Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification
In 2003, 3M initiated contact with Yunnan Baiyao Group Co., Ltd. to discuss potential cooperation opportunities in the area of transdermal pharmaceutical products. Yunnan Baiyao (YB), was a household brand in China for its unique traditional herbal medicines. In recent years, the company had been engaged in a series of corporate reforms and product/market diversification strategies to respond to the change in the Chinese pharmaceutical industry and competition at a global level. By 2003, YB was already a vertically integrated, product-diversified group company with an ambition to become an international player. The proposed cooperation with 3M was attractive to YB, not only as an opportunity for domestic product diversification, but also for international diversification. YB had been attempting to internationalize its products and an overseas department had been established in 2002 specifically for this purpose. On the other hand, YB had also been considering another option, namely, whether to extend its brand to toothpaste and other healthcare products. YB had to make decisions about which of the two options to pursue and whether it was feasible to pursue both.
Swot Analysis of "Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification" written by Paul W. Beamish, George Peng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Yb Baiyao facing as an external strategic factors. Some of the topics covered in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification case study are - Strategic Management Strategies, Joint ventures, Sales and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification casestudy better are - – supply chains are disrupted by pandemic , technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, etc
Introduction to SWOT Analysis of Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yb Baiyao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification can be done for the following purposes –
1. Strategic planning using facts provided in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification case study
2. Improving business portfolio management of Yb Baiyao
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 Yb Baiyao
Strengths Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yb Baiyao in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Yb Baiyao 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.
High switching costs
– The high switching costs that Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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.
Ability to lead change in Strategy & Execution field
– Yb Baiyao 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 Yb Baiyao in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Yb Baiyao is one of the most innovative firm in sector. Manager in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Yb Baiyao 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 Paul W. Beamish, George Peng 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.
Strong track record of project management
– Yb Baiyao is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Yb Baiyao is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Yb Baiyao is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Yb Baiyao is present in almost all the verticals within the industry. This has provided firm in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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.
Successful track record of launching new products
– Yb Baiyao has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yb Baiyao 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.
Highly skilled collaborators
– Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification are -
Capital Spending Reduction
– Even during the low interest decade, Yb Baiyao 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 Yb Baiyao is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Yb Baiyao needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yb Baiyao to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yb Baiyao has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Yb Baiyao 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.
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 Yb Baiyao supply chain. Even after few cautionary changes mentioned in the HBR case study - Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Yb Baiyao vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification HBR case study mentions - Yb Baiyao 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Yb Baiyao 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.
Slow decision making process
– As mentioned earlier in the report, Yb Baiyao 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. Yb Baiyao 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, in the dynamic environment Yb Baiyao has struggled to respond to the nimble upstart competition. Yb Baiyao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification can leverage the sales team experience to cultivate customer relationships as Yb Baiyao is planning to shift buying processes online.
Lack of clear differentiation of Yb Baiyao products
– To increase the profitability and margins on the products, Yb Baiyao needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification | 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification are -
Building a culture of innovation
– managers at Yb Baiyao 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.
Loyalty marketing
– Yb Baiyao 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yb Baiyao can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Yb Baiyao 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 Yb Baiyao to increase its market reach. Yb Baiyao 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Yb Baiyao is facing challenges because of the dominance of functional experts in the organization. Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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.
Buying journey improvements
– Yb Baiyao can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Yb Baiyao 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Yb Baiyao 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 Yb Baiyao to hire the very best people irrespective of their geographical location.
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. Yb Baiyao 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. Yb Baiyao 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.
Using analytics as competitive advantage
– Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yb Baiyao to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Yb Baiyao can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Yb Baiyao in the consumer business. Now Yb Baiyao can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification are -
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 Yb Baiyao.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, Yb Baiyao 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 .
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 Yb Baiyao in the Strategy & Execution sector and impact the bottomline of the organization.
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.
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. Yb Baiyao can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Yb Baiyao 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification .
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 Yb Baiyao business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Yb Baiyao is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Yb Baiyao 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. Yb Baiyao can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Yb Baiyao has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Yb Baiyao 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.
Consumer confidence and its impact on Yb Baiyao 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
– Yb Baiyao 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yb Baiyao needs to make to build a sustainable competitive advantage.