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, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing commodity prices, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models,
increasing government debt because of Covid-19 spendings, technology disruption, 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 -
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.
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.
Organizational Resilience of Baosteel Brazil
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Baosteel Brazil does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Baosteel Brazil 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 Baosteel Brazil is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Heavy Metal (A): Baosteel Enters Brazil Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
Innovation driven organization
– Baosteel Brazil is one of the most innovative firm in sector. Manager in Heavy Metal (A): Baosteel Enters Brazil Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
High switching costs
– The high switching costs that Baosteel Brazil 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.
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.
Ability to recruit top talent
– Baosteel Brazil is one of the leading recruiters in the industry. Managers in the Heavy Metal (A): Baosteel Enters Brazil are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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 -
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.
Low market penetration in new markets
– Outside its home market of Baosteel Brazil, firm in the HBR case study Heavy Metal (A): Baosteel Enters Brazil needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 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 Baosteel Brazil supply chain. Even after few cautionary changes mentioned in the HBR case study - Heavy Metal (A): Baosteel Enters Brazil, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Baosteel Brazil vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Heavy Metal (A): Baosteel Enters Brazil, it seems that the employees of Baosteel Brazil 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.
Interest costs
– Compare to the competition, Baosteel Brazil 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 cash cycle compare to competitors
Baosteel Brazil has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Heavy Metal (A): Baosteel Enters Brazil 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 Heavy Metal (A): Baosteel Enters Brazil can leverage the sales team experience to cultivate customer relationships as Baosteel Brazil is planning to shift buying processes online.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Baosteel Brazil 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.
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 -
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.
Creating value in data economy
– The success of analytics program of Baosteel Brazil has opened avenues for new revenue streams for the organization in the industry. This can help Baosteel Brazil to build a more holistic ecosystem as suggested in the Heavy Metal (A): Baosteel Enters Brazil case study. Baosteel Brazil can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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. Baosteel Brazil can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Baosteel Brazil can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Buying journey improvements
– Baosteel Brazil can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Heavy Metal (A): Baosteel Enters Brazil 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.
Using analytics as competitive advantage
– Baosteel Brazil 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 Heavy Metal (A): Baosteel Enters Brazil - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Baosteel Brazil to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Leveraging digital technologies
– Baosteel Brazil 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.
Manufacturing automation
– Baosteel Brazil 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Baosteel Brazil 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.
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.
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.
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.
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.
High dependence on third party suppliers
– Baosteel Brazil 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Baosteel Brazil 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.
Regulatory challenges
– Baosteel Brazil 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.
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.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Baosteel Brazil 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 Heavy Metal (A): Baosteel Enters Brazil .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Baosteel Brazil with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.