MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation
Established in 1945, MGT Group (MGT, or the Group) was headquartered in France. Its LSD factory was a well-known global engineering provider specializing in the design and manufacture of high-precision valves. At the end of 2007, MGT decided to transfer the LSD factory in France to its Fuzhou factory in China. Two people were put in charge of this project: Kevin Lurton, vice-chief operations officer of MGT Control Systems Division, and Jian Li, the general manager of MGT Fuzhou Company. Lurton and Li faced a series of challenges, ranging from the need for strategic planning to the need for an implementation policy for supply chain reconstruction during this cross-border factory relocation. Amid the tide of globalization, enterprises are already able to extend their footprint to every corner of the world. For many multinational enterprises, transferring a product line, or even a whole factory, to another country has become a key step toward globalization.
Swot Analysis of "MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation" written by Xu Zhiduan, Shi Yun, Xu Yong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mgt Factory facing as an external strategic factors. Some of the topics covered in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, central banks are concerned over increasing inflation,
increasing government debt because of Covid-19 spendings, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mgt Factory, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mgt Factory 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation can be done for the following purposes –
1. Strategic planning using facts provided in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation case study
2. Improving business portfolio management of Mgt Factory
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 Mgt Factory
Strengths MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mgt Factory in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation Harvard Business Review case study are -
Highly skilled collaborators
– Mgt Factory 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Mgt Factory is one of the leading recruiters in the industry. Managers in the MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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
– Mgt Factory has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Mgt Factory 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.
High switching costs
– The high switching costs that Mgt Factory 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
– MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation firm has clearly differentiated products in the market place. This has enabled Mgt Factory to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Mgt Factory to invest into research and development (R&D) and innovation.
High brand equity
– Mgt Factory has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mgt Factory to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Mgt Factory 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 Mgt Factory is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Mgt Factory is one of the most innovative firm in sector. Manager in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Mgt Factory has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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.
Operational resilience
– The operational resilience strategy in the MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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.
Cross disciplinary teams
– Horizontal connected teams at the Mgt Factory 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.
Analytics focus
– Mgt Factory is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Xu Zhiduan, Shi Yun, Xu Yong can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Mgt Factory is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Mgt Factory 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 operating costs
– Compare to the competitors, firm in the HBR case study MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 Mgt Factory 's lucrative customers.
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 Mgt Factory supply chain. Even after few cautionary changes mentioned in the HBR case study - MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mgt Factory vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Mgt Factory 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.
Need for greater diversity
– Mgt Factory 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.
High cash cycle compare to competitors
Mgt Factory 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Mgt Factory needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation HBR case study mentions - Mgt Factory 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 Mgt Factory products
– To increase the profitability and margins on the products, Mgt Factory needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Mgt Factory 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.
Opportunities MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation | 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Mgt Factory 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, MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Mgt Factory 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. Mgt Factory 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.
Building a culture of innovation
– managers at Mgt Factory 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mgt Factory 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
– Mgt Factory 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.
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. Mgt Factory can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Mgt Factory to increase its market reach. Mgt Factory 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.
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. Mgt Factory can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Mgt Factory 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mgt Factory is facing challenges because of the dominance of functional experts in the organization. MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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.
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 Mgt Factory 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
– Mgt Factory 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Mgt Factory 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 Mgt Factory to hire the very best people irrespective of their geographical location.
Threats MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation are -
Regulatory challenges
– Mgt Factory 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.
Increasing wage structure of Mgt Factory
– 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 Mgt Factory.
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 Mgt Factory.
High dependence on third party suppliers
– Mgt Factory 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.
Consumer confidence and its impact on Mgt Factory 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.
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. Mgt Factory can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Mgt Factory 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 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. Mgt Factory needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation, Mgt Factory 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mgt Factory with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Mgt Factory 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. Mgt Factory can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Mgt Factory 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.
Shortening product life cycle
– it is one of the major threat that Mgt Factory is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 MGT Group: Reconstructing the Supply Chain After a Cross-Border Factory Relocation 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 Mgt Factory needs to make to build a sustainable competitive advantage.
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