Luzhou Xinglu Water (2281) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Luzhou Xinglu Water (Hong Kong)

Based on various researches at Oak Spring University , Luzhou Xinglu Water is operating in a macro-environment that has been destablized by – increasing commodity prices, wage bills are increasing, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing energy prices, etc

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Introduction to SWOT Analysis of Luzhou Xinglu Water

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

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Strengths of Luzhou Xinglu Water | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Luzhou Xinglu Water are -

Ability to lead change in Water Utilities

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

Diverse revenue streams

– Luzhou Xinglu Water is present in almost all the verticals within the Water Utilities industry. This has provided Luzhou Xinglu Water 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.

High brand equity

– Luzhou Xinglu Water has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Luzhou Xinglu Water to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Superior customer experience

– The customer experience strategy of Luzhou Xinglu Water in Water Utilities industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Organizational Resilience of Luzhou Xinglu Water

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

High switching costs

– The high switching costs that Luzhou Xinglu Water 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.

Low bargaining power of suppliers

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

Innovation driven organization

– Luzhou Xinglu Water is one of the most innovative firm in Water Utilities sector.

Successful track record of launching new products

– Luzhou Xinglu Water has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Luzhou Xinglu Water 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.

Analytics focus

– Luzhou Xinglu Water 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 Water Utilities 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.

Ability to recruit top talent

– Luzhou Xinglu Water is one of the leading players in the Water Utilities 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.

Digital Transformation in Water Utilities industry

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

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Weaknesses of Luzhou Xinglu Water | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Luzhou Xinglu Water are -

Employees’ less understanding of Luzhou Xinglu Water strategy

– From the outside it seems that the employees of Luzhou Xinglu Water 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 Luzhou Xinglu Water is one of the leading players in the Water Utilities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Water Utilities industry in last five years.

Skills based hiring in Water Utilities industry

– The stress on hiring functional specialists at Luzhou Xinglu Water 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.

Capital Spending Reduction

– Even during the low interest decade, Luzhou Xinglu Water 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 Water Utilities industry using digital technology.

No frontier risks strategy

– From the 10K / annual statement of Luzhou Xinglu Water, it seems that company is thinking out the frontier risks that can impact Water Utilities 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.

Low market penetration in new markets

– Outside its home market of Hong Kong, Luzhou Xinglu Water needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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

Products dominated business model

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

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Luzhou Xinglu Water is slow explore the new channels of communication. These new channels of communication can help Luzhou Xinglu Water to provide better information regarding Water Utilities products and services. It can also build an online community to further reach out to potential customers.

Ability to respond to the competition

– As the decision making is very deliberative at Luzhou Xinglu Water, in the dynamic environment of Water Utilities industry it has struggled to respond to the nimble upstart competition. Luzhou Xinglu Water has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

High bargaining power of channel partners in Water Utilities industry

– because of the regulatory requirements in Hong Kong, Luzhou Xinglu Water 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 Water Utilities industry.

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Luzhou Xinglu Water Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Luzhou Xinglu Water are -

Manufacturing automation

– Luzhou Xinglu Water can use the latest technology developments to improve its manufacturing and designing process in Water Utilities 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.

Learning at scale

– Online learning technologies has now opened space for Luzhou Xinglu Water 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.

Creating value in data economy

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

Remote work and new talent hiring opportunities

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

Better consumer reach

– The expansion of the 5G network will help Luzhou Xinglu Water to increase its market reach. Luzhou Xinglu Water 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Luzhou Xinglu Water can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.

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. Luzhou Xinglu Water can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Using analytics as competitive advantage

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

Use of Bitcoin and other crypto currencies for transactions in Water Utilities industry

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

Reforming the budgeting process

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

Loyalty marketing

– Luzhou Xinglu Water 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.

Building a culture of innovation

– managers at Luzhou Xinglu Water 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 Water Utilities industry.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Luzhou Xinglu Water can use these opportunities to build new business models that can help the communities that Luzhou Xinglu Water operates in. Secondly it can use opportunities from government spending in Water Utilities sector.

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Threats Luzhou Xinglu Water External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Luzhou Xinglu Water are -

Technology acceleration in Forth Industrial Revolution

– Luzhou Xinglu Water has witnessed rapid integration of technology during Covid-19 in the Water Utilities industry. As one of the leading players in the industry, Luzhou Xinglu Water needs to keep up with the evolution of technology in the Water Utilities 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 Water Utilities industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Luzhou Xinglu Water can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Luzhou Xinglu Water in Water Utilities industry. The Water Utilities 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.

High dependence on third party suppliers

– Luzhou Xinglu Water 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.

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 Luzhou Xinglu Water in the Water Utilities sector and impact the bottomline 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 Luzhou Xinglu Water business can come under increasing regulations regarding data privacy, data security, 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. Luzhou Xinglu Water 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

– Luzhou Xinglu Water 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 Water Utilities industry.

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.

Regulatory challenges

– Luzhou Xinglu Water 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 Water Utilities industry regulations.

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. Luzhou Xinglu Water needs to understand the core reasons impacting the Water Utilities industry. This will help it in building a better workplace.

Shortening product life cycle

– it is one of the major threat that Luzhou Xinglu Water is facing in Water Utilities sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Aging population

– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.

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Weighted SWOT Analysis of Luzhou Xinglu Water Template, Example

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

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