China City Infrastructure (2349) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for China City Infrastructure (Hong Kong)

Based on various researches at Oak Spring University , China City Infrastructure is operating in a macro-environment that has been destablized by – technology disruption, cloud computing is disrupting traditional business models, there is backlash against globalization, increasing commodity prices, central banks are concerned over increasing inflation, wage bills are increasing, increasing household debt because of falling income levels, geopolitical disruptions, increasing government debt because of Covid-19 spendings, etc

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Introduction to SWOT Analysis of China City Infrastructure

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

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Strengths of China City Infrastructure | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of China City Infrastructure are -

Cross disciplinary teams

– Horizontal connected teams at the China City Infrastructure are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.

High switching costs

– The high switching costs that China City Infrastructure 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.

Operational resilience

– The operational resilience strategy of China City Infrastructure comprises – understanding the underlying the factors in the Construction 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

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

Sustainable margins compare to other players in Construction Services industry

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

Organizational Resilience of China City Infrastructure

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

Effective Research and Development (R&D)

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

Successful track record of launching new products

– China City Infrastructure has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. China City Infrastructure 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.

Superior customer experience

– The customer experience strategy of China City Infrastructure in Construction Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Training and development

– China City Infrastructure 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.

Digital Transformation in Construction Services industry

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

Strong track record of project management in the Construction Services industry

– China City Infrastructure is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

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Weaknesses of China City Infrastructure | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of China City Infrastructure are -

Low market penetration in new markets

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

Employees’ less understanding of China City Infrastructure strategy

– From the outside it seems that the employees of China City Infrastructure 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.

Interest costs

– Compare to the competition, China City Infrastructure 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.

Slow decision making process

– As mentioned earlier in the report, China City Infrastructure has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction Services industry over the last five years. China City Infrastructure 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.

Slow to harness new channels of communication

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

Compensation and incentives

– The revenue per employee of China City Infrastructure is just above the Construction 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.

High dependence on existing supply chain

– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of China City Infrastructure supply chain. Even after few cautionary changes, China City Infrastructure is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left China City Infrastructure vulnerable to further global disruptions in South East Asia.

Lack of clear differentiation of China City Infrastructure products

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

Ability to respond to the competition

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

Aligning sales with marketing

– From the outside it seems that China City Infrastructure needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction Services industry have deep experience in developing customer relationships. Marketing department at China City Infrastructure can leverage the sales team experience to cultivate customer relationships as China City Infrastructure is planning to shift buying processes online.

Increasing silos among functional specialists

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

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China City Infrastructure Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of China City Infrastructure are -

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

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

Developing new processes and practices

– China City Infrastructure can develop new processes and procedures in Construction 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, China City Infrastructure is facing challenges because of the dominance of functional experts in the organization. China City Infrastructure can utilize new technology in the field of Construction Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Reforming the budgeting process

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

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Construction Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. China City Infrastructure 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 City Infrastructure 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.

Finding new ways to collaborate

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

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. China City Infrastructure can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Loyalty marketing

– China City Infrastructure 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.

Lowering marketing communication costs

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

Creating value in data economy

– The success of analytics program of China City Infrastructure has opened avenues for new revenue streams for the organization in Construction Services industry. This can help China City Infrastructure to build a more holistic ecosystem for China City Infrastructure products in the Construction Services 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 China City Infrastructure 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 City Infrastructure to hire the very best people irrespective of their geographical location.

Buying journey improvements

– China City Infrastructure can improve the customer journey of consumers in the Construction Services 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.

Leveraging digital technologies

– China City Infrastructure 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.

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Threats China City Infrastructure External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of China City Infrastructure are -

High dependence on third party suppliers

– China City Infrastructure 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.

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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, China City Infrastructure 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 City Infrastructure prominent markets.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of China City Infrastructure.

Environmental challenges

– China City Infrastructure 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 City Infrastructure can take advantage of this fund but it will also bring new competitors in the Construction Services industry.

Learning curve for new practices

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

Easy access to finance

– Easy access to finance in Construction Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. China City Infrastructure can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

New competition

– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for China City Infrastructure in the Construction Services sector and impact the bottomline of the organization.

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 City Infrastructure needs to understand the core reasons impacting the Construction Services industry. This will help it in building a better workplace.

Increasing wage structure of China City Infrastructure

– 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 City Infrastructure.

Technology acceleration in Forth Industrial Revolution

– China City Infrastructure has witnessed rapid integration of technology during Covid-19 in the Construction Services industry. As one of the leading players in the industry, China City Infrastructure needs to keep up with the evolution of technology in the Construction 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.

Regulatory challenges

– China City Infrastructure 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 Construction Services industry regulations.

Consumer confidence and its impact on China City Infrastructure 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 Construction Services industry and other sectors.

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Weighted SWOT Analysis of China City Infrastructure Template, Example

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

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