China Shengmu Organic Milk (1432) SWOT Analysis / TOWS Matrix / MBA Resources
Food Processing
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for China Shengmu Organic Milk (Hong Kong)
Based on various researches at Oak Spring University , China Shengmu Organic Milk is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, wage bills are increasing, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, increasing commodity prices, etc
Introduction to SWOT Analysis of China Shengmu Organic Milk
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that China Shengmu Organic Milk can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the China Shengmu Organic Milk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which China Shengmu Organic Milk 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 Shengmu Organic Milk can be done for the following purposes –
1. Strategic planning of China Shengmu Organic Milk
2. Improving business portfolio management of China Shengmu Organic Milk
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Food Processing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of China Shengmu Organic Milk
Strengths of China Shengmu Organic Milk | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of China Shengmu Organic Milk are -
Ability to recruit top talent
– China Shengmu Organic Milk is one of the leading players in the Food Processing 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.
Highly skilled collaborators
– China Shengmu Organic Milk has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Food Processing industry. Secondly the value chain collaborators of China Shengmu Organic Milk have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management in the Food Processing industry
– China Shengmu Organic Milk 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 Food Processing industry
- digital transformation varies from industry to industry. For China Shengmu Organic Milk digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. China Shengmu Organic Milk 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.
Successful track record of launching new products
– China Shengmu Organic Milk has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. China Shengmu Organic Milk 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.
Operational resilience
– The operational resilience strategy of China Shengmu Organic Milk comprises – understanding the underlying the factors in the Food Processing 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.
Ability to lead change in Food Processing
– China Shengmu Organic Milk is one of the leading players in the Food Processing industry in Hong Kong. Over the years it has not only transformed the business landscape in the Food Processing industry in Hong Kong but also across the existing markets. The ability to lead change has enabled China Shengmu Organic Milk in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Food Processing industry
– China Shengmu Organic Milk has clearly differentiated products in the market place. This has enabled China Shengmu Organic Milk to fetch slight price premium compare to the competitors in the Food Processing industry. The sustainable margins have also helped China Shengmu Organic Milk to invest into research and development (R&D) and innovation.
Innovation driven organization
– China Shengmu Organic Milk is one of the most innovative firm in Food Processing sector.
Training and development
– China Shengmu Organic Milk 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.
Superior customer experience
– The customer experience strategy of China Shengmu Organic Milk in Food Processing industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that China Shengmu Organic Milk 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.
Weaknesses of China Shengmu Organic Milk | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Shengmu Organic Milk 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 China Shengmu Organic Milk supply chain. Even after few cautionary changes, China Shengmu Organic Milk is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China Shengmu Organic Milk vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As China Shengmu Organic Milk is one of the leading players in the Food Processing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Food Processing industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, China Shengmu Organic Milk 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 Food Processing industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative at China Shengmu Organic Milk, in the dynamic environment of Food Processing industry it has struggled to respond to the nimble upstart competition. China Shengmu Organic Milk has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– From the outside it seems that China Shengmu Organic Milk needs to have more collaboration between its sales team and marketing team. Sales professionals in the Food Processing industry have deep experience in developing customer relationships. Marketing department at China Shengmu Organic Milk can leverage the sales team experience to cultivate customer relationships as China Shengmu Organic Milk is planning to shift buying processes online.
No frontier risks strategy
– From the 10K / annual statement of China Shengmu Organic Milk, it seems that company is thinking out the frontier risks that can impact Food Processing 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.
Lack of clear differentiation of China Shengmu Organic Milk products
– To increase the profitability and margins on the products, China Shengmu Organic Milk needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– China Shengmu Organic Milk 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.
Increasing silos among functional specialists
– The organizational structure of China Shengmu Organic Milk is dominated by functional specialists. It is not different from other players in the Food Processing industry, but China Shengmu Organic Milk needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help China Shengmu Organic Milk to focus more on services in the Food Processing industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of China Shengmu Organic Milk is just above the Food Processing 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, China Shengmu Organic Milk is slow explore the new channels of communication. These new channels of communication can help China Shengmu Organic Milk to provide better information regarding Food Processing products and services. It can also build an online community to further reach out to potential customers.
China Shengmu Organic Milk Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of China Shengmu Organic Milk are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Food Processing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. China Shengmu Organic Milk 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. China Shengmu Organic Milk 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.
Use of Bitcoin and other crypto currencies for transactions in Food Processing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for China Shengmu Organic Milk in the Food Processing industry. Now China Shengmu Organic Milk can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of China Shengmu Organic Milk has opened avenues for new revenue streams for the organization in Food Processing industry. This can help China Shengmu Organic Milk to build a more holistic ecosystem for China Shengmu Organic Milk products in the Food Processing industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– China Shengmu Organic Milk has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Food Processing sector. This continuous investment in analytics has enabled China Shengmu Organic Milk to build a competitive advantage using analytics. The analytics driven competitive advantage can help China Shengmu Organic Milk to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Food Processing industry, but it has also influenced the consumer preferences. China Shengmu Organic Milk can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, China Shengmu Organic Milk is facing challenges because of the dominance of functional experts in the organization. China Shengmu Organic Milk can utilize new technology in the field of Food Processing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, China Shengmu Organic Milk 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 Shengmu Organic Milk to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– China Shengmu Organic Milk can use the latest technology developments to improve its manufacturing and designing process in Food Processing 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 Shengmu Organic Milk 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 Shengmu Organic Milk to hire the very best people irrespective of their geographical location.
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 Shengmu Organic Milk can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– China Shengmu Organic Milk can develop new processes and procedures in Food Processing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for China Shengmu Organic Milk in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Food Processing industry, and it will provide faster access to the consumers.
Better consumer reach
– The expansion of the 5G network will help China Shengmu Organic Milk to increase its market reach. China Shengmu Organic Milk 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.
Threats China Shengmu Organic Milk External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of China Shengmu Organic Milk are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, China Shengmu Organic Milk 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 Shengmu Organic Milk 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 China Shengmu Organic Milk.
Regulatory challenges
– China Shengmu Organic Milk 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 Food Processing industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Food Processing industry are lowering. It can presents China Shengmu Organic Milk with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Food Processing sector.
High dependence on third party suppliers
– China Shengmu Organic Milk 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.
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.
Technology acceleration in Forth Industrial Revolution
– China Shengmu Organic Milk has witnessed rapid integration of technology during Covid-19 in the Food Processing industry. As one of the leading players in the industry, China Shengmu Organic Milk needs to keep up with the evolution of technology in the Food Processing 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.
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 Shengmu Organic Milk in the Food Processing sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Food Processing industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China Shengmu Organic Milk can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that China Shengmu Organic Milk is facing in Food Processing 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. China Shengmu Organic Milk 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.
Stagnating economy with rate increase
– China Shengmu Organic Milk 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 Food Processing industry.
Environmental challenges
– China Shengmu Organic Milk 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 Shengmu Organic Milk can take advantage of this fund but it will also bring new competitors in the Food Processing industry.
Weighted SWOT Analysis of China Shengmu Organic Milk Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at China Shengmu Organic Milk 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 Shengmu Organic Milk 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 Shengmu Organic Milk 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 Shengmu Organic Milk 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 Shengmu Organic Milk needs to make to build a sustainable competitive advantage.