Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment
Peace Medical Corporation Ltd ("Peace Medical"), headquartered in Chongqing, China, was founded in 2001 as a joint venture between the very large, state-owned Chongqing Medicine Company ("CMC"), which owns a 51% stake, and Jeff Jiang, the company president, who owns a 49% stake. Both Peace Medical and CMC are medical product supply companies, which are wholesalers that buy pharmaceutical products from manufactures and sell them to hospital-based pharmacies or retail drug stores. From the outset, the arrangement between CMC and Peace Medical has benefited both parties. As of 2008, Peace Medical looks as though it will be a successful company for the long term. It is on a very strong growth trajectory, is financially sound, has accumulated an array of tangible and intangible assets, and has established good relationships with a range of other health-care system participants. Jiang has identified five related objectives for the coming years: first, to strengthen management processes in Peace Medical; second, to intensify sales in the Chongqing area; third, to establish his company's national network and increase sales beyond the Chongqing area; fourth, to become the distributor for several small- to mid-sized foreign businesses hoping to bring their non-generic pharmaceutical products into the China market; and fifth, to explore the possibility of forming a strategic alliance with a company to work in complementary fashion with Peace Medical. The case briefly describes the seven year evolution of Peace Medical. It also describes the role of and pressures facing other types of stakeholders in China's medical products supply chain (manufacturers, hospitals, wholesalers, and so forth). It culminates by asking students to evaluate Jiang's five strategic objectives in light of the core competencies of Peace Medical and to identify possible synergies that might arise from pursuing those objectives.
Swot Analysis of "Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment" written by Michael J. Fratantuono, Zhuoran Li includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Peace Medical facing as an external strategic factors. Some of the topics covered in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment case study are - Strategic Management Strategies, Leadership, Operations management, Organizational culture and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment casestudy better are - – technology disruption, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Peace Medical, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Peace Medical 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment can be done for the following purposes –
1. Strategic planning using facts provided in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment case study
2. Improving business portfolio management of Peace Medical
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 Peace Medical
Strengths Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Peace Medical in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment Harvard Business Review case study are -
High brand equity
– Peace Medical has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Peace Medical to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Peace Medical has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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.
Strong track record of project management
– Peace Medical is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Peace Medical in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Peace Medical 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.
Ability to lead change in Strategy & Execution field
– Peace Medical 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 Peace Medical in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Peace Medical is present in almost all the verticals within the industry. This has provided firm in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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.
High switching costs
– The high switching costs that Peace Medical 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.
Operational resilience
– The operational resilience strategy in the Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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
– Peace Medical has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Peace Medical 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.
Low bargaining power of suppliers
– Suppliers of Peace Medical in the sector have low bargaining power. Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Peace Medical to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Peace Medical is one of the most innovative firm in sector. Manager in Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment are -
Lack of clear differentiation of Peace Medical products
– To increase the profitability and margins on the products, Peace Medical needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, in the dynamic environment Peace Medical has struggled to respond to the nimble upstart competition. Peace Medical has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Peace Medical 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, it seems that the employees of Peace Medical don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Peace Medical 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 Peace Medical supply chain. Even after few cautionary changes mentioned in the HBR case study - Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Peace Medical vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Peace Medical 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael J. Fratantuono, Zhuoran Li suggests that, Peace Medical is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Peace Medical 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. Peace Medical 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment can leverage the sales team experience to cultivate customer relationships as Peace Medical is planning to shift buying processes online.
Opportunities Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment | 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Peace Medical is facing challenges because of the dominance of functional experts in the organization. Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Peace Medical 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 Peace Medical to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Peace Medical 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.
Better consumer reach
– The expansion of the 5G network will help Peace Medical to increase its market reach. Peace Medical 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Peace Medical 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.
Creating value in data economy
– The success of analytics program of Peace Medical has opened avenues for new revenue streams for the organization in the industry. This can help Peace Medical to build a more holistic ecosystem as suggested in the Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment case study. Peace Medical can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Peace Medical can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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. Peace Medical can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Peace Medical 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, Peace Medical can use these opportunities to build new business models that can help the communities that Peace Medical operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Peace Medical 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. Peace Medical 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.
Leveraging digital technologies
– Peace Medical 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.
Loyalty marketing
– Peace Medical has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Peace Medical 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 Peace Medical.
Technology acceleration in Forth Industrial Revolution
– Peace Medical has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Peace Medical 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.
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
– Peace Medical 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 Peace Medical in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Peace Medical 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. Peace Medical can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Peace Medical business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Peace Medical 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, Peace Medical 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 .
Stagnating economy with rate increase
– Peace Medical 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.
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.
Consumer confidence and its impact on Peace Medical 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.
Weighted SWOT Analysis of Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment 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 Peace Medical needs to make to build a sustainable competitive advantage.
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