AVIC International Holding HK (232) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for AVIC International Holding HK (Hong Kong)

Based on various researches at Oak Spring University , AVIC International Holding HK is operating in a macro-environment that has been destablized by – banking and financial system is disrupted by Bitcoin and other crypto currencies, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, technology disruption, geopolitical disruptions, etc

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Introduction to SWOT Analysis of AVIC International Holding HK

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

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Strengths of AVIC International Holding HK | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of AVIC International Holding HK are -

Learning organization

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

Low bargaining power of suppliers

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

Innovation driven organization

– AVIC International Holding HK is one of the most innovative firm in Aerospace & Defense sector.

Ability to recruit top talent

– AVIC International Holding HK is one of the leading players in the Aerospace & Defense 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.

Operational resilience

– The operational resilience strategy of AVIC International Holding HK comprises – understanding the underlying the factors in the Aerospace & Defense 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.

Sustainable margins compare to other players in Aerospace & Defense industry

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

High switching costs

– The high switching costs that AVIC International Holding HK 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.

Training and development

– AVIC International Holding HK has one of the best training and development program in Capital Goods 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.

Analytics focus

– AVIC International Holding HK is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Aerospace & Defense industry. The technology infrastructure of Hong Kong is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Successful track record of launching new products

– AVIC International Holding HK has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. AVIC International Holding HK 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.

Diverse revenue streams

– AVIC International Holding HK is present in almost all the verticals within the Aerospace & Defense industry. This has provided AVIC International Holding HK 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.

Highly skilled collaborators

– AVIC International Holding HK has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Aerospace & Defense industry. Secondly the value chain collaborators of AVIC International Holding HK have helped the firm to develop new products and bring them quickly to the marketplace.

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Weaknesses of AVIC International Holding HK | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of AVIC International Holding HK are -

High dependence on AVIC International Holding HK ‘s star products

– The top 2 products and services of AVIC International Holding HK still accounts for major business revenue. This dependence on star products in Aerospace & Defense industry has resulted into insufficient focus on developing new products, even though AVIC International Holding HK has relatively successful track record of launching new products.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, AVIC International Holding HK is slow explore the new channels of communication. These new channels of communication can help AVIC International Holding HK to provide better information regarding Aerospace & Defense products and services. It can also build an online community to further reach out to potential customers.

Employees’ less understanding of AVIC International Holding HK strategy

– From the outside it seems that the employees of AVIC International Holding HK 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.

No frontier risks strategy

– From the 10K / annual statement of AVIC International Holding HK, it seems that company is thinking out the frontier risks that can impact Aerospace & Defense 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.

Skills based hiring in Aerospace & Defense industry

– The stress on hiring functional specialists at AVIC International Holding HK 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.

Interest costs

– Compare to the competition, AVIC International Holding HK 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.

Workers concerns about automation

– As automation is fast increasing in the Aerospace & Defense industry, AVIC International Holding HK 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.

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 AVIC International Holding HK supply chain. Even after few cautionary changes, AVIC International Holding HK is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left AVIC International Holding HK vulnerable to further global disruptions in South East Asia.

Aligning sales with marketing

– From the outside it seems that AVIC International Holding HK needs to have more collaboration between its sales team and marketing team. Sales professionals in the Aerospace & Defense industry have deep experience in developing customer relationships. Marketing department at AVIC International Holding HK can leverage the sales team experience to cultivate customer relationships as AVIC International Holding HK is planning to shift buying processes online.

Increasing silos among functional specialists

– The organizational structure of AVIC International Holding HK is dominated by functional specialists. It is not different from other players in the Aerospace & Defense industry, but AVIC International Holding HK needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help AVIC International Holding HK to focus more on services in the Aerospace & Defense industry rather than just following the product oriented approach.

High cash cycle compare to competitors

AVIC International Holding HK has a high cash cycle compare to other players in the Aerospace & Defense industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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AVIC International Holding HK Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of AVIC International Holding HK are -

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. AVIC International Holding HK can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Reforming the budgeting process

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

Buying journey improvements

– AVIC International Holding HK can improve the customer journey of consumers in the Aerospace & Defense 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Aerospace & Defense industry, but it has also influenced the consumer preferences. AVIC International Holding HK can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Lowering marketing communication costs

– 5G expansion will open new opportunities for AVIC International Holding HK in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Aerospace & Defense industry, and it will provide faster access to the consumers.

Using analytics as competitive advantage

– AVIC International Holding HK has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Aerospace & Defense sector. This continuous investment in analytics has enabled AVIC International Holding HK to build a competitive advantage using analytics. The analytics driven competitive advantage can help AVIC International Holding HK to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Loyalty marketing

– AVIC International Holding HK 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.

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 AVIC International Holding HK 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.

Leveraging digital technologies

– AVIC International Holding HK 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.

Building a culture of innovation

– managers at AVIC International Holding HK 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 Aerospace & Defense industry.

Redefining models of collaboration and team work

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

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Aerospace & Defense industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. AVIC International Holding HK 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. AVIC International Holding HK 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.

Remote work and new talent hiring opportunities

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

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Threats AVIC International Holding HK External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of AVIC International Holding HK are -

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. AVIC International Holding HK 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.

Consumer confidence and its impact on AVIC International Holding HK 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 Aerospace & Defense industry and other sectors.

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.

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. AVIC International Holding HK needs to understand the core reasons impacting the Aerospace & Defense 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 AVIC International Holding HK in the Aerospace & Defense sector and impact the bottomline of the organization.

Stagnating economy with rate increase

– AVIC International Holding HK 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 Aerospace & Defense industry.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for AVIC International Holding HK in Aerospace & Defense industry. The Aerospace & Defense 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.

Technology acceleration in Forth Industrial Revolution

– AVIC International Holding HK has witnessed rapid integration of technology during Covid-19 in the Aerospace & Defense industry. As one of the leading players in the industry, AVIC International Holding HK needs to keep up with the evolution of technology in the Aerospace & Defense 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, AVIC International Holding HK may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Aerospace & Defense sector.

Easy access to finance

– Easy access to finance in Aerospace & Defense industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. AVIC International Holding HK 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 AVIC International Holding HK

– 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 AVIC International Holding HK.

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 AVIC International Holding HK.

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Weighted SWOT Analysis of AVIC International Holding HK Template, Example

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

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