Yum China Holdings, Inc. SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by Yum China Holdings, Inc. managers to do a situational analysis of the organization . It is an important technique to map out the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Yum China Holdings, Inc. is facing in its current business environment.

The Yum China Holdings, Inc. is one of the leading companies in its industry. Yum China Holdings, Inc. maintains its prominent position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis an immensenly interactive process and requires effective coordination among various departments within the company such as – marketing, finance, operations, management information systems and strategic planning.


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The SWOT Analysis framework helps an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also known as SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix enables the managers of the Yum China Holdings, Inc. to develop four types of strategies:

• SO (strengths-opportunities) Strategies
• WO (weaknesses-opportunities) Strategies
• ST (strengths-threats) Strategies
•  WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The primary purpose of SWOT matrix is to identify the strategies that an organization can use to exploit external opportunities, counter threats, and build on & protect Yum China Holdings, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Yum China Holdings, Inc. SWOT Analysis

Strengths of Yum China Holdings, Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Yum China Holdings, Inc. has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Yum China Holdings, Inc. are –

Read - Yum China Holdings, Inc. Porter 5 Forces Analysis & Industry Analysis
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• Highly skilled workforce through successful training and learning programs. Yum China Holdings, Inc. is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
• Good Returns on Capital Expenditure – Yum China Holdings, Inc. is relatively successful at execution of new projects and generated good returns on capital expenditure by building new revenue streams.
• Automation of activities brought consistency of quality to Yum China Holdings, Inc. products and has enabled the company to scale up and scale down based on the demand conditions in the market.
• Strong Brand Portfolio – Over the years Yum China Holdings, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Yum China Holdings, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.
• Strong distribution network – Over the years Yum China Holdings, Inc. has built a reliable distribution network that can reach majority of its potential market.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Highly successful at Go To Market strategies for its products.
• Strong Free Cash Flow – Yum China Holdings, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.

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Weakness of Yum China Holdings, Inc. – Internal Strategic Factors

Weakness are the areas where Yum China Holdings, Inc. can improve upon. Strategy is about making choices and weakness are the areas where an organization can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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• Investment in Research and Development is below the fastest growing players in the industry. Even though Yum China Holdings, Inc. is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation. It has come across as a mature firm looking forward to bring out products based on tested features in the market.
• Organization structure is only compatible with present business model thus limiting expansion in adjacent product segments.
• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Yum China Holdings, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• Not highly successful at integrating firms with different work culture. As mentioned earlier even though Yum China Holdings, Inc. is successful at integrating small companies it has its share of failure to merge firms that have different work culture.
• The profitability ratio and Net Contribution % of Yum China Holdings, Inc. are below the industry average.
• The marketing of the products left a lot to be desired. Even though the product is a success in terms of sale but its positioning and unique selling proposition is not clearly defined which can lead to the attacks in this segment from the competitors.
• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.

Opportunities for Yum China Holdings, Inc. – External Strategic Factors

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• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Yum China Holdings, Inc. an opportunity to enter a new emerging market.
• Lower inflation rate – The low inflation rate bring more stability in the market, enable credit at lower interest rate to the customers of Yum China Holdings, Inc..
• New trends in the consumer behavior can open up new market for the Yum China Holdings, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• The new technology provides an opportunity to Yum China Holdings, Inc. to practices differentiated pricing strategy in the new market. It will enable the firm to maintain its loyal customers with great service and lure new customers through other value oriented propositions.
• New customers from online channel – Over the past few years the company has invested vast sum of money into the online platform. This investment has opened new sales channel for Yum China Holdings, Inc.. In the next few years the company can leverage this opportunity by knowing its customer better and serving their needs using big data analytics.
• New environmental policies – The new opportunities will create a level playing field for all the players in the industry. It represent a great opportunity for Yum China Holdings, Inc. to drive home its advantage in new technology and gain market share in the new product category.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Yum China Holdings, Inc. in other product categories.
• Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.

Threats Yum China Holdings, Inc. Facing - External Strategic Factors

• Rising raw material can pose a threat to the Yum China Holdings, Inc. profitability.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Yum China Holdings, Inc.   in those markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• The demand of the highly profitable products is seasonal in nature and any unlikely event during the peak season may impact the profitability of the company in short to medium term.
• Intense competition – Stable profitability has increased the number of players in the industry over last two years which has put downward pressure on not only profitability but also on overall sales.
• Changing consumer buying behavior from online channel could be a threat to the existing physical infrastructure driven supply chain model.
• Liability laws in different countries are different and Yum China Holdings, Inc. may be exposed to various liability claims given change in policies in those markets.
• As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.

Limitations of SWOT Analysis for Yum China Holdings, Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

• Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
• SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
• The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Yum China Holdings, Inc.
• SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
• SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

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Weighted SWOT Analysis of Yum China Holdings, Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Yum China Holdings, Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Yum China Holdings, Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
• L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
• R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)