Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A)
Wang's Fortune Tea, marketed as Wanglaoji in mainland China and considered to be the founder of Chinese herbal tea, grew from a strong regional brand in China with limited national market penetration to becoming China's top soft drink giant with 90% market share of the country's herbal tea industry. This case explores how Wang's Fortune Tea became China's top selling herbal tea brand. The case asks students to analyze the company's growth strategies and to consider if it can continue to sustain its competitive advantage while facing intense competition from domestic and international companies.
Swot Analysis of "Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A)" written by Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung, Linda Suen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tea Wang's facing as an external strategic factors. Some of the topics covered in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) case study are - Strategic Management Strategies, Growth strategy, Marketing, National competitiveness, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) casestudy better are - – increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, increasing commodity prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, there is backlash against globalization,
central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tea Wang's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tea Wang's 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) can be done for the following purposes –
1. Strategic planning using facts provided in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) case study
2. Improving business portfolio management of Tea Wang's
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Tea Wang's
Strengths Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tea Wang's in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) Harvard Business Review case study are -
Training and development
– Tea Wang's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Tea Wang's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tea Wang's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Analytics focus
– Tea Wang's 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 Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung, Linda Suen 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.
Successful track record of launching new products
– Tea Wang's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tea Wang's 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.
Effective Research and Development (R&D)
– Tea Wang's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Tea Wang's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tea Wang's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Tea Wang's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tea Wang's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Tea Wang's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Tea Wang's is one of the most innovative firm in sector. Manager in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Tea Wang's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Sales & Marketing field
– Tea Wang's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Tea Wang's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Sales & Marketing industry
– Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) firm has clearly differentiated products in the market place. This has enabled Tea Wang's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Tea Wang's to invest into research and development (R&D) and innovation.
Weaknesses Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) are -
Need for greater diversity
– Tea Wang's 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.
No frontier risks strategy
– After analyzing the HBR case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A), it seems that company is thinking about the frontier risks that can impact Sales & Marketing 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.
Products dominated business model
– Even though Tea Wang's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Tea Wang's has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Tea Wang's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Tea Wang's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tea Wang's to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) HBR case study mentions - Tea Wang's 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.
High cash cycle compare to competitors
Tea Wang's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Lack of clear differentiation of Tea Wang's products
– To increase the profitability and margins on the products, Tea Wang's needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Tea Wang's, firm in the HBR case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the segment, Tea Wang's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Interest costs
– Compare to the competition, Tea Wang's 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.
Opportunities Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) | 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Tea Wang's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tea Wang's can use these opportunities to build new business models that can help the communities that Tea Wang's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Manufacturing automation
– Tea Wang's can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Creating value in data economy
– The success of analytics program of Tea Wang's has opened avenues for new revenue streams for the organization in the industry. This can help Tea Wang's to build a more holistic ecosystem as suggested in the Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) case study. Tea Wang's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Tea Wang's can develop new processes and procedures in Sales & Marketing 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tea Wang's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tea Wang's 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, Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Tea Wang's 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.
Building a culture of innovation
– managers at Tea Wang's 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 Sales & Marketing segment.
Buying journey improvements
– Tea Wang's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Tea Wang's 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. Tea Wang's 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.
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. Tea Wang's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tea Wang's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Tea Wang's business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Tea Wang's 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. Tea Wang's can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tea Wang's 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) .
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 Tea Wang's in the Sales & Marketing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Tea Wang's 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 field.
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. Tea Wang's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tea Wang's in the Sales & Marketing industry. The Sales & Marketing 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Tea Wang's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Tea Wang's has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Tea Wang's needs to keep up with the evolution of technology in the Sales & Marketing 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.
High dependence on third party suppliers
– Tea Wang's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Consumer confidence and its impact on Tea Wang's 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.
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 Tea Wang's.
Shortening product life cycle
– it is one of the major threat that Tea Wang's is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Tea Wang's needs to make to build a sustainable competitive advantage.
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