April 17, 2012, was a special day for SANY Group and for its founder Liang Wen'gen. Headquartered in Changsha, SANY Group had transformed itself in two decades from a small welding material factory in 1989 to a leading global construction equipment manufacturer with 5 industrial parks in China; 5 R&D and manufacturing bases in America, Germany, India, Brazil, and Indonesia; and 21 sales companies worldwide. SANY Heavy Industry Co., Ltd. (SANY), SANY Group's major subsidiary, engaged in the construction equipment business and was number six on International Construction's 2012 Yellow Table, a ranking of the world's largest construction equipment manufacturers.
Authors :: Rajiv Lal, Stefan Lippert, Nancy Hua Dai, Di Deng
Swot Analysis of "SANY: Going Global" written by Rajiv Lal, Stefan Lippert, Nancy Hua Dai, Di Deng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sany Construction facing as an external strategic factors. Some of the topics covered in SANY: Going Global case study are - Strategic Management Strategies, Globalization, Growth strategy, Manufacturing, Marketing, Product development and Strategy & Execution.
Some of the macro environment factors that can be used to understand the SANY: Going Global casestudy better are - – increasing energy prices, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, wage bills are increasing, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%,
digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, etc
Introduction to SWOT Analysis of SANY: Going Global
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SANY: Going Global case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sany Construction, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sany Construction 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 SANY: Going Global can be done for the following purposes –
1. Strategic planning using facts provided in SANY: Going Global case study
2. Improving business portfolio management of Sany Construction
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 Sany Construction
Strengths SANY: Going Global | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sany Construction in SANY: Going Global Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Sany Construction 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 Sany Construction in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Sany Construction has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sany Construction to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Sany Construction 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 SANY: Going Global HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– SANY: Going Global firm has clearly differentiated products in the market place. This has enabled Sany Construction to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sany Construction to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Sany Construction 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.
Diverse revenue streams
– Sany Construction is present in almost all the verticals within the industry. This has provided firm in SANY: Going Global 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
– Sany Construction has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SANY: Going Global 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.
Effective Research and Development (R&D)
– Sany Construction 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 SANY: Going Global - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Sany Construction in the sector have low bargaining power. SANY: Going Global has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sany Construction to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the SANY: Going Global 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.
Successful track record of launching new products
– Sany Construction has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sany Construction 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.
Innovation driven organization
– Sany Construction is one of the most innovative firm in sector. Manager in SANY: Going Global Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses SANY: Going Global | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SANY: Going Global are -
Lack of clear differentiation of Sany Construction products
– To increase the profitability and margins on the products, Sany Construction needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Sany Construction 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 - SANY: Going Global 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, Sany Construction 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.
High cash cycle compare to competitors
Sany Construction 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.
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 Sany Construction supply chain. Even after few cautionary changes mentioned in the HBR case study - SANY: Going Global, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sany Construction vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the SANY: Going Global 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 Sany Construction has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Sany Construction is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sany Construction needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sany Construction to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Sany Construction 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 bargaining power of channel partners
– Because of the regulatory requirements, Rajiv Lal, Stefan Lippert, Nancy Hua Dai, Di Deng suggests that, Sany Construction 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study SANY: Going Global, is just above the industry average. Sany Construction 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 Sany Construction 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.
Opportunities SANY: Going Global | 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 SANY: Going Global are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Sany Construction 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sany Construction can use these opportunities to build new business models that can help the communities that Sany Construction operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sany Construction 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.
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 Sany Construction 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.
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. Sany Construction can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Sany Construction 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.
Creating value in data economy
– The success of analytics program of Sany Construction has opened avenues for new revenue streams for the organization in the industry. This can help Sany Construction to build a more holistic ecosystem as suggested in the SANY: Going Global case study. Sany Construction can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Sany Construction 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
– Sany Construction 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.
Better consumer reach
– The expansion of the 5G network will help Sany Construction to increase its market reach. Sany Construction 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.
Using analytics as competitive advantage
– Sany Construction 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 SANY: Going Global - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sany Construction to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Sany Construction in the consumer business. Now Sany Construction can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sany Construction to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Sany Construction to hire the very best people irrespective of their geographical location.
Threats SANY: Going Global External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SANY: Going Global are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sany Construction 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 SANY: Going Global .
High dependence on third party suppliers
– Sany Construction 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.
Increasing wage structure of Sany Construction
– 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 Sany Construction.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sany Construction 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.
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 Sany Construction business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sany Construction with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Sany Construction.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study SANY: Going Global, Sany Construction may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Shortening product life cycle
– it is one of the major threat that Sany Construction is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Sany Construction needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Sany Construction 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. Sany Construction can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Regulatory challenges
– Sany Construction 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.
Weighted SWOT Analysis of SANY: Going Global 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 SANY: Going Global 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 SANY: Going Global 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 SANY: Going Global 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 SANY: Going Global 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 Sany Construction needs to make to build a sustainable competitive advantage.
