Case Study Description of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B)
Yanzhou Coal Mining Company Limited (Yanzhou Coal) is a listed company controlled by Yankuang Group Co., Ltd. (Yankuang Group) which is affiliated to the State-owned Assets Supervision and Administration Commission (SASAC) of Shandong Provincial Government, China. Yanzhou Coal have been listed in Hong Kong, New York and Shanghai respectively. It is mainly engaged in coal, coal chemical industry and power generation. In addition to the connotative development, Yanzhou Coal started to implement a strategy of denotative development after listing and seek coal projects in other cities outside Shandong Province or China. This case mainly introduces the process of Yanzhou Coal's acquisition of Austar Coal Mine, Felix Company, as well as Gloucester Coal Ltd. by exchanging shares, thus achieving listing in Australia.
Authors :: F. Warren McFarlan, Yongjun Jin, Xiaohui Li
Swot Analysis of "Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B)" written by F. Warren McFarlan, Yongjun Jin, Xiaohui Li includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Coal Yanzhou facing as an external strategic factors. Some of the topics covered in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, increasing energy prices, geopolitical disruptions, challanges to central banks by blockchain based private currencies, technology disruption,
supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Coal Yanzhou, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Coal Yanzhou 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) can be done for the following purposes –
1. Strategic planning using facts provided in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) case study
2. Improving business portfolio management of Coal Yanzhou
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Coal Yanzhou
Strengths Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Coal Yanzhou in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) Harvard Business Review case study are -
Strong track record of project management
– Coal Yanzhou is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Coal Yanzhou
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Coal Yanzhou does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Coal Yanzhou 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.
Learning organization
- Coal Yanzhou is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Coal Yanzhou is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Coal Yanzhou has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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.
Low bargaining power of suppliers
– Suppliers of Coal Yanzhou in the sector have low bargaining power. Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Coal Yanzhou to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Coal Yanzhou has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Coal Yanzhou to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Coal Yanzhou 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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.
High switching costs
– The high switching costs that Coal Yanzhou 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.
Analytics focus
– Coal Yanzhou is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by F. Warren McFarlan, Yongjun Jin, Xiaohui Li can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Superior customer experience
– The customer experience strategy of Coal Yanzhou in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Coal Yanzhou is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Coal Yanzhou has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Coal Yanzhou 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.
Lack of clear differentiation of Coal Yanzhou products
– To increase the profitability and margins on the products, Coal Yanzhou needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Coal Yanzhou has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Coal Yanzhou 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. Coal Yanzhou 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B), in the dynamic environment Coal Yanzhou has struggled to respond to the nimble upstart competition. Coal Yanzhou has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Coal Yanzhou 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Coal Yanzhou 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B), is just above the industry average. Coal Yanzhou 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.
Increasing silos among functional specialists
– The organizational structure of Coal Yanzhou is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Coal Yanzhou needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Coal Yanzhou to focus more on services rather than just following the product oriented approach.
Opportunities Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) | 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Coal Yanzhou in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Coal Yanzhou 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, Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Coal Yanzhou can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Coal Yanzhou 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.
Better consumer reach
– The expansion of the 5G network will help Coal Yanzhou to increase its market reach. Coal Yanzhou 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Coal Yanzhou 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.
Loyalty marketing
– Coal Yanzhou 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.
Buying journey improvements
– Coal Yanzhou can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Coal Yanzhou 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. Coal Yanzhou 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. Coal Yanzhou can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Coal Yanzhou can use these opportunities to build new business models that can help the communities that Coal Yanzhou operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Coal Yanzhou can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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 Coal Yanzhou has opened avenues for new revenue streams for the organization in the industry. This can help Coal Yanzhou to build a more holistic ecosystem as suggested in the Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) case study. Coal Yanzhou can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Coal Yanzhou can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Coal Yanzhou needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Coal Yanzhou has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Coal Yanzhou needs to keep up with the evolution of technology in the Strategy & Execution 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.
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 Coal Yanzhou in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Coal Yanzhou 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.
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.
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.
Increasing wage structure of Coal Yanzhou
– 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 Coal Yanzhou.
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. Coal Yanzhou 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.
Stagnating economy with rate increase
– Coal Yanzhou 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.
Consumer confidence and its impact on Coal Yanzhou demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Coal Yanzhou with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Coal Yanzhou in the Strategy & Execution industry. The Strategy & Execution 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.
Weighted SWOT Analysis of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (B) 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 Coal Yanzhou needs to make to build a sustainable competitive advantage.