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 - – talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, increasing energy prices, increasing transportation and logistics costs, geopolitical disruptions,
there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, 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 -
Superior customer experience
– The customer experience strategy of Tea Wang's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Tea Wang's is one of the leading recruiters in the industry. Managers in the Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Learning organization
- Tea Wang's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Tea Wang's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
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.
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.
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.
High switching costs
– The high switching costs that Tea Wang's 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.
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 -
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.
Capital Spending Reduction
– Even during the low interest decade, Tea Wang's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High bargaining power of channel partners
– Because of the regulatory requirements, Gerald Yong Gao, Jiangyong Lu, Hung Gay Fung, Linda Suen suggests that, Tea Wang's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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 Tea Wang's supply chain. Even after few cautionary changes mentioned in the HBR case study - Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tea Wang's vulnerable to further global disruptions in South East Asia.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Tea Wang's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
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.
Aligning sales with marketing
– It come across in the case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) can leverage the sales team experience to cultivate customer relationships as Tea Wang's is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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 Tea Wang's 's lucrative customers.
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 -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tea Wang's 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 Tea Wang's to hire the very best people irrespective of their geographical location.
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.
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.
Loyalty marketing
– Tea Wang's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, 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. Tea Wang's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Tea Wang's to increase its market reach. Tea Wang's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tea Wang's is facing challenges because of the dominance of functional experts in the organization. Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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.
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 Tea Wang's 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.
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.
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Tea Wang's in the consumer business. Now Tea Wang's can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tea Wang's 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.
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.
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 -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
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.
Increasing wage structure of Tea Wang's
– 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 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.
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.
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) .
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A), Tea Wang's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Regulatory challenges
– Tea Wang's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tea Wang's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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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