China Hongqiao (1378) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for China Hongqiao (Hong Kong)

Based on various researches at Oak Spring University , China Hongqiao is operating in a macro-environment that has been destablized by – technology disruption, increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , increasing commodity prices, increasing transportation and logistics costs, geopolitical disruptions, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, etc

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Introduction to SWOT Analysis of China Hongqiao

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Hongqiao can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Hongqiao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Hongqiao 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of China Hongqiao can be done for the following purposes –
1. Strategic planning of China Hongqiao
2. Improving business portfolio management of China Hongqiao
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Metal Mining sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Hongqiao

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Strengths of China Hongqiao | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of China Hongqiao are -

Organizational Resilience of China Hongqiao

– The covid-19 pandemic has put organizational resilience at the centre of everthing China Hongqiao does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Training and development

– China Hongqiao has one of the best training and development program in Basic Materials 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.

Strong track record of project management in the Metal Mining industry

– China Hongqiao is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Ability to recruit top talent

– China Hongqiao is one of the leading players in the Metal Mining 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.

Diverse revenue streams

– China Hongqiao is present in almost all the verticals within the Metal Mining industry. This has provided China Hongqiao 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.

Ability to lead change in Metal Mining

– China Hongqiao is one of the leading players in the Metal Mining industry in Hong Kong. Over the years it has not only transformed the business landscape in the Metal Mining industry in Hong Kong but also across the existing markets. The ability to lead change has enabled China Hongqiao in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Analytics focus

– China Hongqiao 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 Metal Mining 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 Hongqiao comprises – understanding the underlying the factors in the Metal Mining 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.

High brand equity

– China Hongqiao has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled China Hongqiao to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Learning organization

- China Hongqiao 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 Hongqiao is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Hongqiao emphasize – knowledge, initiative, and innovation.

Low bargaining power of suppliers

– Suppliers of China Hongqiao in the Basic Materials sector have low bargaining power. China Hongqiao has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps China Hongqiao to manage not only supply disruptions but also source products at highly competitive prices.

Successful track record of launching new products

– China Hongqiao has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. China Hongqiao 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.

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Weaknesses of China Hongqiao | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of China Hongqiao are -

Low market penetration in new markets

– Outside its home market of Hong Kong, China Hongqiao needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Skills based hiring in Metal Mining industry

– The stress on hiring functional specialists at China Hongqiao 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.

Ability to respond to the competition

– As the decision making is very deliberative at China Hongqiao, in the dynamic environment of Metal Mining industry it has struggled to respond to the nimble upstart competition. China Hongqiao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Products dominated business model

– Even though China Hongqiao has some of the most successful models in the Metal Mining industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. China Hongqiao should strive to include more intangible value offerings along with its core products and services.

Employees’ less understanding of China Hongqiao strategy

– From the outside it seems that the employees of China Hongqiao don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

High bargaining power of channel partners in Metal Mining industry

– because of the regulatory requirements in Hong Kong, China Hongqiao 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 Metal Mining industry.

Interest costs

– Compare to the competition, China Hongqiao 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.

Increasing silos among functional specialists

– The organizational structure of China Hongqiao is dominated by functional specialists. It is not different from other players in the Metal Mining industry, but China Hongqiao needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help China Hongqiao to focus more on services in the Metal Mining industry rather than just following the product 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 Hongqiao supply chain. Even after few cautionary changes, China Hongqiao is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China Hongqiao vulnerable to further global disruptions in South East Asia.

No frontier risks strategy

– From the 10K / annual statement of China Hongqiao, it seems that company is thinking out the frontier risks that can impact Metal Mining 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.

High cash cycle compare to competitors

China Hongqiao has a high cash cycle compare to other players in the Metal Mining industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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China Hongqiao Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of China Hongqiao are -

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects China Hongqiao can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Creating value in data economy

– The success of analytics program of China Hongqiao has opened avenues for new revenue streams for the organization in Metal Mining industry. This can help China Hongqiao to build a more holistic ecosystem for China Hongqiao products in the Metal Mining industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Reconfiguring business model

– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help China Hongqiao 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for China Hongqiao in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Metal Mining industry, and it will provide faster access to the consumers.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for China Hongqiao 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 Hongqiao to hire the very best people irrespective of their geographical location.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Metal Mining industry, but it has also influenced the consumer preferences. China Hongqiao can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Loyalty marketing

– China Hongqiao 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.

Developing new processes and practices

– China Hongqiao can develop new processes and procedures in Metal Mining 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Metal Mining industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. China Hongqiao 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 Hongqiao 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.

Manufacturing automation

– China Hongqiao can use the latest technology developments to improve its manufacturing and designing process in Metal Mining 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.

Better consumer reach

– The expansion of the 5G network will help China Hongqiao to increase its market reach. China Hongqiao will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.

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 Hongqiao can use these opportunities to build new business models that can help the communities that China Hongqiao operates in. Secondly it can use opportunities from government spending in Metal Mining sector.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, China Hongqiao 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 Hongqiao to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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Threats China Hongqiao External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of China Hongqiao are -

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 Hongqiao 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 Hongqiao 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Metal Mining industry are lowering. It can presents China Hongqiao with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Metal Mining sector.

Easy access to finance

– Easy access to finance in Metal Mining industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China Hongqiao can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 Hongqiao in the Metal Mining sector and impact the bottomline of the organization.

Regulatory challenges

– China Hongqiao 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 Metal Mining industry regulations.

Technology acceleration in Forth Industrial Revolution

– China Hongqiao has witnessed rapid integration of technology during Covid-19 in the Metal Mining industry. As one of the leading players in the industry, China Hongqiao needs to keep up with the evolution of technology in the Metal Mining 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.

Shortening product life cycle

– it is one of the major threat that China Hongqiao is facing in Metal Mining sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Stagnating economy with rate increase

– China Hongqiao 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 Metal Mining industry.

Increasing wage structure of China Hongqiao

– 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 Hongqiao.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, China Hongqiao 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 Hongqiao prominent markets.

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 Hongqiao.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, China Hongqiao may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Metal Mining sector.

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Weighted SWOT Analysis of China Hongqiao Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Hongqiao 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 Hongqiao 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 Hongqiao 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 Hongqiao 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 Hongqiao needs to make to build a sustainable competitive advantage.

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