Zhong Fa Zhan (475) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Zhong Fa Zhan (Hong Kong)

Based on various researches at Oak Spring University , Zhong Fa Zhan is operating in a macro-environment that has been destablized by – increasing energy prices, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, etc

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Introduction to SWOT Analysis of Zhong Fa Zhan

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

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Strengths of Zhong Fa Zhan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Zhong Fa Zhan are -

Innovation driven organization

– Zhong Fa Zhan is one of the most innovative firm in Jewelry & Silverware sector.

Low bargaining power of suppliers

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

Ability to lead change in Jewelry & Silverware

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

High switching costs

– The high switching costs that Zhong Fa Zhan 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.

Analytics focus

– Zhong Fa Zhan 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 Jewelry & Silverware 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.

Digital Transformation in Jewelry & Silverware industry

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

Operational resilience

– The operational resilience strategy of Zhong Fa Zhan comprises – understanding the underlying the factors in the Jewelry & Silverware 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

– Zhong Fa Zhan has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Jewelry & Silverware industry. Secondly the value chain collaborators of Zhong Fa Zhan have helped the firm to develop new products and bring them quickly to the marketplace.

Training and development

– Zhong Fa Zhan has one of the best training and development program in Consumer Cyclical industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Learning organization

- Zhong Fa Zhan 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 Zhong Fa Zhan is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Zhong Fa Zhan emphasize – knowledge, initiative, and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Zhong Fa Zhan 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 brand equity

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

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Weaknesses of Zhong Fa Zhan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Zhong Fa Zhan are -

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

Need for greater diversity

– Zhong Fa Zhan 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 decision making process

– As mentioned earlier in the report, Zhong Fa Zhan has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Jewelry & Silverware industry over the last five years. Zhong Fa Zhan even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.

High bargaining power of channel partners in Jewelry & Silverware industry

– because of the regulatory requirements in Hong Kong, Zhong Fa Zhan 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 Jewelry & Silverware industry.

Skills based hiring in Jewelry & Silverware industry

– The stress on hiring functional specialists at Zhong Fa Zhan 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.

Workers concerns about automation

– As automation is fast increasing in the Jewelry & Silverware industry, Zhong Fa Zhan 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.

Compensation and incentives

– The revenue per employee of Zhong Fa Zhan is just above the Jewelry & Silverware 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.

Interest costs

– Compare to the competition, Zhong Fa Zhan 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.

High operating costs

– Compare to the competitors, Zhong Fa Zhan has high operating costs in the Jewelry & Silverware industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Zhong Fa Zhan lucrative customers.

Slow to harness new channels of communication

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

Low market penetration in new markets

– Outside its home market of Hong Kong, Zhong Fa Zhan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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Zhong Fa Zhan Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Zhong Fa Zhan are -

Leveraging digital technologies

– Zhong Fa Zhan 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Jewelry & Silverware industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Zhong Fa Zhan 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. Zhong Fa Zhan 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.

Better consumer reach

– The expansion of the 5G network will help Zhong Fa Zhan to increase its market reach. Zhong Fa Zhan 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.

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 Zhong Fa Zhan 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.

Manufacturing automation

– Zhong Fa Zhan can use the latest technology developments to improve its manufacturing and designing process in Jewelry & Silverware 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.

Building a culture of innovation

– managers at Zhong Fa Zhan 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 Jewelry & Silverware 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, Zhong Fa Zhan can use these opportunities to build new business models that can help the communities that Zhong Fa Zhan operates in. Secondly it can use opportunities from government spending in Jewelry & Silverware sector.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Zhong Fa Zhan can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Zhong Fa Zhan to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Using analytics as competitive advantage

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

Redefining models of collaboration and team work

– As explained in the weaknesses section, Zhong Fa Zhan is facing challenges because of the dominance of functional experts in the organization. Zhong Fa Zhan can utilize new technology in the field of Jewelry & Silverware industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Use of Bitcoin and other crypto currencies for transactions in Jewelry & Silverware industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Zhong Fa Zhan in the Jewelry & Silverware industry. Now Zhong Fa Zhan can target international markets with far fewer capital restrictions requirements than the existing system.

Buying journey improvements

– Zhong Fa Zhan can improve the customer journey of consumers in the Jewelry & Silverware 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.

Learning at scale

– Online learning technologies has now opened space for Zhong Fa Zhan 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 Zhong Fa Zhan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Zhong Fa Zhan are -

Environmental challenges

– Zhong Fa Zhan 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. Zhong Fa Zhan can take advantage of this fund but it will also bring new competitors in the Jewelry & Silverware industry.

Easy access to finance

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

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Zhong Fa Zhan may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Jewelry & Silverware sector.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Zhong Fa Zhan 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 Zhong Fa Zhan prominent markets.

Regulatory challenges

– Zhong Fa Zhan 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 Jewelry & Silverware 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. Zhong Fa Zhan needs to understand the core reasons impacting the Jewelry & Silverware industry. This will help it in building a better workplace.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Zhong Fa Zhan in Jewelry & Silverware industry. The Jewelry & Silverware 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.

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 Zhong Fa Zhan in the Jewelry & Silverware sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Zhong Fa Zhan has witnessed rapid integration of technology during Covid-19 in the Jewelry & Silverware industry. As one of the leading players in the industry, Zhong Fa Zhan needs to keep up with the evolution of technology in the Jewelry & Silverware 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.

Stagnating economy with rate increase

– Zhong Fa Zhan 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 Jewelry & Silverware industry.

Consumer confidence and its impact on Zhong Fa Zhan 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 Jewelry & Silverware industry and other sectors.

High dependence on third party suppliers

– Zhong Fa Zhan 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.

Shortening product life cycle

– it is one of the major threat that Zhong Fa Zhan is facing in Jewelry & Silverware sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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Weighted SWOT Analysis of Zhong Fa Zhan Template, Example

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

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