Heavy Metal (A): Baosteel Enters Brazil SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Heavy Metal (A): Baosteel Enters Brazil
To maximize their effectiveness, color cases should be printed in color.What is Baosteel, a top Chinese steelmaker, doing in Brazil? The company is responding to the Chinese government's "go global" policy and to the possible rise in iron ore input costs. But steel mills are complex, capital-intensive projects, and Brazil is an emerging market that poses manifold risks to foreign investors. Vale do Rio Doce, Baosteel's prospective partner, is an iron miner with little experience in steelmaking. Baosteel must evaluate whether it is choosing the right country, partner, and site for its first overseas greenfield investment.
Swot Analysis of "Heavy Metal (A): Baosteel Enters Brazil" written by Regina Abrami, Iacob Koch-Weser includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Baosteel Brazil facing as an external strategic factors. Some of the topics covered in Heavy Metal (A): Baosteel Enters Brazil case study are - Strategic Management Strategies, Economics, Emerging markets, Global strategy, Globalization, Manufacturing, Marketing, Risk management, Strategic planning, Strategy execution, Supply chain, Sustainability and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Heavy Metal (A): Baosteel Enters Brazil casestudy better are - – central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, etc
Introduction to SWOT Analysis of Heavy Metal (A): Baosteel Enters Brazil
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Heavy Metal (A): Baosteel Enters Brazil case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Baosteel Brazil, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Baosteel Brazil 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 Heavy Metal (A): Baosteel Enters Brazil can be done for the following purposes –
1. Strategic planning using facts provided in Heavy Metal (A): Baosteel Enters Brazil case study
2. Improving business portfolio management of Baosteel Brazil
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 Baosteel Brazil
Strengths Heavy Metal (A): Baosteel Enters Brazil | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Baosteel Brazil in Heavy Metal (A): Baosteel Enters Brazil Harvard Business Review case study are -
High brand equity
– Baosteel Brazil has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Baosteel Brazil to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Heavy Metal (A): Baosteel Enters Brazil 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.
Effective Research and Development (R&D)
– Baosteel Brazil 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 Heavy Metal (A): Baosteel Enters Brazil - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Baosteel Brazil has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Baosteel Brazil 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.
Diverse revenue streams
– Baosteel Brazil is present in almost all the verticals within the industry. This has provided firm in Heavy Metal (A): Baosteel Enters Brazil 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.
Superior customer experience
– The customer experience strategy of Baosteel Brazil in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Baosteel Brazil 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 Heavy Metal (A): Baosteel Enters Brazil HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Baosteel Brazil are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to lead change in Strategy & Execution field
– Baosteel Brazil 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 Baosteel Brazil in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Baosteel Brazil digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Baosteel Brazil 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Heavy Metal (A): Baosteel Enters Brazil firm has clearly differentiated products in the market place. This has enabled Baosteel Brazil to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Baosteel Brazil to invest into research and development (R&D) and innovation.
Training and development
– Baosteel Brazil has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Heavy Metal (A): Baosteel Enters Brazil 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.
Weaknesses Heavy Metal (A): Baosteel Enters Brazil | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Heavy Metal (A): Baosteel Enters Brazil are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Heavy Metal (A): Baosteel Enters Brazil, in the dynamic environment Baosteel Brazil has struggled to respond to the nimble upstart competition. Baosteel Brazil has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Heavy Metal (A): Baosteel Enters Brazil, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Heavy Metal (A): Baosteel Enters Brazil, is just above the industry average. Baosteel Brazil 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Regina Abrami, Iacob Koch-Weser suggests that, Baosteel Brazil 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.
Skills based hiring
– The stress on hiring functional specialists at Baosteel Brazil 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.
Need for greater diversity
– Baosteel Brazil has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Baosteel Brazil products
– To increase the profitability and margins on the products, Baosteel Brazil needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Heavy Metal (A): Baosteel Enters Brazil 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 Baosteel Brazil has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Baosteel Brazil is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Baosteel Brazil needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Baosteel Brazil to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Baosteel Brazil 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 - Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil 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 Baosteel Brazil 's lucrative customers.
Opportunities Heavy Metal (A): Baosteel Enters Brazil | 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 Heavy Metal (A): Baosteel Enters Brazil are -
Learning at scale
– Online learning technologies has now opened space for Baosteel Brazil 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Baosteel Brazil to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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 Baosteel Brazil in the consumer business. Now Baosteel Brazil can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Baosteel Brazil 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, Heavy Metal (A): Baosteel Enters Brazil, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Baosteel Brazil 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.
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. Baosteel Brazil 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. Baosteel Brazil 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Baosteel Brazil can use these opportunities to build new business models that can help the communities that Baosteel Brazil operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Baosteel Brazil is facing challenges because of the dominance of functional experts in the organization. Heavy Metal (A): Baosteel Enters Brazil 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Baosteel Brazil 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.
Building a culture of innovation
– managers at Baosteel Brazil 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Baosteel Brazil 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 Baosteel Brazil to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Baosteel Brazil 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.
Better consumer reach
– The expansion of the 5G network will help Baosteel Brazil to increase its market reach. Baosteel Brazil 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.
Threats Heavy Metal (A): Baosteel Enters Brazil External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Heavy Metal (A): Baosteel Enters Brazil are -
Shortening product life cycle
– it is one of the major threat that Baosteel Brazil is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Baosteel Brazil 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.
Environmental challenges
– Baosteel Brazil 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. Baosteel Brazil can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Baosteel Brazil needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 Baosteel Brazil.
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 Baosteel Brazil in the Strategy & Execution sector and impact the bottomline of the organization.
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 Baosteel Brazil business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Heavy Metal (A): Baosteel Enters Brazil, Baosteel Brazil 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 Baosteel Brazil
– 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 Baosteel Brazil.
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.
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.
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. Baosteel Brazil 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.
Consumer confidence and its impact on Baosteel Brazil demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil 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 Baosteel Brazil needs to make to build a sustainable competitive advantage.
