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 – supply chains are disrupted by pandemic , there is backlash against globalization, geopolitical disruptions, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, 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 -
Innovation driven organization
– China Shenhua Energy H is one of the most innovative firm in Coal sector.
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.
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.
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.
Ability to recruit top talent
– China Shenhua Energy H is one of the leading players in the Coal industry in Hong Kong. It is in a position to attract the best talent available in Hong Kong. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Superior customer experience
– The customer experience strategy of China Shenhua Energy H in Coal industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Organizational Resilience of China Shenhua Energy H
– The covid-19 pandemic has put organizational resilience at the centre of everthing China Shenhua Energy H does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
High cash cycle compare to competitors
China Shenhua Energy H has a high cash cycle compare to other players in the Coal industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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.
Workers concerns about automation
– As automation is fast increasing in the Coal industry, China Shenhua Energy H 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.
Lack of clear differentiation of China Shenhua Energy H products
– To increase the profitability and margins on the products, China Shenhua Energy H needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– From the 10K / annual statement of China Shenhua Energy H, it seems that company is thinking out the frontier risks that can impact Coal industry. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
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 -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Coal industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. China Shenhua Energy H 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. China Shenhua Energy H 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, China Shenhua Energy H 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 China Shenhua Energy H to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
Manufacturing automation
– China Shenhua Energy H can use the latest technology developments to improve its manufacturing and designing process in Coal 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.
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.
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.
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.
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.
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 China Shenhua Energy H 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects China Shenhua Energy H can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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 -
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.
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.
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.
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.
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.
Consumer confidence and its impact on China Shenhua Energy H 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 Coal industry and other sectors.
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.
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.
Environmental challenges
– China Shenhua Energy H 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. China Shenhua Energy H can take advantage of this fund but it will also bring new competitors in the Coal industry.
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.
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.
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.
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 China Shenhua Energy H business can come under increasing regulations regarding data privacy, data security, etc.
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.
