Case Study Description of Zuji: Finding a Winning Strategy
It was October 2015, Charlie Wong, CEO of Zuji Hong Kong told the media at the launch of Zuji's new brand campaign "Search, Discover and Share" that he would like to see Zuji "become the Google for travel" in Hong Kong. Indeed, a deemed pioneer and leading online travel agent ("OTA") in Hong Kong, the aspiration did not seem far-fetched. Yet, the ambition was not without challenge. Since Zuji went online in 2002, the brand had been twice sold and its geographic coverage shrunk from six to three markets: Hong Kong, Singapore and Australia. Online travel booking had been slow picking up in Hong Kong. After more than 10 years, online sales remained at under 10% of the total market in Hong Kong, compared to the regional average of 25% in Asia Pacific. As momentum built up, Wong predicted the online travel agent ("OTA") market to quadruple, from 10% in 2014 to 40% in 2016. Meantime, competition from multiple fronts was flooding the market. Global leader Expedia had launched Expedia.com.hk in 2013, and was investing heavily in marketing to capture share. Traditional offline agents were busy expanding their online presence, building a hybrid model as competitive advantage. At the consumer end, mobile phones have become an indispensable travel companion and its implication went beyond the migration from one platform to another. Around the world, the industry was seeing the rise of the millennia travellers with new needs and expectations while on the road, and they were changing the rules of the game. Zuji is facing the biggest opportunity of its time to ride this wave of change and reinforced its market leadership.
Swot Analysis of "Zuji: Finding a Winning Strategy" written by Kevin Zhou, Josephine Lau includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Zuji Kong facing as an external strategic factors. Some of the topics covered in Zuji: Finding a Winning Strategy case study are - Strategic Management Strategies, Marketing, Mobile and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Zuji: Finding a Winning Strategy casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing commodity prices, wage bills are increasing, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models,
increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Zuji: Finding a Winning Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Zuji: Finding a Winning Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Zuji Kong, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Zuji Kong 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 Zuji: Finding a Winning Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Zuji: Finding a Winning Strategy case study
2. Improving business portfolio management of Zuji Kong
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 Zuji Kong
Strengths Zuji: Finding a Winning Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Zuji Kong in Zuji: Finding a Winning Strategy Harvard Business Review case study are -
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Zuji Kong digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Zuji Kong 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.
Cross disciplinary teams
– Horizontal connected teams at the Zuji Kong 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.
Successful track record of launching new products
– Zuji Kong has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Zuji Kong 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.
Organizational Resilience of Zuji Kong
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Zuji Kong does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Zuji Kong has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Zuji: Finding a Winning Strategy 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.
Superior customer experience
– The customer experience strategy of Zuji Kong in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Zuji Kong has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Zuji Kong to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Zuji Kong is present in almost all the verticals within the industry. This has provided firm in Zuji: Finding a Winning Strategy 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
– Zuji: Finding a Winning Strategy firm has clearly differentiated products in the market place. This has enabled Zuji Kong to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Zuji Kong to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Zuji: Finding a Winning Strategy 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.
Low bargaining power of suppliers
– Suppliers of Zuji Kong in the sector have low bargaining power. Zuji: Finding a Winning Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Zuji Kong to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Zuji Kong 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 Zuji: Finding a Winning Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Zuji: Finding a Winning Strategy are -
Lack of clear differentiation of Zuji Kong products
– To increase the profitability and margins on the products, Zuji Kong needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Zuji: Finding a Winning Strategy, it seems that the employees of Zuji Kong 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 Zuji: Finding a Winning Strategy, in the dynamic environment Zuji Kong has struggled to respond to the nimble upstart competition. Zuji Kong has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Zuji Kong 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 - Zuji: Finding a Winning Strategy should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Zuji Kong 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.
Slow to strategic competitive environment developments
– As Zuji: Finding a Winning Strategy HBR case study mentions - Zuji Kong 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Zuji: Finding a Winning Strategy, is just above the industry average. Zuji Kong 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 bargaining power of channel partners
– Because of the regulatory requirements, Kevin Zhou, Josephine Lau suggests that, Zuji Kong 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.
No frontier risks strategy
– After analyzing the HBR case study Zuji: Finding a Winning Strategy, 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.
High cash cycle compare to competitors
Zuji Kong 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.
Slow decision making process
– As mentioned earlier in the report, Zuji Kong 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. Zuji Kong 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.
Opportunities Zuji: Finding a Winning Strategy | 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 Zuji: Finding a Winning Strategy are -
Using analytics as competitive advantage
– Zuji Kong 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 Zuji: Finding a Winning Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Zuji Kong to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Zuji Kong 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Zuji Kong 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. Zuji Kong 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. Zuji Kong 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.
Developing new processes and practices
– Zuji Kong 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.
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 Zuji Kong 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.
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 Zuji Kong in the consumer business. Now Zuji Kong can target international markets with far fewer capital restrictions requirements than the existing system.
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. Zuji Kong can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Zuji Kong 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Zuji Kong is facing challenges because of the dominance of functional experts in the organization. Zuji: Finding a Winning Strategy 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.
Buying journey improvements
– Zuji Kong can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Zuji: Finding a Winning Strategy 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Zuji Kong can use these opportunities to build new business models that can help the communities that Zuji Kong operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Loyalty marketing
– Zuji Kong 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 Zuji: Finding a Winning Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Zuji: Finding a Winning Strategy are -
Environmental challenges
– Zuji Kong 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. Zuji Kong can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Regulatory challenges
– Zuji Kong 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Zuji Kong 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 Zuji Kong with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Zuji Kong business can come under increasing regulations regarding data privacy, data security, etc.
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 Zuji Kong in the Sales & Marketing sector and impact the bottomline of the organization.
Consumer confidence and its impact on Zuji Kong 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.
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. Zuji Kong needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Zuji Kong 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.
Shortening product life cycle
– it is one of the major threat that Zuji Kong is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Zuji Kong
– 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 Zuji Kong.
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. Zuji Kong 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 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.
Weighted SWOT Analysis of Zuji: Finding a Winning Strategy 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 Zuji: Finding a Winning Strategy 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 Zuji: Finding a Winning Strategy 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 Zuji: Finding a Winning Strategy 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 Zuji: Finding a Winning Strategy 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 Zuji Kong needs to make to build a sustainable competitive advantage.