SWOT Analysis / TOWS Matrix for SKY Light (Hong Kong)
Based on various researches at Oak Spring University , SKY Light is operating in a macro-environment that has been destablized by – technology disruption, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies,
increasing transportation and logistics costs, increasing household debt because of falling income levels, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that SKY Light can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the SKY Light, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which SKY Light 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.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of SKY Light can be done for the following purposes –
1. Strategic planning of SKY Light
2. Improving business portfolio management of SKY Light
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a Photography sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of SKY Light
Strengths of SKY Light | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of SKY Light are -
Training and development
– SKY Light 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.
High brand equity
– SKY Light has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled SKY Light to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– SKY Light 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 Photography 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
– SKY Light is one of the leading players in the Photography 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.
Innovation driven organization
– SKY Light is one of the most innovative firm in Photography sector.
Superior customer experience
– The customer experience strategy of SKY Light in Photography industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– SKY Light has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. SKY Light 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.
Learning organization
- SKY Light 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 SKY Light is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at SKY Light emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– SKY Light has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Photography industry. Secondly the value chain collaborators of SKY Light have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of SKY Light
– The covid-19 pandemic has put organizational resilience at the centre of everthing SKY Light 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 SKY Light in the Consumer Cyclical sector have low bargaining power. SKY Light has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps SKY Light to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that SKY Light 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.
Weaknesses of SKY Light | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SKY Light are -
Need for greater diversity
– SKY Light 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.
Ability to respond to the competition
– As the decision making is very deliberative at SKY Light, in the dynamic environment of Photography industry it has struggled to respond to the nimble upstart competition. SKY Light has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Hong Kong, SKY Light needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– From the 10K / annual statement of SKY Light, it seems that company is thinking out the frontier risks that can impact Photography 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.
Capital Spending Reduction
– Even during the low interest decade, SKY Light 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 Photography industry using digital technology.
Lack of clear differentiation of SKY Light products
– To increase the profitability and margins on the products, SKY Light needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee of SKY Light is just above the Photography 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.
Increasing silos among functional specialists
– The organizational structure of SKY Light is dominated by functional specialists. It is not different from other players in the Photography industry, but SKY Light needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help SKY Light to focus more on services in the Photography industry rather than just following the product oriented approach.
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 SKY Light supply chain. Even after few cautionary changes, SKY Light is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left SKY Light vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As SKY Light is one of the leading players in the Photography industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Photography industry in last five years.
Interest costs
– Compare to the competition, SKY Light 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.
SKY Light Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of SKY Light are -
Creating value in data economy
– The success of analytics program of SKY Light has opened avenues for new revenue streams for the organization in Photography industry. This can help SKY Light to build a more holistic ecosystem for SKY Light products in the Photography 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 SKY Light 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 SKY Light to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions in Photography industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for SKY Light in the Photography industry. Now SKY Light can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, SKY Light 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for SKY Light in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Photography industry, and it will provide faster access to the consumers.
Loyalty marketing
– SKY Light 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.
Better consumer reach
– The expansion of the 5G network will help SKY Light to increase its market reach. SKY Light 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Photography industry, but it has also influenced the consumer preferences. SKY Light can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects SKY Light can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– SKY Light 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.
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 SKY Light 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.
Learning at scale
– Online learning technologies has now opened space for SKY Light 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.
Manufacturing automation
– SKY Light can use the latest technology developments to improve its manufacturing and designing process in Photography 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.
Threats SKY Light External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of SKY Light are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Photography industry are lowering. It can presents SKY Light with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Photography sector.
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. SKY Light 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, SKY Light may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Photography sector.
Shortening product life cycle
– it is one of the major threat that SKY Light is facing in Photography sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on SKY Light 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 Photography industry and other sectors.
Regulatory challenges
– SKY Light 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 Photography industry regulations.
Easy access to finance
– Easy access to finance in Photography industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. SKY Light 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 SKY Light in Photography industry. The Photography 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.
Increasing wage structure of SKY Light
– 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 SKY Light.
Technology acceleration in Forth Industrial Revolution
– SKY Light has witnessed rapid integration of technology during Covid-19 in the Photography industry. As one of the leading players in the industry, SKY Light needs to keep up with the evolution of technology in the Photography 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.
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 SKY Light business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– SKY Light 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 Photography industry.
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.
Weighted SWOT Analysis of SKY Light Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at SKY Light 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 SKY Light 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 SKY Light 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 SKY Light 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 SKY Light needs to make to build a sustainable competitive advantage.