Shanghai Tang: The First Global Chinese Luxury Brand? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Shanghai Tang: The First Global Chinese Luxury Brand?
When he created Shanghai Tang in 1994, Hong Kong businessman David Tang intended to launch China's first bona-fide luxury brand. In the first few years, Tang's flamboyant, cross-cultural style and ties to celebrities fueled the buzz surrounding the brand. But the brand was unable to establish its core customer outside its home market of Hong Kong, and the company struggled to find a niche among successful, established global luxury brands. In 2005, under new leadership and revised creative direction, Shanghai Tang expanded into several regional markets worldwide, with a particular focus in Asia. But was the company on track to become the first global Chinese luxury brand?
Swot Analysis of "Shanghai Tang: The First Global Chinese Luxury Brand?" written by Monica Park, Bennett Yim includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tang Luxury facing as an external strategic factors. Some of the topics covered in Shanghai Tang: The First Global Chinese Luxury Brand? case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Shanghai Tang: The First Global Chinese Luxury Brand? casestudy better are - – wage bills are increasing, increasing transportation and logistics costs, increasing household debt because of falling income levels, there is backlash against globalization, increasing commodity prices, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google,
there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Shanghai Tang: The First Global Chinese Luxury Brand?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shanghai Tang: The First Global Chinese Luxury Brand? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tang Luxury, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tang Luxury 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 Shanghai Tang: The First Global Chinese Luxury Brand? can be done for the following purposes –
1. Strategic planning using facts provided in Shanghai Tang: The First Global Chinese Luxury Brand? case study
2. Improving business portfolio management of Tang Luxury
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 Tang Luxury
Strengths Shanghai Tang: The First Global Chinese Luxury Brand? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tang Luxury in Shanghai Tang: The First Global Chinese Luxury Brand? Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Tang Luxury in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Tang Luxury is one of the leading recruiters in the industry. Managers in the Shanghai Tang: The First Global Chinese Luxury Brand? 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 Tang Luxury 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.
Organizational Resilience of Tang Luxury
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tang Luxury does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Tang Luxury has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Shanghai Tang: The First Global Chinese Luxury Brand? 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 Tang Luxury digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tang Luxury 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.
High brand equity
– Tang Luxury has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tang Luxury to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Tang Luxury 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 Shanghai Tang: The First Global Chinese Luxury Brand? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Tang Luxury 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 Shanghai Tang: The First Global Chinese Luxury Brand? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Tang Luxury has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tang Luxury 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.
Diverse revenue streams
– Tang Luxury is present in almost all the verticals within the industry. This has provided firm in Shanghai Tang: The First Global Chinese Luxury Brand? 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.
Low bargaining power of suppliers
– Suppliers of Tang Luxury in the sector have low bargaining power. Shanghai Tang: The First Global Chinese Luxury Brand? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tang Luxury to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Shanghai Tang: The First Global Chinese Luxury Brand? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanghai Tang: The First Global Chinese Luxury Brand? are -
High operating costs
– Compare to the competitors, firm in the HBR case study Shanghai Tang: The First Global Chinese Luxury Brand? 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 Tang Luxury 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shanghai Tang: The First Global Chinese Luxury Brand?, is just above the industry average. Tang Luxury needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tang Luxury is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Shanghai Tang: The First Global Chinese Luxury Brand? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Tang Luxury 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.
Lack of clear differentiation of Tang Luxury products
– To increase the profitability and margins on the products, Tang Luxury needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Tang Luxury 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shanghai Tang: The First Global Chinese Luxury Brand?, it seems that the employees of Tang Luxury 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.
Aligning sales with marketing
– It come across in the case study Shanghai Tang: The First Global Chinese Luxury Brand? 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 Shanghai Tang: The First Global Chinese Luxury Brand? can leverage the sales team experience to cultivate customer relationships as Tang Luxury is planning to shift buying processes online.
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 Tang Luxury supply chain. Even after few cautionary changes mentioned in the HBR case study - Shanghai Tang: The First Global Chinese Luxury Brand?, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tang Luxury vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Tang Luxury, firm in the HBR case study Shanghai Tang: The First Global Chinese Luxury Brand? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Tang Luxury 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.
Opportunities Shanghai Tang: The First Global Chinese Luxury Brand? | 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 Shanghai Tang: The First Global Chinese Luxury Brand? 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. Tang Luxury can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tang Luxury 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 Tang Luxury to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Tang Luxury has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Shanghai Tang: The First Global Chinese Luxury Brand? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tang Luxury to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Tang Luxury 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.
Better consumer reach
– The expansion of the 5G network will help Tang Luxury to increase its market reach. Tang Luxury 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.
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 Tang Luxury 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.
Developing new processes and practices
– Tang Luxury 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.
Buying journey improvements
– Tang Luxury can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shanghai Tang: The First Global Chinese Luxury Brand? 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tang Luxury 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.
Leveraging digital technologies
– Tang Luxury 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 Tang Luxury 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.
Learning at scale
– Online learning technologies has now opened space for Tang Luxury 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.
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. Tang Luxury 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. Tang Luxury 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 Shanghai Tang: The First Global Chinese Luxury Brand? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shanghai Tang: The First Global Chinese Luxury Brand? are -
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 Tang Luxury in the Sales & Marketing sector and impact the bottomline of the organization.
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. Tang Luxury can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tang Luxury 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 Shanghai Tang: The First Global Chinese Luxury Brand? .
Increasing wage structure of Tang Luxury
– 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 Tang Luxury.
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. Tang Luxury 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.
Shortening product life cycle
– it is one of the major threat that Tang Luxury is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Tang Luxury 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shanghai Tang: The First Global Chinese Luxury Brand?, Tang Luxury 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 .
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. Tang Luxury needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Regulatory challenges
– Tang Luxury 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 Tang Luxury with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Tang Luxury 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. Tang Luxury can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Weighted SWOT Analysis of Shanghai Tang: The First Global Chinese Luxury Brand? 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 Shanghai Tang: The First Global Chinese Luxury Brand? 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 Shanghai Tang: The First Global Chinese Luxury Brand? 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 Shanghai Tang: The First Global Chinese Luxury Brand? 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 Shanghai Tang: The First Global Chinese Luxury Brand? 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 Tang Luxury needs to make to build a sustainable competitive advantage.