China Agri-Industries (606) SWOT Analysis / TOWS Matrix / MBA Resources
Crops
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Agri-Industries (Hong Kong)
Based on various researches at Oak Spring University , China Agri-Industries is operating in a macro-environment that has been destablized by – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, technology disruption, there is backlash against globalization, increasing transportation and logistics costs, increasing household debt because of falling income levels, geopolitical disruptions,
digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of China Agri-Industries
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Agri-Industries can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Agri-Industries, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Agri-Industries 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 Agri-Industries can be done for the following purposes –
1. Strategic planning of China Agri-Industries
2. Improving business portfolio management of China Agri-Industries
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Crops sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Agri-Industries
Strengths of China Agri-Industries | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Agri-Industries are -
Highly skilled collaborators
– China Agri-Industries has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Crops industry. Secondly the value chain collaborators of China Agri-Industries have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of China Agri-Industries in Crops industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– China Agri-Industries is one of the most innovative firm in Crops sector.
Sustainable margins compare to other players in Crops industry
– China Agri-Industries has clearly differentiated products in the market place. This has enabled China Agri-Industries to fetch slight price premium compare to the competitors in the Crops industry. The sustainable margins have also helped China Agri-Industries to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy of China Agri-Industries comprises – understanding the underlying the factors in the Crops 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.
Analytics focus
– China Agri-Industries 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 Crops 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
– China Agri-Industries has one of the best training and development program in Consumer/Non-Cyclical 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.
High switching costs
– The high switching costs that China Agri-Industries has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the China Agri-Industries 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.
Learning organization
- China Agri-Industries 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 Agri-Industries is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at China Agri-Industries emphasize – knowledge, initiative, and innovation.
Organizational Resilience of China Agri-Industries
– The covid-19 pandemic has put organizational resilience at the centre of everthing China Agri-Industries does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Crops
– China Agri-Industries is one of the leading players in the Crops industry in Hong Kong. Over the years it has not only transformed the business landscape in the Crops industry in Hong Kong but also across the existing markets. The ability to lead change has enabled China Agri-Industries in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of China Agri-Industries | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Agri-Industries are -
Compensation and incentives
– The revenue per employee of China Agri-Industries is just above the Crops 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 operating costs
– Compare to the competitors, China Agri-Industries has high operating costs in the Crops industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract China Agri-Industries lucrative customers.
Products dominated business model
– Even though China Agri-Industries has some of the most successful models in the Crops industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. China Agri-Industries should strive to include more intangible value offerings along with its core products and services.
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 Agri-Industries supply chain. Even after few cautionary changes, China Agri-Industries is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China Agri-Industries vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
China Agri-Industries has a high cash cycle compare to other players in the Crops industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on China Agri-Industries ‘s star products
– The top 2 products and services of China Agri-Industries still accounts for major business revenue. This dependence on star products in Crops industry has resulted into insufficient focus on developing new products, even though China Agri-Industries has relatively successful track record of launching new products.
Skills based hiring in Crops industry
– The stress on hiring functional specialists at China Agri-Industries 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.
Workers concerns about automation
– As automation is fast increasing in the Crops industry, China Agri-Industries 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.
Low market penetration in new markets
– Outside its home market of Hong Kong, China Agri-Industries needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of China Agri-Industries products
– To increase the profitability and margins on the products, China Agri-Industries needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, China Agri-Industries has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Crops industry using digital technology.
China Agri-Industries Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Agri-Industries are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects China Agri-Industries can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– China Agri-Industries 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.
Manufacturing automation
– China Agri-Industries can use the latest technology developments to improve its manufacturing and designing process in Crops 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for China Agri-Industries 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 Agri-Industries to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help China Agri-Industries to increase its market reach. China Agri-Industries 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.
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 Agri-Industries 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.
Using analytics as competitive advantage
– China Agri-Industries has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Crops sector. This continuous investment in analytics has enabled China Agri-Industries to build a competitive advantage using analytics. The analytics driven competitive advantage can help China Agri-Industries to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– China Agri-Industries can develop new processes and procedures in Crops 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.
Buying journey improvements
– China Agri-Industries can improve the customer journey of consumers in the Crops 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, China Agri-Industries 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 Agri-Industries 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 Crops industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Agri-Industries in the Crops industry. Now China Agri-Industries can target international markets with far fewer capital restrictions requirements than the existing system.
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 Agri-Industries can use these opportunities to build new business models that can help the communities that China Agri-Industries operates in. Secondly it can use opportunities from government spending in Crops sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for China Agri-Industries in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Crops industry, and it will provide faster access to the consumers.
Threats China Agri-Industries External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Agri-Industries are -
Technology acceleration in Forth Industrial Revolution
– China Agri-Industries has witnessed rapid integration of technology during Covid-19 in the Crops industry. As one of the leading players in the industry, China Agri-Industries needs to keep up with the evolution of technology in the Crops 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.
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 Agri-Industries needs to understand the core reasons impacting the Crops industry. This will help it in building a better workplace.
Increasing wage structure of China Agri-Industries
– 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 Agri-Industries.
Environmental challenges
– China Agri-Industries needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. China Agri-Industries can take advantage of this fund but it will also bring new competitors in the Crops industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, China Agri-Industries 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 Agri-Industries prominent markets.
Regulatory challenges
– China Agri-Industries 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 Crops industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Crops industry are lowering. It can presents China Agri-Industries with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Crops sector.
Consumer confidence and its impact on China Agri-Industries 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 Crops industry and other sectors.
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 Agri-Industries.
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 Agri-Industries in the Crops sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that China Agri-Industries is facing in Crops sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– China Agri-Industries 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.
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.
Weighted SWOT Analysis of China Agri-Industries Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Agri-Industries 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 Agri-Industries 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 Agri-Industries 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 Agri-Industries 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 Agri-Industries needs to make to build a sustainable competitive advantage.