SWOT Analysis / TOWS Matrix for Huaneng Renewables (Hong Kong)
Based on various researches at Oak Spring University , Huaneng Renewables is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, increasing commodity prices, geopolitical disruptions, increasing energy prices, digital marketing is dominated by two big players Facebook and Google,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Huaneng Renewables
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Huaneng Renewables can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huaneng Renewables, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huaneng Renewables 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 Huaneng Renewables can be done for the following purposes –
1. Strategic planning of Huaneng Renewables
2. Improving business portfolio management of Huaneng Renewables
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Electric Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Huaneng Renewables
Strengths of Huaneng Renewables | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huaneng Renewables are -
Diverse revenue streams
– Huaneng Renewables is present in almost all the verticals within the Electric Utilities industry. This has provided Huaneng Renewables 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.
Digital Transformation in Electric Utilities industry
- digital transformation varies from industry to industry. For Huaneng Renewables digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Huaneng Renewables 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.
Learning organization
- Huaneng Renewables 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 Huaneng Renewables is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Huaneng Renewables emphasize – knowledge, initiative, and innovation.
Analytics focus
– Huaneng Renewables 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 Electric Utilities 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.
Training and development
– Huaneng Renewables has one of the best training and development program in Utilities 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.
Superior customer experience
– The customer experience strategy of Huaneng Renewables in Electric Utilities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Huaneng Renewables are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Huaneng Renewables is one of the most innovative firm in Electric Utilities sector.
Effective Research and Development (R&D)
– Huaneng Renewables has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Huaneng Renewables staying ahead in the Electric Utilities industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Huaneng Renewables has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Electric Utilities industry. Secondly the value chain collaborators of Huaneng Renewables have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Huaneng Renewables in the Utilities sector have low bargaining power. Huaneng Renewables has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Huaneng Renewables to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Huaneng Renewables has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Huaneng Renewables 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 Huaneng Renewables | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Huaneng Renewables are -
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 Huaneng Renewables supply chain. Even after few cautionary changes, Huaneng Renewables is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Huaneng Renewables vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the Electric Utilities industry, Huaneng Renewables 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.
High bargaining power of channel partners in Electric Utilities industry
– because of the regulatory requirements in Hong Kong, Huaneng Renewables 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 Electric Utilities industry.
High dependence on Huaneng Renewables ‘s star products
– The top 2 products and services of Huaneng Renewables still accounts for major business revenue. This dependence on star products in Electric Utilities industry has resulted into insufficient focus on developing new products, even though Huaneng Renewables has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Hong Kong, Huaneng Renewables needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Huaneng Renewables products
– To increase the profitability and margins on the products, Huaneng Renewables needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative at Huaneng Renewables, in the dynamic environment of Electric Utilities industry it has struggled to respond to the nimble upstart competition. Huaneng Renewables has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, Huaneng Renewables has high operating costs in the Electric Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Huaneng Renewables lucrative customers.
Aligning sales with marketing
– From the outside it seems that Huaneng Renewables needs to have more collaboration between its sales team and marketing team. Sales professionals in the Electric Utilities industry have deep experience in developing customer relationships. Marketing department at Huaneng Renewables can leverage the sales team experience to cultivate customer relationships as Huaneng Renewables is planning to shift buying processes online.
Skills based hiring in Electric Utilities industry
– The stress on hiring functional specialists at Huaneng Renewables 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.
Increasing silos among functional specialists
– The organizational structure of Huaneng Renewables is dominated by functional specialists. It is not different from other players in the Electric Utilities industry, but Huaneng Renewables needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Huaneng Renewables to focus more on services in the Electric Utilities industry rather than just following the product oriented approach.
Huaneng Renewables Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Huaneng Renewables are -
Buying journey improvements
– Huaneng Renewables can improve the customer journey of consumers in the Electric Utilities 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.
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 Huaneng Renewables 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Huaneng Renewables can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions in Electric Utilities industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Huaneng Renewables in the Electric Utilities industry. Now Huaneng Renewables can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Huaneng Renewables can use the latest technology developments to improve its manufacturing and designing process in Electric Utilities 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Huaneng Renewables can use these opportunities to build new business models that can help the communities that Huaneng Renewables operates in. Secondly it can use opportunities from government spending in Electric Utilities sector.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Electric Utilities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Huaneng Renewables 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. Huaneng Renewables 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.
Learning at scale
– Online learning technologies has now opened space for Huaneng Renewables 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.
Developing new processes and practices
– Huaneng Renewables can develop new processes and procedures in Electric Utilities 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.
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. Huaneng Renewables can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huaneng Renewables 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 Huaneng Renewables to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Huaneng Renewables has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Electric Utilities sector. This continuous investment in analytics has enabled Huaneng Renewables to build a competitive advantage using analytics. The analytics driven competitive advantage can help Huaneng Renewables to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Huaneng Renewables can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Huaneng Renewables External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Huaneng Renewables are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huaneng Renewables in Electric Utilities industry. The Electric Utilities 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
– Huaneng Renewables 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 Electric Utilities industry are lowering. It can presents Huaneng Renewables with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Electric Utilities sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Huaneng Renewables may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Electric Utilities sector.
Environmental challenges
– Huaneng Renewables 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. Huaneng Renewables can take advantage of this fund but it will also bring new competitors in the Electric Utilities industry.
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.
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 Huaneng Renewables business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Huaneng Renewables 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 Electric Utilities industry regulations.
Technology acceleration in Forth Industrial Revolution
– Huaneng Renewables has witnessed rapid integration of technology during Covid-19 in the Electric Utilities industry. As one of the leading players in the industry, Huaneng Renewables needs to keep up with the evolution of technology in the Electric Utilities 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.
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 Huaneng Renewables.
Easy access to finance
– Easy access to finance in Electric Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Huaneng Renewables can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Huaneng Renewables 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 Electric Utilities industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Huaneng Renewables 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 Huaneng Renewables prominent markets.
Weighted SWOT Analysis of Huaneng Renewables Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Huaneng Renewables 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 Huaneng Renewables 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 Huaneng Renewables 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 Huaneng Renewables 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 Huaneng Renewables needs to make to build a sustainable competitive advantage.
