Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing
The contract footwear manufacturing industry is a highly competitive labor-intensive industry. Hong Kong-listed Yue Yuen Industrial (Holdings) Limited is the world's largest contract footwear manufacturer, five times larger than its nearest rival, with the major global brands as its key customers. This case explores how a traditional footwear manufacturer has used a measured strategy of innovation and integration to gain competitive advantage in the intensely competitive global marketplace, thus upgrading itself in the economic value chain. The case asks students to analyze the company's growth strategies and to consider if it can continue to sustain its competitive advantage.
Authors :: Ali Farhoomand, Alison Bate, Christina Chan
Swot Analysis of "Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing" written by Ali Farhoomand, Alison Bate, Christina Chan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Footwear Yuen facing as an external strategic factors. Some of the topics covered in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing case study are - Strategic Management Strategies, Globalization, Manufacturing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, technology disruption, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion,
customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, etc
Introduction to SWOT Analysis of Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Footwear Yuen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Footwear Yuen 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing can be done for the following purposes –
1. Strategic planning using facts provided in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing case study
2. Improving business portfolio management of Footwear Yuen
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 Footwear Yuen
Strengths Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Footwear Yuen in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Footwear Yuen 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.
Ability to lead change in Sales & Marketing field
– Footwear Yuen 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 Footwear Yuen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Footwear Yuen
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Footwear Yuen does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Footwear Yuen 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing - 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 recruit top talent
– Footwear Yuen is one of the leading recruiters in the industry. Managers in the Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 brand equity
– Footwear Yuen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Footwear Yuen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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.
Innovation driven organization
– Footwear Yuen is one of the most innovative firm in sector. Manager in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Footwear Yuen has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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.
Sustainable margins compare to other players in Sales & Marketing industry
– Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing firm has clearly differentiated products in the market place. This has enabled Footwear Yuen to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Footwear Yuen to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Footwear Yuen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Footwear Yuen 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.
Low bargaining power of suppliers
– Suppliers of Footwear Yuen in the sector have low bargaining power. Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Footwear Yuen to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing, it seems that the employees of Footwear Yuen don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing, in the dynamic environment Footwear Yuen has struggled to respond to the nimble upstart competition. Footwear Yuen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Footwear Yuen is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Footwear Yuen 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. Footwear Yuen 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 Footwear Yuen 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 - Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing can leverage the sales team experience to cultivate customer relationships as Footwear Yuen is planning to shift buying processes online.
High cash cycle compare to competitors
Footwear Yuen 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 Footwear Yuen 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.
Increasing silos among functional specialists
– The organizational structure of Footwear Yuen is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Footwear Yuen needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Footwear Yuen to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Footwear Yuen products
– To increase the profitability and margins on the products, Footwear Yuen needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Footwear Yuen supply chain. Even after few cautionary changes mentioned in the HBR case study - Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Footwear Yuen vulnerable to further global disruptions in South East Asia.
Opportunities Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing | 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing are -
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. Footwear Yuen 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, Footwear Yuen 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, Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Footwear Yuen 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 Footwear Yuen has opened avenues for new revenue streams for the organization in the industry. This can help Footwear Yuen to build a more holistic ecosystem as suggested in the Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing case study. Footwear Yuen can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Footwear Yuen 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 Footwear Yuen to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Footwear Yuen to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Footwear Yuen can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Footwear Yuen 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.
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. Footwear Yuen can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Footwear Yuen 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Footwear Yuen can use these opportunities to build new business models that can help the communities that Footwear Yuen operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Leveraging digital technologies
– Footwear Yuen 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Footwear Yuen 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.
Threats Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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.
Environmental challenges
– Footwear Yuen 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. Footwear Yuen can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
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.
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. Footwear Yuen 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.
Technology acceleration in Forth Industrial Revolution
– Footwear Yuen has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Footwear Yuen 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
– Footwear Yuen 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.
Regulatory challenges
– Footwear Yuen 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.
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. Footwear Yuen can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Footwear Yuen 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing .
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 Footwear Yuen in the Sales & Marketing sector and impact the bottomline 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 Footwear Yuen 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Footwear Yuen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Footwear Yuen
– 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 Footwear Yuen.
Weighted SWOT Analysis of Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Yue Yuen Industrial (Holdings) Limited: (A) Making 200 Million Pair of Shoes a Year and Growing 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 Footwear Yuen needs to make to build a sustainable competitive advantage.
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