China Modern Dairy (1117) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for China Modern Dairy (Hong Kong)

Based on various researches at Oak Spring University , China Modern Dairy 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%, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing energy prices, wage bills are increasing, there is backlash against globalization, talent flight as more people leaving formal jobs, geopolitical disruptions, challanges to central banks by blockchain based private currencies, etc

---

---

---

---

Introduction to SWOT Analysis of China Modern Dairy

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

---

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

The strengths of China Modern Dairy are -

Innovation driven organization

– China Modern Dairy is one of the most innovative firm in Fish/Livestock sector.

Effective Research and Development (R&D)

– China Modern Dairy has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – China Modern Dairy staying ahead in the Fish/Livestock 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 Fish/Livestock industry

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

Digital Transformation in Fish/Livestock industry

- digital transformation varies from industry to industry. For China Modern Dairy digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Modern Dairy 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.

Ability to recruit top talent

– China Modern Dairy is one of the leading players in the Fish/Livestock 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.

Sustainable margins compare to other players in Fish/Livestock industry

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

Superior customer experience

– The customer experience strategy of China Modern Dairy in Fish/Livestock industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to lead change in Fish/Livestock

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

Training and development

– China Modern Dairy 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.

Successful track record of launching new products

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

Highly skilled collaborators

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

Low bargaining power of suppliers

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

---

---

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

The weaknesses of China Modern Dairy are -

Increasing silos among functional specialists

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

Interest costs

– Compare to the competition, China Modern Dairy 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.

Ability to respond to the competition

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

Lack of clear differentiation of China Modern Dairy products

– To increase the profitability and margins on the products, China Modern Dairy needs to provide more differentiated products than what it is currently offering in the marketplace.

Slow decision making process

– As mentioned earlier in the report, China Modern Dairy has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Fish/Livestock industry over the last five years. China Modern Dairy 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.

Slow to strategic competitive environment developments

– As China Modern Dairy is one of the leading players in the Fish/Livestock industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Fish/Livestock industry in last five years.

Compensation and incentives

– The revenue per employee of China Modern Dairy is just above the Fish/Livestock 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, China Modern Dairy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Capital Spending Reduction

– Even during the low interest decade, China Modern Dairy 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 Fish/Livestock industry using digital technology.

High dependence on China Modern Dairy ‘s star products

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

---

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

The opportunities of China Modern Dairy 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, China Modern Dairy can use these opportunities to build new business models that can help the communities that China Modern Dairy operates in. Secondly it can use opportunities from government spending in Fish/Livestock sector.

Building a culture of innovation

– managers at China Modern Dairy 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 Fish/Livestock industry.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects China Modern Dairy 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 China Modern Dairy in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Fish/Livestock industry, and it will provide faster access to the consumers.

Developing new processes and practices

– China Modern Dairy can develop new processes and procedures in Fish/Livestock 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.

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 Modern Dairy 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, China Modern Dairy 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 Modern Dairy to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Remote work and new talent hiring opportunities

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

Use of Bitcoin and other crypto currencies for transactions in Fish/Livestock industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Modern Dairy in the Fish/Livestock industry. Now China Modern Dairy can target international markets with far fewer capital restrictions requirements than the existing system.

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. China Modern Dairy can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Manufacturing automation

– China Modern Dairy can use the latest technology developments to improve its manufacturing and designing process in Fish/Livestock 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.

Loyalty marketing

– China Modern Dairy 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.

Buying journey improvements

– China Modern Dairy can improve the customer journey of consumers in the Fish/Livestock 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.

---

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

The threats of China Modern Dairy are -

Increasing wage structure of China Modern Dairy

– 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 Modern Dairy.

Consumer confidence and its impact on China Modern Dairy 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 Fish/Livestock industry and other sectors.

Technology acceleration in Forth Industrial Revolution

– China Modern Dairy has witnessed rapid integration of technology during Covid-19 in the Fish/Livestock industry. As one of the leading players in the industry, China Modern Dairy needs to keep up with the evolution of technology in the Fish/Livestock 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.

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 Modern Dairy 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 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 Modern Dairy needs to understand the core reasons impacting the Fish/Livestock industry. This will help it in building a better workplace.

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 Modern Dairy in the Fish/Livestock sector and impact the bottomline of the organization.

Regulatory challenges

– China Modern Dairy 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 Fish/Livestock industry regulations.

Shortening product life cycle

– it is one of the major threat that China Modern Dairy is facing in Fish/Livestock sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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.

Barriers of entry lowering

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

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 China Modern Dairy business can come under increasing regulations regarding data privacy, data security, etc.

Learning curve for new practices

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

Easy access to finance

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

---

Weighted SWOT Analysis of China Modern Dairy Template, Example

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

--- ---