SWOT Analysis / TOWS Matrix for SINOPEC Engineering (Hong Kong)
Based on various researches at Oak Spring University , SINOPEC Engineering is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing commodity prices, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions,
there is backlash against globalization, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of SINOPEC Engineering
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that SINOPEC Engineering can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the SINOPEC Engineering, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which SINOPEC Engineering 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 SINOPEC Engineering can be done for the following purposes –
1. Strategic planning of SINOPEC Engineering
2. Improving business portfolio management of SINOPEC Engineering
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Construction Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of SINOPEC Engineering
Strengths of SINOPEC Engineering | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of SINOPEC Engineering are -
Training and development
– SINOPEC Engineering has one of the best training and development program in Capital Goods 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.
Highly skilled collaborators
– SINOPEC Engineering has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Construction Services industry. Secondly the value chain collaborators of SINOPEC Engineering have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the SINOPEC Engineering 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.
Diverse revenue streams
– SINOPEC Engineering is present in almost all the verticals within the Construction Services industry. This has provided SINOPEC Engineering 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.
Low bargaining power of suppliers
– Suppliers of SINOPEC Engineering in the Capital Goods sector have low bargaining power. SINOPEC Engineering has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps SINOPEC Engineering to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Construction Services industry
– SINOPEC Engineering has clearly differentiated products in the market place. This has enabled SINOPEC Engineering to fetch slight price premium compare to the competitors in the Construction Services industry. The sustainable margins have also helped SINOPEC Engineering to invest into research and development (R&D) and innovation.
Learning organization
- SINOPEC Engineering 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 SINOPEC Engineering is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at SINOPEC Engineering emphasize – knowledge, initiative, and innovation.
High brand equity
– SINOPEC Engineering has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled SINOPEC Engineering to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– SINOPEC Engineering has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – SINOPEC Engineering staying ahead in the Construction Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the Construction Services industry
– SINOPEC Engineering is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of SINOPEC Engineering in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– SINOPEC Engineering is one of the most innovative firm in Construction Services sector.
Weaknesses of SINOPEC Engineering | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SINOPEC Engineering are -
Lack of clear differentiation of SINOPEC Engineering products
– To increase the profitability and margins on the products, SINOPEC Engineering needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
SINOPEC Engineering has a high cash cycle compare to other players in the Construction Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ less understanding of SINOPEC Engineering strategy
– From the outside it seems that the employees of SINOPEC Engineering 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.
Increasing silos among functional specialists
– The organizational structure of SINOPEC Engineering is dominated by functional specialists. It is not different from other players in the Construction Services industry, but SINOPEC Engineering needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help SINOPEC Engineering to focus more on services in the Construction Services industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of SINOPEC Engineering is just above the Construction Services 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.
Slow decision making process
– As mentioned earlier in the report, SINOPEC Engineering has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction Services industry over the last five years. SINOPEC Engineering even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
No frontier risks strategy
– From the 10K / annual statement of SINOPEC Engineering, it seems that company is thinking out the frontier risks that can impact Construction Services 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 operating costs
– Compare to the competitors, SINOPEC Engineering has high operating costs in the Construction Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract SINOPEC Engineering lucrative customers.
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 SINOPEC Engineering supply chain. Even after few cautionary changes, SINOPEC Engineering is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SINOPEC Engineering vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Hong Kong, SINOPEC Engineering needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, SINOPEC Engineering is slow explore the new channels of communication. These new channels of communication can help SINOPEC Engineering to provide better information regarding Construction Services products and services. It can also build an online community to further reach out to potential customers.
SINOPEC Engineering Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SINOPEC Engineering 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, SINOPEC Engineering can use these opportunities to build new business models that can help the communities that SINOPEC Engineering operates in. Secondly it can use opportunities from government spending in Construction Services sector.
Using analytics as competitive advantage
– SINOPEC Engineering has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Construction Services sector. This continuous investment in analytics has enabled SINOPEC Engineering to build a competitive advantage using analytics. The analytics driven competitive advantage can help SINOPEC Engineering to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– SINOPEC Engineering 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.
Learning at scale
– Online learning technologies has now opened space for SINOPEC Engineering 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 SINOPEC Engineering 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 Construction Services industry.
Redefining models of collaboration and team work
– As explained in the weaknesses section, SINOPEC Engineering is facing challenges because of the dominance of functional experts in the organization. SINOPEC Engineering can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. SINOPEC Engineering 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. SINOPEC Engineering 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.
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 SINOPEC Engineering 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, SINOPEC Engineering 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 SINOPEC Engineering to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Use of Bitcoin and other crypto currencies for transactions in Construction Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for SINOPEC Engineering in the Construction Services industry. Now SINOPEC Engineering can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects SINOPEC Engineering can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for SINOPEC Engineering 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 SINOPEC Engineering to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– SINOPEC Engineering can develop new processes and procedures in Construction Services 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.
Threats SINOPEC Engineering External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SINOPEC Engineering are -
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 SINOPEC Engineering business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of SINOPEC Engineering
– 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 SINOPEC Engineering.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, SINOPEC Engineering may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Construction Services sector.
Technology acceleration in Forth Industrial Revolution
– SINOPEC Engineering has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, SINOPEC Engineering needs to keep up with the evolution of technology in the Construction Services 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 SINOPEC Engineering is facing in Construction Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– SINOPEC Engineering 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 Construction Services industry.
Environmental challenges
– SINOPEC Engineering 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. SINOPEC Engineering can take advantage of this fund but it will also bring new competitors in the Construction Services industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, SINOPEC Engineering 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 SINOPEC Engineering prominent markets.
High dependence on third party suppliers
– SINOPEC Engineering 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.
Easy access to finance
– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. SINOPEC Engineering 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 Construction Services industry are lowering. It can presents SINOPEC Engineering with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction Services sector.
Regulatory challenges
– SINOPEC Engineering 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 Construction Services industry regulations.
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. SINOPEC Engineering 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.
Weighted SWOT Analysis of SINOPEC Engineering Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at SINOPEC Engineering 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 SINOPEC Engineering 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 SINOPEC Engineering 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 SINOPEC Engineering 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 SINOPEC Engineering needs to make to build a sustainable competitive advantage.
