Strength, Weakness, Opportunity, And Threat Analysis

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The SWOT (Strength, Weakness, Opportunity, and Threat) analysis is structured in a point-based system in order to visualize the recommendation result in a more quantitative view. Internal factors, strength and weakness, are rated in terms of technology, product quality, cost, demand and supply. External factors, opportunity and threat, are rated in terms of R&D, policy, demand and supply. The factors and their relative importance are explained in the next paragraphs.

Technology in Strength and Weakness refers to the technological advancement including production process and equipment as well as research and development investment for future production benefits. If a company’s equipment is imported with foreign advanced technology, then the
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The rapid downstream development forces the technology in the target market to go forward. For example, the daily chemicals market is expected to be more specifically segmented according to customers’ more specific demand and needs. This would in turn trigger the technology development in the target market to adapt to the change. If a company could manage to take this opportunity, then it is rated high with a positive number under “Technology” of “Opportunity and Threat”. Otherwise, it would be rated with a negative number as a threat to the company.

Demand in Strength and Weakness refers to the stability of customer source. If a company has quite stable large customers in each year, then it is rated high in “Demand” as strength of the company. If a company is established only recently, then it is likely to have to work hard on getting stable long term customer relationship, thus it is rated low or even negative in this
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Firstly, if a company’s price is too high or has low performance-to-price ratio, then the company is rated with a negative number under “Supply” in “Strength and Weakness”, vice versa. Secondly, if a company has upstream (other than EO & PO) and/or downstream production, it is typically a major strength of the company. Thirdly, if a company has large production scale or large capacity, it is likely to have strong supply ability when having large orders. In addition, small AEO suppliers are gradually being driven out of the market, which means suppliers with large production scale is likely to earn higher market share.

Supply in Opportunity and Threat refers to the trend of raw material prices and the product homogeneity problem vs. the trend of product differentiation. As EO’s price is decreasing, a company with major raw material in EO may take the opportunity to lower its cost. If a company produces homogeneous products, the product differentiation would shock its profit margin in the future, and acts as a threat to the

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