1. ESSAY QUESTION - CHINESE HAS A SAYING “WHEN THERE ARE THREATS, THERE ARE ALSO OPPORTUNITIES” WHICH SUGGESTS STRATEGIC OPPORTUNITIES ARE AVAILABLE IN ALMOST ANY INDUSTRY, INCLUDING DECLINING ONES. DISCUSS WITH ILLUSTRATIVE EXAMPLES IF YOU AGREE WITH SUCH A VIEW.
SWOT analysis usually uses in strategy planning. “S” and “W” mean “Strength” and “Weakness” which are mainly focusing on the company's internal environment. On the other hand, “O” and “T” mean “Opportunities” and “Threats” which focus on the external environment. External environmental trends fall into two broad categories:One represents the threat, the otherrepresents the opportunity. The threat refers to the challenge posed by an unfavorable development trend in the environment, which will weaken the competitive position of the company if we does not take decisive strategic actions. The opportunity is an area that is attractive to the company's behavior, where the company will have a competitive advantage.During the external environment scanning, by adopting PEST analysis (political, economic, social and technology), companies can identify the “whole picture” of the business environment easily, including threats and thus to create opportunities. The below two examples will be used to explain the idea on how to overcome threats with opportunities.
Example 1: 比如
依据年度报告，香港最受欢迎的本地报纸每天的销售平均额（每天由Next Digital Limes，0282。香港出书的报纸）从2009-10日的302673份削减到2016－17份的130230份。另一份受欢迎的香港本地报纸《东方日报》（东方报业集团有限公司，0018。香港）的一份报纸上，报纸出书业的收入从2009-10年的HK15834 41000下降到2016－17年间的1082500万。The traditional paid newspaper industry is sun setting in the recent 10 years mainly due to the distribution of free daily newspapers since early 2000. Free daily newspapers are not only distributed in some fixed locations, but also available online. This changes the trend of reading newspapers and makes the sales of traditional paid newspaper industry declining years by years.
According to the annual reports, the sales average per day of the most popular local newspaper in Hong Kong - Apply Daily (one of the newspapers published by Next Digital Limited, 0282.HK) decreased from 302,673 copies per day in 2009-10 to 130,230 copies in 2016-17. For another popular Hong Kong local newspaper - Oriental Daily News (one of the newspapers published by Oriental Press Group Limited, 0018.HK), the revenue on newspapers publishing is declining from HKD1,583,441,000 in 2009-10 to HKD1,082,500,000 in 2016-17.
However, on one hand, the depressed market conditions and the property cooling measures taken by the government also have negative affects to the advertising revenue of the local traditional paid newspaper industry, especially the revenue on the properties advertisements.
To analyze the external environment of traditional paid newspaper industry by using PEST analysis, the political environment (P) affects the property transaction rates due to the property cooling measures announced by the Hong Kong government and brings negative impacts on the advertising revenue of the traditional paid newspaper industry. For the economic (E), the depressed market conditions decrease the sales of newspaper and related magazine. The traditional paid newspaper has shrunk completely, and the circulation of paper media has dropped sharply, which leads to people losing confidence in the newspaper. Most newspaper groups are turning to the Internet, and some are starting to distribute free newspapers. The social culture (S) of reading local traditional paid newspaper was affected by the delivery of free daily newspapers. The emergence of free newspapers has brought a strong impact on the traditional newspapers, and many paid newspaper groups have launched free newspapers one after another. While paid newspaper sales have fallen, free newspapers have retained a large number of readers.The trends on reading newspapers were affected by the Technology development (T). An e-reader is a device dedicated to displaying digital versions of written material from books, magazines, newspapers and other print sources.Some e-readers also provide access to e-documents such as blogs, websites, news feeds, etc.In most cases, devices with other major functions, such as netbooks and cellphones, are also used as e-readers.The emergence of e-readers also brings a strong impact on the traditional paid newspaper industry.
In order to turn the threats into opportunities, traditional paid newspaper publishers applied different strategies to tackle and turn into opportunity. For example, Oriental Press Group Limited has set up two 24-hours online television channels in order to draw people’s attention back on traditional newspapers publishers. The two 24-hours online television channels are “Ontv” and “Money 18”. “Ontv” is a 24-hours online television channel which provides real time news and produces different kinds of programmes around some specific topics. It also invites KOLs (Key opinion leaders) to share lots of hop topics to pop up the viewing rates. “Money 18” provides 24-hours financial news and real time stock quote.Next Digital Limited did similar online platform to raise people’s attention to the productions of traditional newspapers publishers. “Apple Action News” is the online platform created by the Next Digital Limited for reporting real time news.
These changes successfully help Oriental Daily News to overcome threats with opportunities. Free daily newspapers and Technology development seems to be big threats for the traditional paid newspaper industry. However, the publishers take use of free E-channels to increase their revenue. In the annual reports of 2016-17, Oriental Daily News proudly announced that the income from the electronic media increased 40% compare with 2015-16. The online platforms help traditional newspapers publishers to keep consistent revenue while the revenue of traditional newspapers was decreasing.
Sometimes when people step backward and they will see opportunities from threats. The online media has a great success while the traditional paid newspaper industry is sun setting. Most Kwai Chung Limited starts up its business while the traditional paid newspaper industry is sun setting. The company published “Blackpaper Magazine” in 2010. Following Blackpaper Magazine’s great success, Most Kwai Chung Limited published “100 Most Magazine” in 2013.Most Kwai Chung Limited has its online media platform named “TV Most” and successfully attracts young generation which gains approximately 60% of the total revenue of the company.Environmental scanning plays an important role on developing the company strategy. Firstly, it is quite difficult to have a TV license issued by the Government; however, due to the technological progress, video website becomes a new trend which was gradually accepted by more and more people. Secondly, fast-paced life makes people want to get access to latest events easily and conveniently. Therefore TV Most aims to upload sarcastic videos and let people know the latest events in an entertaining way. Furthermore, TV Most also creates advertorial videos and promote the products in a humorous way, which makes the company earn abundant profits.
Example 2: Retail Industry in China
Same as traditional paid newspaper industry in Hong Kong, the retail industry in China also affected by the Technology development. Technology development changes the trend of lots of industry, including the retail industry. People change their shopping habit and tend to shop online instead of visiting a shopping mall or a retail stores. Shopping online is convenience and people can buy things from anywhere. However, it turns to be a threat to traditional retail industry in China. Many big department stores are facing declining on sales due to the competition though online trading. However, this is always opportunities come up with threats.
To analyze the external environment of traditional retail industry in China by using PEST analysis, the political environment (P) is that the China government encourage people to use “internet plus” which push the development of online trading. For the economic (E), the GDP and household income of China are increasing and people are willing to buy more luxury products. The social culture (S) of shopping in a fast and convenience way is a tread. The Technology development makes people tend to shop online instead of shopping in malls and department stores.With the Internet, social networks and big data increasingly empowering consumers, the dominant power of Chinese business has undergone major changes, truly entering the era of consumer sovereignty,. The traditional business-centric and the era of monopoly of commerce by geographical location is gone. A new generation of digital consumers not only has a lot of online migration, but also has been highly empowered by new technologies, and fundamental changes have taken place in consumer behavior and consumer attitudes.