VSTECS (856) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for VSTECS (Hong Kong)

Based on various researches at Oak Spring University , VSTECS is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, etc

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Introduction to SWOT Analysis of VSTECS

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that VSTECS can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the VSTECS, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which VSTECS 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 VSTECS can be done for the following purposes –
1. Strategic planning of VSTECS
2. Improving business portfolio management of VSTECS
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Computer Hardware sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of VSTECS

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

The strengths of VSTECS are -

Strong track record of project management in the Computer Hardware industry

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

Training and development

– VSTECS has one of the best training and development program in Technology 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.

Ability to lead change in Computer Hardware

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

Cross disciplinary teams

– Horizontal connected teams at the VSTECS 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.

High brand equity

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

Operational resilience

– The operational resilience strategy of VSTECS comprises – understanding the underlying the factors in the Computer Hardware industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.

Highly skilled collaborators

– VSTECS has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Computer Hardware industry. Secondly the value chain collaborators of VSTECS have helped the firm to develop new products and bring them quickly to the marketplace.

Learning organization

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

Sustainable margins compare to other players in Computer Hardware industry

– VSTECS has clearly differentiated products in the market place. This has enabled VSTECS to fetch slight price premium compare to the competitors in the Computer Hardware industry. The sustainable margins have also helped VSTECS to invest into research and development (R&D) and innovation.

Diverse revenue streams

– VSTECS is present in almost all the verticals within the Computer Hardware industry. This has provided VSTECS 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.

Effective Research and Development (R&D)

– VSTECS has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – VSTECS staying ahead in the Computer Hardware industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Low bargaining power of suppliers

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

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

The weaknesses of VSTECS are -

High bargaining power of channel partners in Computer Hardware industry

– because of the regulatory requirements in Hong Kong, VSTECS 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 Computer Hardware industry.

High dependence on VSTECS ‘s star products

– The top 2 products and services of VSTECS still accounts for major business revenue. This dependence on star products in Computer Hardware industry has resulted into insufficient focus on developing new products, even though VSTECS has relatively successful track record of launching new products.

High operating costs

– Compare to the competitors, VSTECS has high operating costs in the Computer Hardware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract VSTECS lucrative customers.

Interest costs

– Compare to the competition, VSTECS 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.

Employees’ less understanding of VSTECS strategy

– From the outside it seems that the employees of VSTECS 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.

Need for greater diversity

– VSTECS has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Workers concerns about automation

– As automation is fast increasing in the Computer Hardware industry, VSTECS 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.

Products dominated business model

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

Compensation and incentives

– The revenue per employee of VSTECS is just above the Computer Hardware 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.

Low market penetration in new markets

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

No frontier risks strategy

– From the 10K / annual statement of VSTECS, it seems that company is thinking out the frontier risks that can impact Computer Hardware 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.

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

The opportunities of VSTECS are -

Reforming the budgeting process

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

Lowering marketing communication costs

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

Creating value in data economy

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

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, VSTECS can use these opportunities to build new business models that can help the communities that VSTECS operates in. Secondly it can use opportunities from government spending in Computer Hardware sector.

Leveraging digital technologies

– VSTECS 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.

Developing new processes and practices

– VSTECS can develop new processes and procedures in Computer Hardware 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, VSTECS can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.

Better consumer reach

– The expansion of the 5G network will help VSTECS to increase its market reach. VSTECS 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 VSTECS 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, VSTECS is facing challenges because of the dominance of functional experts in the organization. VSTECS can utilize new technology in the field of Computer Hardware industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Remote work and new talent hiring opportunities

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

Learning at scale

– Online learning technologies has now opened space for VSTECS 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.

Loyalty marketing

– VSTECS 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.

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

The threats of VSTECS are -

Barriers of entry lowering

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

Easy access to finance

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

High dependence on third party suppliers

– VSTECS 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.

Regulatory challenges

– VSTECS 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 Computer Hardware industry regulations.

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 VSTECS business can come under increasing regulations regarding data privacy, data security, etc.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, VSTECS 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 VSTECS 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 VSTECS.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for VSTECS in Computer Hardware industry. The Computer Hardware 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.

Shortening product life cycle

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

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. VSTECS 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.

Technology acceleration in Forth Industrial Revolution

– VSTECS has witnessed rapid integration of technology during Covid-19 in the Computer Hardware industry. As one of the leading players in the industry, VSTECS needs to keep up with the evolution of technology in the Computer Hardware 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.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

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Weighted SWOT Analysis of VSTECS Template, Example

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

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