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 – competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, there is backlash against globalization, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, wage bills are increasing,
increasing energy prices, geopolitical disruptions, 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 -
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.
Operational resilience
– The operational resilience strategy of Huaiji Dengyun Auto-parts comprises – understanding the underlying the factors in the Auto & Truck Parts 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.
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.
Superior customer experience
– The customer experience strategy of Huaiji Dengyun Auto-parts in Auto & Truck Parts industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Huaiji Dengyun Auto-parts has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Huaiji Dengyun Auto-parts to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Analytics focus
– Huaiji Dengyun Auto-parts 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 Auto & Truck Parts 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.
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.
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.
Innovation driven organization
– Huaiji Dengyun Auto-parts is one of the most innovative firm in Auto & Truck Parts sector.
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.
Successful track record of launching new products
– Huaiji Dengyun Auto-parts has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Huaiji Dengyun Auto-parts has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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 operating costs
– Compare to the competitors, Huaiji Dengyun Auto-parts has high operating costs in the Auto & Truck Parts industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Huaiji Dengyun Auto-parts lucrative customers.
Lack of clear differentiation of Huaiji Dengyun Auto-parts products
– To increase the profitability and margins on the products, Huaiji Dengyun Auto-parts needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Interest costs
– Compare to the competition, Huaiji Dengyun Auto-parts has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the Auto & Truck Parts industry, Huaiji Dengyun Auto-parts 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.
Products dominated business model
– Even though Huaiji Dengyun Auto-parts has some of the most successful models in the Auto & Truck Parts industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Huaiji Dengyun Auto-parts should strive to include more intangible value offerings along with its core products and services.
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 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 Huaiji Dengyun Auto-parts supply chain. Even after few cautionary changes, Huaiji Dengyun Auto-parts is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Huaiji Dengyun Auto-parts vulnerable to further global disruptions in South East Asia.
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 -
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.
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.
Buying journey improvements
– Huaiji Dengyun Auto-parts can improve the customer journey of consumers in the Auto & Truck Parts 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.
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.
Manufacturing automation
– Huaiji Dengyun Auto-parts can use the latest technology developments to improve its manufacturing and designing process in Auto & Truck Parts 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Auto & Truck Parts industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Huaiji Dengyun Auto-parts 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. Huaiji Dengyun Auto-parts 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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Huaiji Dengyun Auto-parts can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Huaiji Dengyun Auto-parts 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.
Leveraging digital technologies
– Huaiji Dengyun Auto-parts 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.
Creating value in data economy
– The success of analytics program of Huaiji Dengyun Auto-parts has opened avenues for new revenue streams for the organization in Auto & Truck Parts industry. This can help Huaiji Dengyun Auto-parts to build a more holistic ecosystem for Huaiji Dengyun Auto-parts products in the Auto & Truck Parts industry by providing – data insight services, data privacy related products, data based consulting services, 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 -
Easy access to finance
– Easy access to finance in Auto & Truck Parts industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Huaiji Dengyun Auto-parts can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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 Huaiji Dengyun Auto-parts in the Auto & Truck Parts sector and impact the bottomline of the organization.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Huaiji Dengyun Auto-parts has witnessed rapid integration of technology during Covid-19 in the Auto & Truck Parts industry. As one of the leading players in the industry, Huaiji Dengyun Auto-parts needs to keep up with the evolution of technology in the Auto & Truck Parts 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Huaiji Dengyun Auto-parts 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 Huaiji Dengyun Auto-parts prominent markets.
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.
Regulatory challenges
– Huaiji Dengyun Auto-parts 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 Auto & Truck Parts industry regulations.
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.
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.
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.
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.
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.
