China Shengmu Organic Milk (1432) SWOT Analysis / TOWS Matrix / 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 – increasing commodity prices, there is increasing trade war between United States & China, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, increasing transportation and logistics costs, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, etc

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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.

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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

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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 -

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.

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.

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.

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.

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.

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.

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.

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.

Innovation driven organization

– China Shengmu Organic Milk is one of the most innovative firm in Food Processing sector.

Effective Research and Development (R&D)

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

Organizational Resilience of China Shengmu Organic Milk

– The covid-19 pandemic has put organizational resilience at the centre of everthing China Shengmu Organic Milk does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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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 -

Slow decision making process

– As mentioned earlier in the report, China Shengmu Organic Milk has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Food Processing industry over the last five years. China Shengmu Organic Milk 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.

High operating costs

– Compare to the competitors, China Shengmu Organic Milk has high operating costs in the Food Processing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract China Shengmu Organic Milk lucrative customers.

High bargaining power of channel partners in Food Processing industry

– because of the regulatory requirements in Hong Kong, China Shengmu Organic Milk 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 Food Processing industry.

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.

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.

Skills based hiring in Food Processing industry

– The stress on hiring functional specialists at China Shengmu Organic Milk 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.

Products dominated business model

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

Low market penetration in new markets

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

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.

Employees’ less understanding of China Shengmu Organic Milk strategy

– From the outside it seems that the employees of China Shengmu Organic Milk 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.

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.

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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 -

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.

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 Shengmu Organic Milk can use these opportunities to build new business models that can help the communities that China Shengmu Organic Milk operates in. Secondly it can use opportunities from government spending in Food Processing sector.

Buying journey improvements

– China Shengmu Organic Milk can improve the customer journey of consumers in the Food Processing 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.

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.

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.

Building a culture of innovation

– managers at China Shengmu Organic Milk 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 Food Processing industry.

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.

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.

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 Shengmu Organic Milk 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.

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.

Learning at scale

– Online learning technologies has now opened space for China Shengmu Organic Milk 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.

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.

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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 -

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.

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.

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.

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.

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.

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 Shengmu Organic Milk business can come under increasing regulations regarding data privacy, data security, etc.

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.

Increasing wage structure of China Shengmu Organic Milk

– 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 Shengmu Organic Milk.

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.

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.

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 Shengmu Organic Milk needs to understand the core reasons impacting the Food Processing industry. This will help it in building a better workplace.

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.

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.

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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.

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