Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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. Jiang was only in his mid-30s when he co-founded Peace Medical. He belongs to a generation of business leaders who came of age during China's ongoing transition from an economy governed by central planning to one operating according to market processes. He has tried to base the success of his company on a strong organizational culture, good management techniques and a clear strategy-an approach that stands in contrast to that of more elderly businessmen, who have learned to rely on political instincts as much as on business principles while governing state-owned organizations. The case describes the reforms of China's health-care system introduced by the government. It also describes the evolution of Peace Medical over its first seven years of operations, and culminates by asking students to assess the company's strengths and possible weaknesses.
Swot Analysis of "Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment casestudy better are - – increasing energy prices, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, increasing commodity prices, geopolitical disruptions, talent flight as more people leaving formal jobs,
wage bills are increasing, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment can be done for the following purposes –
1. Strategic planning using facts provided in Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Peace Medical in Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment Harvard Business Review case study are -
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.
Ability to recruit top talent
– Peace Medical is one of the leading recruiters in the industry. Managers in the Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Operational resilience
– The operational resilience strategy in the Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
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.
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.
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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Low bargaining power of suppliers
– Suppliers of Peace Medical in the sector have low bargaining power. Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Peace Medical digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Peace Medical has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Interest costs
– Compare to the competition, Peace Medical 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment, is just above the industry average. Peace Medical 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.
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.
Low market penetration in new markets
– Outside its home market of Peace Medical, firm in the HBR case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Aligning sales with marketing
– It come across in the case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment can leverage the sales team experience to cultivate customer relationships as Peace Medical is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Opportunities Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment are -
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.
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.
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.
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.
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 Peace Medical in the consumer business. Now Peace Medical can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Peace Medical 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Peace Medical to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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, Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
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. Peace Medical can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Buying journey improvements
– Peace Medical can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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.
Threats Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's Health-Care Environment are -
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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Peace Medical 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 .
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.
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.
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.
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.
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.
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.
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.
Weighted SWOT Analysis of Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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 Chonqing Peace Medical Corporation Ltd (A): Establishing A Foothold in China's 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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