China Mengniu Dairy (2319) SWOT Analysis / TOWS Matrix / MBA Resources
Food Processing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Mengniu Dairy (Hong Kong)
Based on various researches at Oak Spring University , China Mengniu Dairy is operating in a macro-environment that has been destablized by – there is backlash against globalization, supply chains are disrupted by pandemic , wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, technology disruption,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of China Mengniu Dairy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Mengniu Dairy can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Mengniu Dairy, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Mengniu Dairy 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 Mengniu Dairy can be done for the following purposes –
1. Strategic planning of China Mengniu Dairy
2. Improving business portfolio management of China Mengniu Dairy
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Mengniu Dairy
Strengths of China Mengniu Dairy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Mengniu Dairy are -
Superior customer experience
– The customer experience strategy of China Mengniu Dairy in Food Processing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in Food Processing industry
- digital transformation varies from industry to industry. For China Mengniu Dairy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Mengniu Dairy has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– China Mengniu Dairy is present in almost all the verticals within the Food Processing industry. This has provided China Mengniu Dairy 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.
Sustainable margins compare to other players in Food Processing industry
– China Mengniu Dairy has clearly differentiated products in the market place. This has enabled China Mengniu Dairy to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped China Mengniu Dairy to invest into research and development (R&D) and innovation.
Learning organization
- China Mengniu Dairy 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 Mengniu Dairy is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Mengniu Dairy emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the China Mengniu Dairy 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.
Analytics focus
– China Mengniu Dairy 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 Food Processing 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.
Operational resilience
– The operational resilience strategy of China Mengniu Dairy comprises – understanding the underlying the factors in the Food Processing 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
– China Mengniu Dairy has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Food Processing industry. Secondly the value chain collaborators of China Mengniu Dairy have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of China Mengniu Dairy
– The covid-19 pandemic has put organizational resilience at the centre of everthing China Mengniu Dairy does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– China Mengniu Dairy has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – China Mengniu Dairy staying ahead in the Food Processing 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
– China Mengniu Dairy has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. China Mengniu Dairy 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 China Mengniu Dairy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Mengniu Dairy are -
High dependence on China Mengniu Dairy ‘s star products
– The top 2 products and services of China Mengniu Dairy still accounts for major business revenue. This dependence on star products in Food Processing industry has resulted into insufficient focus on developing new products, even though China Mengniu Dairy has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee of China Mengniu Dairy is just above the Food Processing 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.
High bargaining power of channel partners in Food Processing industry
– because of the regulatory requirements in Hong Kong, China Mengniu Dairy 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 Food Processing industry.
Workers concerns about automation
– As automation is fast increasing in the Food Processing industry, China Mengniu Dairy 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, China Mengniu Dairy is slow explore the new channels of communication. These new channels of communication can help China Mengniu Dairy to provide better information regarding Food Processing products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that China Mengniu Dairy needs to have more collaboration between its sales team and marketing team. Sales professionals in the Food Processing industry have deep experience in developing customer relationships. Marketing department at China Mengniu Dairy can leverage the sales team experience to cultivate customer relationships as China Mengniu Dairy is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As China Mengniu Dairy is one of the leading players in the Food Processing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Food Processing industry in last five years.
Skills based hiring in Food Processing industry
– The stress on hiring functional specialists at China Mengniu Dairy 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.
Interest costs
– Compare to the competition, China Mengniu Dairy 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.
High cash cycle compare to competitors
China Mengniu Dairy has a high cash cycle compare to other players in the Food Processing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Hong Kong, China Mengniu Dairy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
China Mengniu Dairy Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Mengniu Dairy are -
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 Mengniu Dairy can use these opportunities to build new business models that can help the communities that China Mengniu Dairy operates in. Secondly it can use opportunities from government spending in Food Processing sector.
Leveraging digital technologies
– China Mengniu Dairy 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.
Using analytics as competitive advantage
– China Mengniu Dairy has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled China Mengniu Dairy to build a competitive advantage using analytics. The analytics driven competitive advantage can help China Mengniu Dairy to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for China Mengniu Dairy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Food Processing industry, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of China Mengniu Dairy has opened avenues for new revenue streams for the organization in Food Processing industry. This can help China Mengniu Dairy to build a more holistic ecosystem for China Mengniu Dairy products in the Food Processing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– China Mengniu Dairy can improve the customer journey of consumers in the Food Processing 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for China Mengniu Dairy 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 China Mengniu Dairy to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects China Mengniu Dairy 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 Mengniu Dairy 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, China Mengniu Dairy is facing challenges because of the dominance of functional experts in the organization. China Mengniu Dairy can utilize new technology in the field of Food Processing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Food Processing industry, but it has also influenced the consumer preferences. China Mengniu Dairy can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– China Mengniu Dairy can develop new processes and procedures in Food Processing 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.
Use of Bitcoin and other crypto currencies for transactions in Food Processing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Mengniu Dairy in the Food Processing industry. Now China Mengniu Dairy can target international markets with far fewer capital restrictions requirements than the existing system.
Threats China Mengniu Dairy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Mengniu Dairy are -
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 China Mengniu Dairy in the Food Processing sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– China Mengniu Dairy has witnessed rapid integration of technology during Covid-19 in the Food Processing industry. As one of the leading players in the industry, China Mengniu Dairy needs to keep up with the evolution of technology in the Food Processing 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.
Stagnating economy with rate increase
– China Mengniu Dairy 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 Food Processing industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, China Mengniu Dairy may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Food Processing sector.
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 Mengniu Dairy.
Regulatory challenges
– China Mengniu Dairy 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 Food Processing industry regulations.
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 Mengniu Dairy needs to understand the core reasons impacting the Food Processing 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for China Mengniu Dairy in Food Processing industry. The Food Processing 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.
High dependence on third party suppliers
– China Mengniu Dairy 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.
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 Mengniu Dairy business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Food Processing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China Mengniu Dairy can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents China Mengniu Dairy with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing sector.
Weighted SWOT Analysis of China Mengniu Dairy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Mengniu Dairy 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 Mengniu Dairy 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 Mengniu Dairy 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 Mengniu Dairy 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 Mengniu Dairy needs to make to build a sustainable competitive advantage.