Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China

Lantian Stock was China's first state-owned agricultural enterprise to have gone through the corporatization reform in mid 90's. Since its listing in 1996, Lantian Stock had recorded a dazzling performance in its financial statements. However, in October 2001, its resplendent image was smashed by an academic researcher, Liu Shuwei with her powerful 600-word article that pointed out the liquidity crisis of Lantian Stock. Consequently, all banks in China refused to extend loans to the company. Meanwhile, Liu faced defamation prosecution brought up by the company who initially denied the allegation. The defamation charge was dropped eventually as the Chinese regulators began to unveil the hidden truth that Lantian Stock had indeed involved in misreporting and perpetrating accounting fraud. Chinese media also dug up the controversial background, mythical tales and the previous fraud record of Lantian Stock. Since Liu could uncover the misstatement based on some basic financial ratio analysis, she remained skeptical about why such wrongdoings had not been discovered by related parties earlier. Alternately, the auditing or CPA firm of Lantian Stock commented that the fraud was undetectable as it had gone far beyond what CPAs could discover from its required procedure, and blamed it on the Chinese environment that was conducive to accounting fraud. Was the circumstance of Lantian Stock scandal as what the CPA had claimed?

Authors :: Amy Lau, Raymond Wong, Claudia H. L. Woo

Topics :: Leadership & Managing People

Tags :: Compensation, Corporate governance, Ethics, Financial management, Government, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China" written by Amy Lau, Raymond Wong, Claudia H. L. Woo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lantian Stock facing as an external strategic factors. Some of the topics covered in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study are - Strategic Management Strategies, Compensation, Corporate governance, Ethics, Financial management, Government and Leadership & Managing People.

Some of the macro environment factors that can be used to understand the Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China casestudy better are - – cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, technology disruption, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, etc

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Introduction to SWOT Analysis of Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lantian Stock, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lantian Stock 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 Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China can be done for the following purposes –
1. Strategic planning using facts provided in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study
2. Improving business portfolio management of Lantian Stock
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lantian Stock

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Strengths Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Lantian Stock in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China Harvard Business Review case study are -

Superior customer experience

– The customer experience strategy of Lantian Stock in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

– Suppliers of Lantian Stock in the sector have low bargaining power. Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lantian Stock to manage not only supply disruptions but also source products at highly competitive prices.

Successful track record of launching new products

– Lantian Stock has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lantian Stock 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.

High switching costs

– The high switching costs that Lantian Stock 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.

Sustainable margins compare to other players in Leadership & Managing People industry

– Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China firm has clearly differentiated products in the market place. This has enabled Lantian Stock to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Lantian Stock to invest into research and development (R&D) and innovation.

Cross disciplinary teams

– Horizontal connected teams at the Lantian Stock 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.

Analytics focus

– Lantian Stock 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 industry. The technology infrastructure suggested by Amy Lau, Raymond Wong, Claudia H. L. Woo can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

High brand equity

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

Operational resilience

– The operational resilience strategy in the Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China Harvard Business Review case study comprises – understanding the underlying the factors in the 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.

Diverse revenue streams

– Lantian Stock is present in almost all the verticals within the industry. This has provided firm in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Training and development

– Lantian Stock has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Strong track record of project management

– Lantian Stock is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

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Weaknesses Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China are -

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China, is just above the industry average. Lantian Stock 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lantian Stock is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Increasing silos among functional specialists

– The organizational structure of Lantian Stock is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Lantian Stock needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lantian Stock to focus more on services rather than just following the product oriented approach.

High operating costs

– Compare to the competitors, firm in the HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Lantian Stock 's lucrative customers.

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 Lantian Stock supply chain. Even after few cautionary changes mentioned in the HBR case study - Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Lantian Stock vulnerable to further global disruptions in South East Asia.

Slow to strategic competitive environment developments

– As Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China HBR case study mentions - Lantian Stock takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.

Aligning sales with marketing

– It come across in the case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China can leverage the sales team experience to cultivate customer relationships as Lantian Stock is planning to shift buying processes online.

No frontier risks strategy

– After analyzing the HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. 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.

Slow decision making process

– As mentioned earlier in the report, Lantian Stock has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Lantian Stock 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.

Need for greater diversity

– Lantian Stock 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.

Interest costs

– Compare to the competition, Lantian Stock 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.

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Opportunities Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities highlighted in the Harvard Business Review case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China are -

Low interest rates

– Even though inflation is raising its head in most developed economies, Lantian Stock 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.

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 Lantian Stock 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Lantian Stock is facing challenges because of the dominance of functional experts in the organization. Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Creating value in data economy

– The success of analytics program of Lantian Stock has opened avenues for new revenue streams for the organization in the industry. This can help Lantian Stock to build a more holistic ecosystem as suggested in the Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China case study. Lantian Stock can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Lantian Stock can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Lantian Stock in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.

Manufacturing automation

– Lantian Stock can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. 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.

Developing new processes and practices

– Lantian Stock can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Lantian Stock can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Lantian Stock 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, as suggested in case study, Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Lantian Stock 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. Lantian Stock 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.

Building a culture of innovation

– managers at Lantian Stock 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 Leadership & Managing People segment.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Lantian Stock 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 Lantian Stock to hire the very best people irrespective of their geographical location.

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Threats Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China are -

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 Lantian Stock business can come under increasing regulations regarding data privacy, data security, etc.

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 Lantian Stock in the Leadership & Managing People sector and impact the bottomline of the organization.

Capital market disruption

– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Lantian Stock.

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. Lantian Stock needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.

Environmental challenges

– Lantian Stock 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. Lantian Stock can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China, Lantian Stock may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Lantian Stock in the Leadership & Managing People industry. The Leadership & Managing People 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 international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Lantian Stock 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 prominent markets illustrated in HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China .

Consumer confidence and its impact on Lantian Stock 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 the industry and other sectors.

Shortening product life cycle

– it is one of the major threat that Lantian Stock is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Easy access to finance

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

Increasing wage structure of Lantian Stock

– 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 Lantian Stock.

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Weighted SWOT Analysis of Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China 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 the case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China 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 the Harvard case study Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China 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 Lantian Stock: The 600-Word Spell on a Transformed State-Owned Enterprise in China is 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 Lantian Stock needs to make to build a sustainable competitive advantage.

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