Case Study Description of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A)
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 (A)" 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 (A) 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 (A) casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic ,
there is backlash against globalization, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A)
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 (A) 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 (A) can be done for the following purposes –
1. Strategic planning using facts provided in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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 (A) | 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 (A) Harvard Business Review case study are -
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 (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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.
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.
Diverse revenue streams
– Coal Yanzhou is present in almost all the verticals within the industry. This has provided firm in Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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.
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 (A) 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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Coal Yanzhou in the sector have low bargaining power. Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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.
Highly skilled collaborators
– Coal Yanzhou 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Ability to lead change in Strategy & Execution field
– Coal Yanzhou is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Coal Yanzhou in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) are -
High bargaining power of channel partners
– Because of the regulatory requirements, F. Warren McFarlan, Yongjun Jin, Xiaohui Li suggests that, Coal Yanzhou 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.
Slow to strategic competitive environment developments
– As Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) HBR case study mentions - Coal Yanzhou 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.
Aligning sales with marketing
– It come across in the case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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 Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) can leverage the sales team experience to cultivate customer relationships as Coal Yanzhou is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Coal Yanzhou 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.
Interest costs
– Compare to the competition, Coal Yanzhou has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
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.
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 Coal Yanzhou supply chain. Even after few cautionary changes mentioned in the HBR case study - Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Coal Yanzhou vulnerable to further global disruptions in South East Asia.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A), 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.
Opportunities Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) | 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 (A) are -
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 Coal Yanzhou in the consumer business. Now Coal Yanzhou can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Coal Yanzhou 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 Coal Yanzhou 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 Strategy & Execution segment.
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.
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.
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.
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.
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.
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 (A) 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Coal Yanzhou can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Coal Yanzhou can develop new processes and procedures in Strategy & Execution 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.
Threats Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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 (A) are -
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 Coal Yanzhou business can come under increasing regulations regarding data privacy, data security, etc.
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.
Regulatory challenges
– Coal Yanzhou 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 Strategy & Execution industry regulations.
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Coal Yanzhou.
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.
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.
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.
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.
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.
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.
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.
Weighted SWOT Analysis of Yanzhou Coal Mining Company Limited: Overseas Acquisitions (A) 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 (A) 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 (A) 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 (A) 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 (A) 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.
