Otis Elevator Co.: China Strategy (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Otis Elevator Co.: China Strategy (A)
Examines the evolution of Otis's joint venture in China, from inception to the political crisis in 1989. Raises the question of whether or not the company should make an additional investment in the aftermath of the Tiananmen Square incident.
Swot Analysis of "Otis Elevator Co.: China Strategy (A)" written by Michael Y. Yoshino, Thomas W. Malnight includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tiananmen Otis's facing as an external strategic factors. Some of the topics covered in Otis Elevator Co.: China Strategy (A) case study are - Strategic Management Strategies, Emerging markets, Financial management, Globalization, Government, Joint ventures, Negotiations, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Otis Elevator Co.: China Strategy (A) casestudy better are - – increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, increasing commodity prices,
competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, etc
Introduction to SWOT Analysis of Otis Elevator Co.: China Strategy (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Otis Elevator Co.: China Strategy (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tiananmen Otis's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tiananmen Otis'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 Otis Elevator Co.: China Strategy (A) can be done for the following purposes –
1. Strategic planning using facts provided in Otis Elevator Co.: China Strategy (A) case study
2. Improving business portfolio management of Tiananmen Otis'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 Tiananmen Otis's
Strengths Otis Elevator Co.: China Strategy (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tiananmen Otis's in Otis Elevator Co.: China Strategy (A) Harvard Business Review case study are -
High brand equity
– Tiananmen Otis's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tiananmen Otis's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Tiananmen Otis's is one of the most innovative firm in sector. Manager in Otis Elevator Co.: China Strategy (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Tiananmen Otis'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 Tiananmen Otis's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Otis Elevator Co.: China Strategy (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Tiananmen Otis'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 Otis Elevator Co.: China Strategy (A) - 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
– Tiananmen Otis's is one of the leading recruiters in the industry. Managers in the Otis Elevator Co.: China Strategy (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Tiananmen Otis's 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
– Otis Elevator Co.: China Strategy (A) firm has clearly differentiated products in the market place. This has enabled Tiananmen Otis's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Tiananmen Otis's to invest into research and development (R&D) and innovation.
Training and development
– Tiananmen Otis's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Otis Elevator Co.: China Strategy (A) 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Tiananmen Otis's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tiananmen Otis's 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.
Analytics focus
– Tiananmen Otis's 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 Michael Y. Yoshino, Thomas W. Malnight 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.
Low bargaining power of suppliers
– Suppliers of Tiananmen Otis's in the sector have low bargaining power. Otis Elevator Co.: China Strategy (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tiananmen Otis's to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Tiananmen Otis's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tiananmen Otis'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.
Weaknesses Otis Elevator Co.: China Strategy (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Otis Elevator Co.: China Strategy (A) are -
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Y. Yoshino, Thomas W. Malnight suggests that, Tiananmen Otis's 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Otis Elevator Co.: China Strategy (A), in the dynamic environment Tiananmen Otis's has struggled to respond to the nimble upstart competition. Tiananmen Otis's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Tiananmen Otis's, firm in the HBR case study Otis Elevator Co.: China Strategy (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Tiananmen Otis'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.
Aligning sales with marketing
– It come across in the case study Otis Elevator Co.: China Strategy (A) 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 Otis Elevator Co.: China Strategy (A) can leverage the sales team experience to cultivate customer relationships as Tiananmen Otis's is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tiananmen Otis's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Otis Elevator Co.: China Strategy (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Tiananmen Otis's 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.
Capital Spending Reduction
– Even during the low interest decade, Tiananmen Otis'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.
No frontier risks strategy
– After analyzing the HBR case study Otis Elevator Co.: China Strategy (A), 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.
Increasing silos among functional specialists
– The organizational structure of Tiananmen Otis's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tiananmen Otis's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tiananmen Otis's to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Otis Elevator Co.: China Strategy (A), it seems that the employees of Tiananmen Otis'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.
Opportunities Otis Elevator Co.: China Strategy (A) | 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 Otis Elevator Co.: China Strategy (A) are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tiananmen Otis's is facing challenges because of the dominance of functional experts in the organization. Otis Elevator Co.: China Strategy (A) 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.
Building a culture of innovation
– managers at Tiananmen Otis'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 Tiananmen Otis's to increase its market reach. Tiananmen Otis'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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tiananmen Otis's can use these opportunities to build new business models that can help the communities that Tiananmen Otis's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Tiananmen Otis's 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.
Manufacturing automation
– Tiananmen Otis's 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.
Creating value in data economy
– The success of analytics program of Tiananmen Otis's has opened avenues for new revenue streams for the organization in the industry. This can help Tiananmen Otis's to build a more holistic ecosystem as suggested in the Otis Elevator Co.: China Strategy (A) case study. Tiananmen Otis's can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Tiananmen Otis's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tiananmen Otis'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.
Buying journey improvements
– Tiananmen Otis's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Otis Elevator Co.: China Strategy (A) 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tiananmen Otis's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Tiananmen Otis's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tiananmen Otis'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, Otis Elevator Co.: China Strategy (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Otis Elevator Co.: China Strategy (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Otis Elevator Co.: China Strategy (A) are -
Environmental challenges
– Tiananmen Otis'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. Tiananmen Otis's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Technology acceleration in Forth Industrial Revolution
– Tiananmen Otis's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Tiananmen Otis'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.
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. Tiananmen Otis'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.
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. Tiananmen Otis's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Tiananmen Otis's business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Tiananmen Otis'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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tiananmen Otis'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.
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 Tiananmen Otis's.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tiananmen Otis'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 Otis Elevator Co.: China Strategy (A) .
Increasing wage structure of Tiananmen Otis's
– 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 Tiananmen Otis's.
Regulatory challenges
– Tiananmen Otis'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.
Stagnating economy with rate increase
– Tiananmen Otis's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Otis Elevator Co.: China Strategy (A), Tiananmen Otis's 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 .
Weighted SWOT Analysis of Otis Elevator Co.: China Strategy (A) 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 Otis Elevator Co.: China Strategy (A) 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 Otis Elevator Co.: China Strategy (A) 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 Otis Elevator Co.: China Strategy (A) 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 Otis Elevator Co.: China Strategy (A) 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 Tiananmen Otis's needs to make to build a sustainable competitive advantage.