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 - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, wage bills are increasing, there is increasing trade war between United States & China,
talent flight as more people leaving formal jobs, there is backlash against globalization, 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 -
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment firm has clearly differentiated products in the market place. This has enabled Peace Medical to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Peace Medical to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Peace Medical 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
Ability to recruit top talent
– Peace Medical is one of the leading recruiters in the industry. Managers in the Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
Organizational Resilience of Peace Medical
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Peace Medical does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Analytics focus
– Peace Medical 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 Michael J. Fratantuono, Zhuoran 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Peace Medical 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.
Increasing silos among functional specialists
– The organizational structure of Peace Medical is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Peace Medical needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Peace Medical to focus more on services rather than just following the product 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Peace Medical is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Peace Medical 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 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.
Slow to strategic competitive environment developments
– As Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment HBR case study mentions - Peace Medical 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.
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.
Products dominated business model
– Even though Peace Medical 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 - Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment should strive to include more intangible value offerings along with its core products and services.
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 -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Peace Medical can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
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.
Developing new processes and practices
– Peace Medical 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Peace Medical 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, Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Peace Medical 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.
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.
Learning at scale
– Online learning technologies has now opened space for Peace Medical to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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.
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.
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 -
Increasing wage structure of Peace Medical
– 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 Peace Medical.
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. Peace Medical needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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. Peace Medical can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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 .
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.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Peace Medical 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 Chongqing Peace Medical Corporation Ltd (B): Charting a Strategy in China's Rapidly Changing Health-Care Environment .
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. Peace Medical 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.
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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