Case Study Description of Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance
On August 2, 2000, Korea-based Pohang Iron & Steel Co. Ltd. (POSCO) and Japan-based Nippon Steel Corp. (NSC) crafted a cross-border, cross-shareholding alliance. At a joint press conference, the two companies said their alliance was not limited to their firms alone and said approaches from others would be welcomed. Their invitation had aroused the interest of the largest steelmaker in China, Baoshan Iron & Steel Co. Ltd (Baosteel). In January 2001, Baosteel signed a memorandum of understanding with POSCO to create a cross-shareholding in each other's shares. The company also planned to invite NSC to acquire a stake in the group. If the Sino-Japanese alliance succeeded, the three steel giants would form a three-way cross-border, cross-shareholding alliance. Such a bold move would help Baosteel to gain an upper hand in competition with European and American steel firms eager to enter the Asian market.
Swot Analysis of "Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance" written by Zhigang Tao, Mary Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shareholding Steel facing as an external strategic factors. Some of the topics covered in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance case study are - Strategic Management Strategies, Joint ventures and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shareholding Steel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shareholding Steel 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance can be done for the following purposes –
1. Strategic planning using facts provided in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance case study
2. Improving business portfolio management of Shareholding Steel
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 Shareholding Steel
Strengths Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shareholding Steel in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance Harvard Business Review case study are -
Organizational Resilience of Shareholding Steel
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Shareholding Steel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Shareholding Steel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Shareholding Steel is present in almost all the verticals within the industry. This has provided firm in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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.
Learning organization
- Shareholding Steel 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 Shareholding Steel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Shareholding Steel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Shareholding Steel 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.
Successful track record of launching new products
– Shareholding Steel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shareholding Steel 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.
Innovation driven organization
– Shareholding Steel is one of the most innovative firm in sector. Manager in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Shareholding Steel is one of the leading recruiters in the industry. Managers in the Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Shareholding Steel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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.
Ability to lead change in Strategy & Execution field
– Shareholding Steel is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Shareholding Steel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Shareholding Steel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shareholding Steel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance are -
Aligning sales with marketing
– It come across in the case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance can leverage the sales team experience to cultivate customer relationships as Shareholding Steel is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Shareholding Steel has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Shareholding Steel even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Lack of clear differentiation of Shareholding Steel products
– To increase the profitability and margins on the products, Shareholding Steel needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Shareholding Steel has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, it seems that the employees of Shareholding Steel 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Shareholding Steel 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shareholding Steel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Shareholding Steel, firm in the HBR case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Shareholding Steel 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, is just above the industry average. Shareholding Steel needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Shareholding Steel 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.
Opportunities Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance | 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shareholding Steel 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
– Shareholding Steel 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.
Building a culture of innovation
– managers at Shareholding Steel 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.
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. Shareholding Steel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Shareholding Steel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shareholding Steel 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, Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Shareholding Steel 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.
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 Shareholding Steel in the consumer business. Now Shareholding Steel can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Shareholding Steel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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
– Shareholding Steel 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shareholding Steel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Shareholding Steel 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shareholding Steel is facing challenges because of the dominance of functional experts in the organization. Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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.
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. Shareholding Steel 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. Shareholding Steel 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.
Threats Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance are -
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 Shareholding Steel business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, Shareholding Steel 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 .
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 Shareholding Steel.
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. Shareholding Steel 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.
Shortening product life cycle
– it is one of the major threat that Shareholding Steel is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Shareholding Steel 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.
Technology acceleration in Forth Industrial Revolution
– Shareholding Steel has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Shareholding Steel 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.
Increasing wage structure of Shareholding Steel
– 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 Shareholding Steel.
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. Shareholding Steel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Shareholding Steel in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Shareholding Steel 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.
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. Shareholding Steel needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Weighted SWOT Analysis of Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Shareholding Steel needs to make to build a sustainable competitive advantage.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance
