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 - – wage bills are increasing, increasing household debt because of falling income levels, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google, technology disruption,
there is increasing trade war between United States & China, increasing transportation and logistics costs, 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 -
Sustainable margins compare to other players in Strategy & Execution industry
– Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification firm has clearly differentiated products in the market place. This has enabled Yb Baiyao to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Yb Baiyao to invest into research and development (R&D) and innovation.
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.
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.
Ability to recruit top talent
– Yb Baiyao is one of the leading recruiters in the industry. Managers in the Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Yb Baiyao has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Yb Baiyao to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Yb Baiyao has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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.
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.
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.
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.
Organizational Resilience of Yb Baiyao
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Yb Baiyao does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, it seems that the employees of Yb Baiyao 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.
Products dominated business model
– Even though Yb Baiyao 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 - Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 Yb Baiyao 's lucrative customers.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, is just above the industry average. Yb Baiyao 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.
No frontier risks strategy
– After analyzing the HBR case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification, 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Yb Baiyao is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Yunnan Baiyao: Traditional Medicine Meets Product/Market Diversification 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 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul W. Beamish, George Peng suggests that, Yb Baiyao 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.
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 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.
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 -
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.
Developing new processes and practices
– Yb Baiyao 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.
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.
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. Yb Baiyao can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yb Baiyao 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.
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.
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.
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.
Manufacturing automation
– Yb Baiyao can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Yb Baiyao 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.
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 -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yb Baiyao 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 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 .
Increasing wage structure of Yb Baiyao
– 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 Yb Baiyao.
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.
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. Yb Baiyao 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. 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.
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.
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.
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.
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 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.
Stagnating economy with rate increase
– Yb Baiyao 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.
High dependence on third party suppliers
– Yb Baiyao 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.
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.
