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, wage bills are increasing, increasing transportation and logistics costs, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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.
Operational resilience
– The operational resilience strategy in the Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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
– Tea Wang's is present in almost all the verticals within the industry. This has provided firm in Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) 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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A), is just above the industry average. Tea Wang's 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.
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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tea Wang's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Tea Wang's 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. Tea Wang's 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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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. Tea Wang's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
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.
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.
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.
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 .
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.
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.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Wang's Fortune Tea from China: Competing for a New Arena of the Beverage Market (A)