industry, but it has also influenced the consumer preferences. Aeolus Tyre can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Use of Bitcoin and other crypto currencies for transactions in Tires industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Aeolus Tyre in the Tires industry. Now Aeolus Tyre can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Aeolus Tyre 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.
Developing new processes and practices
– Aeolus Tyre can develop new processes and procedures in Tires 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.
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. Aeolus Tyre can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aeolus Tyre can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Aeolus Tyre External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Aeolus Tyre are -
Environmental challenges
– Aeolus Tyre 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. Aeolus Tyre can take advantage of this fund but it will also bring new competitors in the Tires industry.
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. Aeolus Tyre 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.
Easy access to finance
– Easy access to finance in Tires industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Aeolus Tyre can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Aeolus Tyre.
Shortening product life cycle
– it is one of the major threat that Aeolus Tyre is facing in Tires sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aeolus Tyre in Tires industry. The Tires 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 Aeolus Tyre 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 Tires industry and other sectors.
Stagnating economy with rate increase
– Aeolus Tyre 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 Tires industry.
Increasing wage structure of Aeolus Tyre
– 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 Aeolus Tyre.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Aeolus Tyre may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Tires sector.
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 Aeolus Tyre in the Tires sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Aeolus Tyre has witnessed rapid integration of technology during Covid-19 in the Tires industry. As one of the leading players in the industry, Aeolus Tyre needs to keep up with the evolution of technology in the Tires 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.
Regulatory challenges
– Aeolus Tyre 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 Tires industry regulations.
Weighted SWOT Analysis of Aeolus Tyre Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Aeolus Tyre 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 Aeolus Tyre 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 Aeolus Tyre 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 Aeolus Tyre 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 Aeolus Tyre needs to make to build a sustainable competitive advantage.