SWOT Analysis / TOWS Matrix for Huaiji Dengyun Auto-parts (China)
Based on various researches at Oak Spring University , Huaiji Dengyun Auto-parts is operating in a macro-environment that has been destablized by – wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, technology disruption, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Huaiji Dengyun Auto-parts
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Huaiji Dengyun Auto-parts can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huaiji Dengyun Auto-parts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts can be done for the following purposes –
1. Strategic planning of Huaiji Dengyun Auto-parts
2. Improving business portfolio management of Huaiji Dengyun Auto-parts
3. Assessing feasibility of the new initiative in China
4. Making a Auto & Truck Parts sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Huaiji Dengyun Auto-parts
Strengths of Huaiji Dengyun Auto-parts | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huaiji Dengyun Auto-parts are -
Cross disciplinary teams
– Horizontal connected teams at the Huaiji Dengyun Auto-parts 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.
Digital Transformation in Auto & Truck Parts industry
- digital transformation varies from industry to industry. For Huaiji Dengyun Auto-parts digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Huaiji Dengyun Auto-parts 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.
Learning organization
- Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Huaiji Dengyun Auto-parts emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Huaiji Dengyun Auto-parts has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Auto & Truck Parts industry. Secondly the value chain collaborators of Huaiji Dengyun Auto-parts have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Huaiji Dengyun Auto-parts is one of the leading players in the Auto & Truck Parts 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)
– Huaiji Dengyun Auto-parts has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Huaiji Dengyun Auto-parts staying ahead in the Auto & Truck Parts industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Huaiji Dengyun Auto-parts is one of the most innovative firm in Auto & Truck Parts sector.
Ability to lead change in Auto & Truck Parts
– Huaiji Dengyun Auto-parts is one of the leading players in the Auto & Truck Parts industry in China. Over the years it has not only transformed the business landscape in the Auto & Truck Parts industry in China but also across the existing markets. The ability to lead change has enabled Huaiji Dengyun Auto-parts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Auto & Truck Parts industry
– Huaiji Dengyun Auto-parts has clearly differentiated products in the market place. This has enabled Huaiji Dengyun Auto-parts to fetch slight price premium compare to the competitors in the Auto & Truck Parts industry. The sustainable margins have also helped Huaiji Dengyun Auto-parts to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Huaiji Dengyun Auto-parts in the Consumer Cyclical sector have low bargaining power. Huaiji Dengyun Auto-parts has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Huaiji Dengyun Auto-parts to manage not only supply disruptions but also source products at highly competitive prices.
Diverse revenue streams
– Huaiji Dengyun Auto-parts is present in almost all the verticals within the Auto & Truck Parts industry. This has provided Huaiji Dengyun Auto-parts a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Huaiji Dengyun Auto-parts are -
High bargaining power of channel partners in Auto & Truck Parts industry
– because of the regulatory requirements in China, Huaiji Dengyun Auto-parts 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 Auto & Truck Parts industry.
Need for greater diversity
– Huaiji Dengyun Auto-parts 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Huaiji Dengyun Auto-parts is slow explore the new channels of communication. These new channels of communication can help Huaiji Dengyun Auto-parts to provide better information regarding Auto & Truck Parts products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Huaiji Dengyun Auto-parts is dominated by functional specialists. It is not different from other players in the Auto & Truck Parts industry, but Huaiji Dengyun Auto-parts needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Huaiji Dengyun Auto-parts to focus more on services in the Auto & Truck Parts industry rather than just following the product oriented approach.
Employees’ less understanding of Huaiji Dengyun Auto-parts strategy
– From the outside it seems that the employees of Huaiji Dengyun Auto-parts don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on Huaiji Dengyun Auto-parts ‘s star products
– The top 2 products and services of Huaiji Dengyun Auto-parts still accounts for major business revenue. This dependence on star products in Auto & Truck Parts industry has resulted into insufficient focus on developing new products, even though Huaiji Dengyun Auto-parts has relatively successful track record of launching new products.
High cash cycle compare to competitors
Huaiji Dengyun Auto-parts has a high cash cycle compare to other players in the Auto & Truck Parts industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Auto & Truck Parts industry
– The stress on hiring functional specialists at Huaiji Dengyun Auto-parts 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.
Slow to strategic competitive environment developments
– As Huaiji Dengyun Auto-parts is one of the leading players in the Auto & Truck Parts industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Auto & Truck Parts industry in last five years.
Aligning sales with marketing
– From the outside it seems that Huaiji Dengyun Auto-parts needs to have more collaboration between its sales team and marketing team. Sales professionals in the Auto & Truck Parts industry have deep experience in developing customer relationships. Marketing department at Huaiji Dengyun Auto-parts can leverage the sales team experience to cultivate customer relationships as Huaiji Dengyun Auto-parts is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee of Huaiji Dengyun Auto-parts is just above the Auto & Truck Parts 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.
Huaiji Dengyun Auto-parts Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Huaiji Dengyun Auto-parts are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Huaiji Dengyun Auto-parts in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Auto & Truck Parts industry, and it will provide faster access to the consumers.
Loyalty marketing
– Huaiji Dengyun Auto-parts 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.
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 Huaiji Dengyun Auto-parts 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.
Using analytics as competitive advantage
– Huaiji Dengyun Auto-parts has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Auto & Truck Parts sector. This continuous investment in analytics has enabled Huaiji Dengyun Auto-parts to build a competitive advantage using analytics. The analytics driven competitive advantage can help Huaiji Dengyun Auto-parts to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Huaiji Dengyun Auto-parts can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Huaiji Dengyun Auto-parts can use these opportunities to build new business models that can help the communities that Huaiji Dengyun Auto-parts operates in. Secondly it can use opportunities from government spending in Auto & Truck Parts sector.
Building a culture of innovation
– managers at Huaiji Dengyun Auto-parts 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 Auto & Truck Parts industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions in Auto & Truck Parts industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Huaiji Dengyun Auto-parts in the Auto & Truck Parts industry. Now Huaiji Dengyun Auto-parts can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Huaiji Dengyun Auto-parts 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.
Developing new processes and practices
– Huaiji Dengyun Auto-parts can develop new processes and procedures in Auto & Truck Parts 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Huaiji Dengyun Auto-parts is facing challenges because of the dominance of functional experts in the organization. Huaiji Dengyun Auto-parts can utilize new technology in the field of Auto & Truck Parts industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Huaiji Dengyun Auto-parts External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Huaiji Dengyun Auto-parts are -
Consumer confidence and its impact on Huaiji Dengyun Auto-parts 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 Auto & Truck Parts 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. Huaiji Dengyun Auto-parts needs to understand the core reasons impacting the Auto & Truck Parts industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huaiji Dengyun Auto-parts in Auto & Truck Parts industry. The Auto & Truck Parts 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Auto & Truck Parts industry are lowering. It can presents Huaiji Dengyun Auto-parts with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Auto & Truck Parts sector.
Increasing wage structure of Huaiji Dengyun Auto-parts
– 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 Huaiji Dengyun Auto-parts.
Stagnating economy with rate increase
– Huaiji Dengyun Auto-parts 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 Auto & Truck Parts industry.
Environmental challenges
– Huaiji Dengyun Auto-parts 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. Huaiji Dengyun Auto-parts can take advantage of this fund but it will also bring new competitors in the Auto & Truck Parts 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. Huaiji Dengyun Auto-parts 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.
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 Huaiji Dengyun Auto-parts business can come under increasing regulations regarding data privacy, data security, etc.
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.
High dependence on third party suppliers
– Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts is facing in Auto & Truck Parts sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Huaiji Dengyun Auto-parts Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts needs to make to build a sustainable competitive advantage.