Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee
The sauce company Lee Kum Kee, one of the best known Hong Kong brands, had a long history that began in 1888 and was run by the same family for four generations. The company was founded by Lee Kam Sheung as a small oyster sauce manufacturer in Guangdong Province, China. It relocated to Macau in the early 1900s and moved once more to Hong Kong after World War II; it remained based there in the decades afterwards. Lee Kum Kee was already expanding beyond the Guangdong-Macau-Hong Kong distribution network in the 1920s to North America, when it was also making shrimp paste. In the 1970s and 1980s, after the torch passed to third-generation leader Lee Man Tat, there was rapid geographical market and product diversification. Lee Man Tat's sons, who were educated in the West, inherited the leadership from their father in the 1990s, and the pace of modernization and diversification continued while the company's marketing strategy remained vigorous and adaptable. The company overcame a consumer confidence crisis--called the 3-MPCD crisis--in the late 1990s and early 2000s and continued to thrive. By early 2003, Lee Kum Kee had already developed more than 200 sauces. Its distribution network covered 60 countries in five continents, and its products were available in more than 80 countries. What lessons about strategic brand management can we learn from the way Lee Kum Kee developed, maintained, and expanded the reach of its products over a whole century? What lessons about crisis management does the company's handling of the 3-MPCD crisis offer?
Swot Analysis of "Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee" written by Bennett Yim, Vincent Mak includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lee Kum facing as an external strategic factors. Some of the topics covered in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee case study are - Strategic Management Strategies, Corporate governance, Crisis management, Growth strategy, Risk management, Strategic planning and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee casestudy better are - – there is increasing trade war between United States & China, increasing commodity prices, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, technology disruption, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lee Kum, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee can be done for the following purposes –
1. Strategic planning using facts provided in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee case study
2. Improving business portfolio management of Lee Kum
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 Lee Kum
Strengths Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lee Kum in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee Harvard Business Review case study are -
Diverse revenue streams
– Lee Kum is present in almost all the verticals within the industry. This has provided firm in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Lee Kum in the sector have low bargaining power. Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Lee Kum to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Lee Kum has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lee Kum 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.
Cross disciplinary teams
– Horizontal connected teams at the Lee Kum 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.
Strong track record of project management
– Lee Kum is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Sales & Marketing industry
– Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee firm has clearly differentiated products in the market place. This has enabled Lee Kum to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Lee Kum to invest into research and development (R&D) and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Lee Kum digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lee Kum 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.
Effective Research and Development (R&D)
– Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Lee Kum is one of the most innovative firm in sector. Manager in Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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.
Ability to recruit top talent
– Lee Kum is one of the leading recruiters in the industry. Managers in the Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee, is just above the industry average. Lee Kum 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.
Skills based hiring
– The stress on hiring functional specialists at Lee Kum 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee HBR case study mentions - Lee Kum 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.
Low market penetration in new markets
– Outside its home market of Lee Kum, firm in the HBR case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Lee Kum 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. Lee Kum 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.
Aligning sales with marketing
– It come across in the case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee can leverage the sales team experience to cultivate customer relationships as Lee Kum is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lee Kum is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Lee Kum has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee, in the dynamic environment Lee Kum has struggled to respond to the nimble upstart competition. Lee Kum has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Lee Kum products
– To increase the profitability and margins on the products, Lee Kum needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee | 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee are -
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. Lee Kum 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. Lee Kum 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.
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. Lee Kum can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Lee Kum in the consumer business. Now Lee Kum can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Lee Kum 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lee Kum can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Lee Kum 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, Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lee Kum to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Lee Kum 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.
Manufacturing automation
– Lee Kum 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 Lee Kum to increase its market reach. Lee Kum will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lee Kum is facing challenges because of the dominance of functional experts in the organization. Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Lee Kum 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Lee Kum can use these opportunities to build new business models that can help the communities that Lee Kum operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Lee Kum in the Sales & Marketing sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Lee Kum has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Lee Kum 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.
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. Lee Kum can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Lee Kum 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.
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. Lee Kum 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Lee Kum 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee .
Shortening product life cycle
– it is one of the major threat that Lee Kum is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lee Kum 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. Lee Kum needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
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.
Stagnating economy with rate increase
– Lee Kum 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.
High dependence on third party suppliers
– Lee Kum 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.
Weighted SWOT Analysis of Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Old Company, Modern Marketing Strategy: Lessons from Lee Kum Kee 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 Lee Kum needs to make to build a sustainable competitive advantage.
