Based on various researches at Oak Spring University , Beijing Hengtong Innovation Luxwood is operating in a macro-environment that has been destablized by – increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, there is increasing trade war between United States & China, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Beijing Hengtong Innovation Luxwood
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Beijing Hengtong Innovation Luxwood can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Beijing Hengtong Innovation Luxwood, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood can be done for the following purposes –
1. Strategic planning of Beijing Hengtong Innovation Luxwood
2. Improving business portfolio management of Beijing Hengtong Innovation Luxwood
3. Assessing feasibility of the new initiative in China
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Beijing Hengtong Innovation Luxwood
Strengths of Beijing Hengtong Innovation Luxwood | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Beijing Hengtong Innovation Luxwood are -
Training and development
– Beijing Hengtong Innovation Luxwood has one of the best training and development program in Capital Goods 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.
Sustainable margins compare to other players in Construction Services industry
– Beijing Hengtong Innovation Luxwood has clearly differentiated products in the market place. This has enabled Beijing Hengtong Innovation Luxwood to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped Beijing Hengtong Innovation Luxwood to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Beijing Hengtong Innovation Luxwood is one of the leading players in the Construction Services 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.
Digital Transformation in Construction Services industry
- digital transformation varies from industry to industry. For Beijing Hengtong Innovation Luxwood digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Beijing Hengtong Innovation Luxwood 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.
Diverse revenue streams
– Beijing Hengtong Innovation Luxwood is present in almost all the verticals within the Construction Services industry. This has provided Beijing Hengtong Innovation Luxwood 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.
Superior customer experience
– The customer experience strategy of Beijing Hengtong Innovation Luxwood in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Beijing Hengtong Innovation Luxwood is one of the most innovative firm in Construction Services sector.
Learning organization
- Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Beijing Hengtong Innovation Luxwood emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of Beijing Hengtong Innovation Luxwood comprises – understanding the underlying the factors in the Construction Services 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 Beijing Hengtong Innovation Luxwood 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.
Strong track record of project management in the Construction Services industry
– Beijing Hengtong Innovation Luxwood is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Beijing Hengtong Innovation Luxwood 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 Construction Services 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.
Weaknesses of Beijing Hengtong Innovation Luxwood | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Beijing Hengtong Innovation Luxwood are -
High bargaining power of channel partners in Construction Services industry
– because of the regulatory requirements in China, Beijing Hengtong Innovation Luxwood 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 Construction Services industry.
Ability to respond to the competition
– As the decision making is very deliberative at Beijing Hengtong Innovation Luxwood, in the dynamic environment of Construction Services industry it has struggled to respond to the nimble upstart competition. Beijing Hengtong Innovation Luxwood has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Beijing Hengtong Innovation Luxwood 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 Construction Services industry using digital technology.
High dependence on Beijing Hengtong Innovation Luxwood ‘s star products
– The top 2 products and services of Beijing Hengtong Innovation Luxwood still accounts for major business revenue. This dependence on star products in Construction Services industry has resulted into insufficient focus on developing new products, even though Beijing Hengtong Innovation Luxwood has relatively successful track record of launching new products.
High cash cycle compare to competitors
Beijing Hengtong Innovation Luxwood has a high cash cycle compare to other players in the Construction Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Increasing silos among functional specialists
– The organizational structure of Beijing Hengtong Innovation Luxwood is dominated by functional specialists. It is not different from other players in the Construction Services industry, but Beijing Hengtong Innovation Luxwood needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Beijing Hengtong Innovation Luxwood to focus more on services in the Construction Services industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Beijing Hengtong Innovation Luxwood is just above the Construction Services 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 decision making process
– As mentioned earlier in the report, Beijing Hengtong Innovation Luxwood has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction Services industry over the last five years. Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood has some of the most successful models in the Construction Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Beijing Hengtong Innovation Luxwood should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Beijing Hengtong Innovation Luxwood 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.
High operating costs
– Compare to the competitors, Beijing Hengtong Innovation Luxwood has high operating costs in the Construction Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Beijing Hengtong Innovation Luxwood lucrative customers.
Beijing Hengtong Innovation Luxwood Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Beijing Hengtong Innovation Luxwood are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Beijing Hengtong Innovation Luxwood is facing challenges because of the dominance of functional experts in the organization. Beijing Hengtong Innovation Luxwood can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Building a culture of innovation
– managers at Beijing Hengtong Innovation Luxwood 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 Construction Services industry.
Use of Bitcoin and other crypto currencies for transactions in Construction Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Beijing Hengtong Innovation Luxwood in the Construction Services industry. Now Beijing Hengtong Innovation Luxwood can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Beijing Hengtong Innovation Luxwood can use the latest technology developments to improve its manufacturing and designing process in Construction Services 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Beijing Hengtong Innovation Luxwood can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Beijing Hengtong Innovation Luxwood 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Beijing Hengtong Innovation Luxwood 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. Beijing Hengtong Innovation Luxwood 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Beijing Hengtong Innovation Luxwood in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Construction Services industry, and it will provide faster access to the consumers.
Loyalty marketing
– Beijing Hengtong Innovation Luxwood 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Beijing Hengtong Innovation Luxwood can improve the customer journey of consumers in the Construction Services 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.
Developing new processes and practices
– Beijing Hengtong Innovation Luxwood can develop new processes and procedures in Construction Services 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.
Threats Beijing Hengtong Innovation Luxwood External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Beijing Hengtong Innovation Luxwood are -
Easy access to finance
– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction Services industry are lowering. It can presents Beijing Hengtong Innovation Luxwood with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction Services sector.
Increasing wage structure of Beijing Hengtong Innovation Luxwood
– 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 Beijing Hengtong Innovation Luxwood.
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. Beijing Hengtong Innovation Luxwood 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.
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.
Shortening product life cycle
– it is one of the major threat that Beijing Hengtong Innovation Luxwood is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Beijing Hengtong Innovation Luxwood 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 Construction Services industry regulations.
Technology acceleration in Forth Industrial Revolution
– Beijing Hengtong Innovation Luxwood has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, Beijing Hengtong Innovation Luxwood needs to keep up with the evolution of technology in the Construction Services 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.
Consumer confidence and its impact on Beijing Hengtong Innovation Luxwood 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 Construction Services industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood prominent markets.
Stagnating economy with rate increase
– Beijing Hengtong Innovation Luxwood 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 Construction Services industry.
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 Beijing Hengtong Innovation Luxwood business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Beijing Hengtong Innovation Luxwood Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood 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 Beijing Hengtong Innovation Luxwood needs to make to build a sustainable competitive advantage.
