AAC Technologies (B): Strategies for Development and Growth SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AAC Technologies (B): Strategies for Development and Growth
Supplement to case NTU087. AAC Technologies Holdings Inc., headquartered in Shenzhen, was listed on the Hong Kong Stock Exchange in 2005. The case describes AAC's transformation from a small Chinese family business into a leading global technology solutions provider in the mobile devices industry. The focus is on how the founders developed the company's strategic capabilities through R&D and acquisitions to win major customers and integrated its technological leadership strategy with industry trends and developments, and hence poised to seize market opportunities.
Swot Analysis of "AAC Technologies (B): Strategies for Development and Growth" written by Boon Siong Neo, Yu Zou includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Aac Aac's facing as an external strategic factors. Some of the topics covered in AAC Technologies (B): Strategies for Development and Growth case study are - Strategic Management Strategies, Innovation, IT, Leadership, Manufacturing, Mobile, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AAC Technologies (B): Strategies for Development and Growth casestudy better are - – supply chains are disrupted by pandemic , increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization,
challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of AAC Technologies (B): Strategies for Development and Growth
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AAC Technologies (B): Strategies for Development and Growth case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Aac Aac's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Aac Aac's 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 AAC Technologies (B): Strategies for Development and Growth can be done for the following purposes –
1. Strategic planning using facts provided in AAC Technologies (B): Strategies for Development and Growth case study
2. Improving business portfolio management of Aac Aac's
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 Aac Aac's
Strengths AAC Technologies (B): Strategies for Development and Growth | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Aac Aac's in AAC Technologies (B): Strategies for Development and Growth Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the AAC Technologies (B): Strategies for Development and Growth 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.
Organizational Resilience of Aac Aac's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Aac Aac's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Aac Aac's is one of the most innovative firm in sector. Manager in AAC Technologies (B): Strategies for Development and Growth Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Aac Aac's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Aac Aac's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Aac Aac's 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 Aac Aac's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AAC Technologies (B): Strategies for Development and Growth Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Aac Aac's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Aac Aac's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Aac Aac's 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.
Superior customer experience
– The customer experience strategy of Aac Aac's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Aac Aac's 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 AAC Technologies (B): Strategies for Development and Growth - 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
– Aac Aac's is one of the leading recruiters in the industry. Managers in the AAC Technologies (B): Strategies for Development and Growth are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Aac Aac's in the sector have low bargaining power. AAC Technologies (B): Strategies for Development and Growth has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Aac Aac's to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– AAC Technologies (B): Strategies for Development and Growth firm has clearly differentiated products in the market place. This has enabled Aac Aac's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Aac Aac's to invest into research and development (R&D) and innovation.
Weaknesses AAC Technologies (B): Strategies for Development and Growth | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AAC Technologies (B): Strategies for Development and Growth are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AAC Technologies (B): Strategies for Development and Growth, it seems that the employees of Aac Aac's 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.
Low market penetration in new markets
– Outside its home market of Aac Aac's, firm in the HBR case study AAC Technologies (B): Strategies for Development and Growth needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Aac Aac's 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.
Interest costs
– Compare to the competition, Aac Aac's 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 operating costs
– Compare to the competitors, firm in the HBR case study AAC Technologies (B): Strategies for Development and Growth 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 Aac Aac's 's lucrative customers.
Aligning sales with marketing
– It come across in the case study AAC Technologies (B): Strategies for Development and Growth 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 AAC Technologies (B): Strategies for Development and Growth can leverage the sales team experience to cultivate customer relationships as Aac Aac's is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As AAC Technologies (B): Strategies for Development and Growth HBR case study mentions - Aac Aac's 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.
Lack of clear differentiation of Aac Aac's products
– To increase the profitability and margins on the products, Aac Aac's needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Aac Aac's 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AAC Technologies (B): Strategies for Development and Growth 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 Aac Aac's 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 AAC Technologies (B): Strategies for Development and Growth, in the dynamic environment Aac Aac's has struggled to respond to the nimble upstart competition. Aac Aac's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities AAC Technologies (B): Strategies for Development and Growth | 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 AAC Technologies (B): Strategies for Development and Growth are -
Building a culture of innovation
– managers at Aac Aac's 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.
Better consumer reach
– The expansion of the 5G network will help Aac Aac's to increase its market reach. Aac Aac's 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, Aac Aac's is facing challenges because of the dominance of functional experts in the organization. AAC Technologies (B): Strategies for Development and Growth 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Aac Aac's 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.
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. Aac Aac's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Aac Aac's 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.
Loyalty marketing
– Aac Aac's 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.
Creating value in data economy
– The success of analytics program of Aac Aac's has opened avenues for new revenue streams for the organization in the industry. This can help Aac Aac's to build a more holistic ecosystem as suggested in the AAC Technologies (B): Strategies for Development and Growth case study. Aac Aac's 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, Aac Aac's 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, AAC Technologies (B): Strategies for Development and Growth, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Aac Aac's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Aac Aac's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AAC Technologies (B): Strategies for Development and Growth 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.
Developing new processes and practices
– Aac Aac's 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.
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 Aac Aac's in the consumer business. Now Aac Aac's can target international markets with far fewer capital restrictions requirements than the existing system.
Threats AAC Technologies (B): Strategies for Development and Growth External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AAC Technologies (B): Strategies for Development and Growth are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Aac Aac's 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 AAC Technologies (B): Strategies for Development and Growth .
Regulatory challenges
– Aac Aac's 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.
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 Aac Aac's business can come under increasing regulations regarding data privacy, data security, etc.
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. Aac Aac's 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.
High dependence on third party suppliers
– Aac Aac's 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.
Environmental challenges
– Aac Aac's 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. Aac Aac's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Aac Aac's.
Technology acceleration in Forth Industrial Revolution
– Aac Aac's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Aac Aac's 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 Aac Aac's 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.
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 Aac Aac's in the Strategy & Execution sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Aac Aac's 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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Aac Aac's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of AAC Technologies (B): Strategies for Development and Growth 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 AAC Technologies (B): Strategies for Development and Growth 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 AAC Technologies (B): Strategies for Development and Growth 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 AAC Technologies (B): Strategies for Development and Growth 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 AAC Technologies (B): Strategies for Development and Growth 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 Aac Aac's needs to make to build a sustainable competitive advantage.
