China Shenhua Energy H (1088) SWOT Analysis / TOWS Matrix / MBA Resources
Coal
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Shenhua Energy H (Hong Kong)
Based on various researches at Oak Spring University , China Shenhua Energy H is operating in a macro-environment that has been destablized by – geopolitical disruptions, increasing energy prices, increasing government debt because of Covid-19 spendings, wage bills are increasing, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models,
banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of China Shenhua Energy H
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Shenhua Energy H can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Shenhua Energy H, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Shenhua Energy H 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 China Shenhua Energy H can be done for the following purposes –
1. Strategic planning of China Shenhua Energy H
2. Improving business portfolio management of China Shenhua Energy H
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Coal sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Shenhua Energy H
Strengths of China Shenhua Energy H | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Shenhua Energy H are -
Digital Transformation in Coal industry
- digital transformation varies from industry to industry. For China Shenhua Energy H digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Shenhua Energy H 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.
Sustainable margins compare to other players in Coal industry
– China Shenhua Energy H has clearly differentiated products in the market place. This has enabled China Shenhua Energy H to fetch slight price premium compare to the competitors in the Coal industry. The sustainable margins have also helped China Shenhua Energy H to invest into research and development (R&D) and innovation.
High brand equity
– China Shenhua Energy H has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled China Shenhua Energy H to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- China Shenhua Energy H 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 China Shenhua Energy H is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Shenhua Energy H emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of China Shenhua Energy H in the Energy sector have low bargaining power. China Shenhua Energy H has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps China Shenhua Energy H to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Coal
– China Shenhua Energy H is one of the leading players in the Coal industry in Hong Kong. Over the years it has not only transformed the business landscape in the Coal industry in Hong Kong but also across the existing markets. The ability to lead change has enabled China Shenhua Energy H in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– China Shenhua Energy H has one of the best training and development program in Energy 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.
Cross disciplinary teams
– Horizontal connected teams at the China Shenhua Energy H 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.
Innovation driven organization
– China Shenhua Energy H is one of the most innovative firm in Coal sector.
Operational resilience
– The operational resilience strategy of China Shenhua Energy H comprises – understanding the underlying the factors in the Coal 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.
Analytics focus
– China Shenhua Energy H 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 Coal industry. The technology infrastructure of Hong Kong 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.
High switching costs
– The high switching costs that China Shenhua Energy H 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 China Shenhua Energy H | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Shenhua Energy H are -
Increasing silos among functional specialists
– The organizational structure of China Shenhua Energy H is dominated by functional specialists. It is not different from other players in the Coal industry, but China Shenhua Energy H needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help China Shenhua Energy H to focus more on services in the Coal industry rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative at China Shenhua Energy H, in the dynamic environment of Coal industry it has struggled to respond to the nimble upstart competition. China Shenhua Energy H has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, China Shenhua Energy H has high operating costs in the Coal industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract China Shenhua Energy H lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, China Shenhua Energy H 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 Coal industry using digital technology.
Skills based hiring in Coal industry
– The stress on hiring functional specialists at China Shenhua Energy H 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.
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 China Shenhua Energy H supply chain. Even after few cautionary changes, China Shenhua Energy H is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China Shenhua Energy H vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee of China Shenhua Energy H is just above the Coal 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.
Employees’ less understanding of China Shenhua Energy H strategy
– From the outside it seems that the employees of China Shenhua Energy H 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.
Low market penetration in new markets
– Outside its home market of Hong Kong, China Shenhua Energy H needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on China Shenhua Energy H ‘s star products
– The top 2 products and services of China Shenhua Energy H still accounts for major business revenue. This dependence on star products in Coal industry has resulted into insufficient focus on developing new products, even though China Shenhua Energy H has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, China Shenhua Energy H is slow explore the new channels of communication. These new channels of communication can help China Shenhua Energy H to provide better information regarding Coal products and services. It can also build an online community to further reach out to potential customers.
China Shenhua Energy H Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Shenhua Energy H are -
Developing new processes and practices
– China Shenhua Energy H can develop new processes and procedures in Coal 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.
Buying journey improvements
– China Shenhua Energy H can improve the customer journey of consumers in the Coal 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, China Shenhua Energy H is facing challenges because of the dominance of functional experts in the organization. China Shenhua Energy H can utilize new technology in the field of Coal industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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. China Shenhua Energy H can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for China Shenhua Energy H in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Coal industry, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Coal industry, but it has also influenced the consumer preferences. China Shenhua Energy H 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 Coal industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Shenhua Energy H in the Coal industry. Now China Shenhua Energy H 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 China Shenhua Energy H 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.
Building a culture of innovation
– managers at China Shenhua Energy H 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 Coal industry.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, China Shenhua Energy H can use these opportunities to build new business models that can help the communities that China Shenhua Energy H operates in. Secondly it can use opportunities from government spending in Coal sector.
Creating value in data economy
– The success of analytics program of China Shenhua Energy H has opened avenues for new revenue streams for the organization in Coal industry. This can help China Shenhua Energy H to build a more holistic ecosystem for China Shenhua Energy H products in the Coal industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– China Shenhua Energy H 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.
Leveraging digital technologies
– China Shenhua Energy H 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.
Threats China Shenhua Energy H External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Shenhua Energy H are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, China Shenhua Energy H may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Coal sector.
Increasing wage structure of China Shenhua Energy H
– 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 China Shenhua Energy H.
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 China Shenhua Energy H.
Regulatory challenges
– China Shenhua Energy H 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 Coal industry regulations.
Technology acceleration in Forth Industrial Revolution
– China Shenhua Energy H has witnessed rapid integration of technology during Covid-19 in the Coal industry. As one of the leading players in the industry, China Shenhua Energy H needs to keep up with the evolution of technology in the Coal 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.
Easy access to finance
– Easy access to finance in Coal industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China Shenhua Energy H can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that China Shenhua Energy H is facing in Coal sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, China Shenhua Energy H 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 China Shenhua Energy H prominent markets.
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. China Shenhua Energy H needs to understand the core reasons impacting the Coal industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– China Shenhua Energy H 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 Coal 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. China Shenhua Energy H will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
High dependence on third party suppliers
– China Shenhua Energy H 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for China Shenhua Energy H in Coal industry. The Coal 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.
Weighted SWOT Analysis of China Shenhua Energy H Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Shenhua Energy H 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 China Shenhua Energy H 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 China Shenhua Energy H 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 China Shenhua Energy H 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 China Shenhua Energy H needs to make to build a sustainable competitive advantage.