Luzheng Futures Co (1461) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Luzheng Futures Co (Hong Kong)

Based on various researches at Oak Spring University , Luzheng Futures Co is operating in a macro-environment that has been destablized by – increasing commodity prices, talent flight as more people leaving formal jobs, technology disruption, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, there is backlash against globalization, etc

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Introduction to SWOT Analysis of Luzheng Futures Co

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

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Strengths of Luzheng Futures Co | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Luzheng Futures Co are -

Analytics focus

– Luzheng Futures Co 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 Investment Services 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.

Learning organization

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

Ability to lead change in Investment Services

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

Effective Research and Development (R&D)

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

Sustainable margins compare to other players in Investment Services industry

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

Organizational Resilience of Luzheng Futures Co

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

Low bargaining power of suppliers

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

Operational resilience

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

Highly skilled collaborators

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

Diverse revenue streams

– Luzheng Futures Co is present in almost all the verticals within the Investment Services industry. This has provided Luzheng Futures Co 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.

Digital Transformation in Investment Services industry

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

– Luzheng Futures Co has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Luzheng Futures Co 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.

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Weaknesses of Luzheng Futures Co | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Luzheng Futures Co are -

Workers concerns about automation

– As automation is fast increasing in the Investment Services industry, Luzheng Futures Co needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.

Products dominated business model

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

High operating costs

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

Capital Spending Reduction

– Even during the low interest decade, Luzheng Futures Co 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 Investment Services industry using digital technology.

Skills based hiring in Investment Services industry

– The stress on hiring functional specialists at Luzheng Futures Co 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.

Lack of clear differentiation of Luzheng Futures Co products

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

Need for greater diversity

– Luzheng Futures Co 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.

Slow to strategic competitive environment developments

– As Luzheng Futures Co is one of the leading players in the Investment Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Investment Services industry in last five years.

High bargaining power of channel partners in Investment Services industry

– because of the regulatory requirements in Hong Kong, Luzheng Futures Co 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 Investment Services industry.

Low market penetration in new markets

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

Compensation and incentives

– The revenue per employee of Luzheng Futures Co is just above the Investment Services 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.

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Luzheng Futures Co Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Luzheng Futures Co 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, Luzheng Futures Co can use these opportunities to build new business models that can help the communities that Luzheng Futures Co operates in. Secondly it can use opportunities from government spending in Investment Services sector.

Manufacturing automation

– Luzheng Futures Co can use the latest technology developments to improve its manufacturing and designing process in Investment Services 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

– Luzheng Futures Co 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.

Use of Bitcoin and other crypto currencies for transactions in Investment Services industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Luzheng Futures Co in the Investment Services industry. Now Luzheng Futures Co can target international markets with far fewer capital restrictions requirements than the existing system.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Investment Services industry, but it has also influenced the consumer preferences. Luzheng Futures Co can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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 Luzheng Futures Co 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.

Lowering marketing communication costs

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

Using analytics as competitive advantage

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

Building a culture of innovation

– managers at Luzheng Futures Co 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 Investment Services industry.

Reforming the budgeting process

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

Creating value in data economy

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

Developing new processes and practices

– Luzheng Futures Co can develop new processes and procedures in Investment Services 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.

Learning at scale

– Online learning technologies has now opened space for Luzheng Futures Co 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.

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Threats Luzheng Futures Co External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Luzheng Futures Co are -

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.

Regulatory challenges

– Luzheng Futures Co 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 Investment Services industry regulations.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Luzheng Futures Co may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Investment Services sector.

High dependence on third party suppliers

– Luzheng Futures Co 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.

Barriers of entry lowering

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

Environmental challenges

– Luzheng Futures Co 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. Luzheng Futures Co can take advantage of this fund but it will also bring new competitors in the Investment Services industry.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Luzheng Futures Co in Investment Services industry. The Investment Services industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.

Shortening product life cycle

– it is one of the major threat that Luzheng Futures Co is facing in Investment Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Technology acceleration in Forth Industrial Revolution

– Luzheng Futures Co has witnessed rapid integration of technology during Covid-19 in the Investment Services industry. As one of the leading players in the industry, Luzheng Futures Co needs to keep up with the evolution of technology in the Investment Services 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.

Easy access to finance

– Easy access to finance in Investment Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Luzheng Futures Co 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 Luzheng Futures Co

– 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 Luzheng Futures Co.

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 Luzheng Futures Co.

Stagnating economy with rate increase

– Luzheng Futures Co 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 Investment Services industry.

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Weighted SWOT Analysis of Luzheng Futures Co Template, Example

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

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