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 - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion,
increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, 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 -
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.
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.
Effective Research and Development (R&D)
– Shareholding Steel 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
Low bargaining power of suppliers
– Suppliers of Shareholding Steel in the sector have low bargaining power. Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shareholding Steel to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
High switching costs
– The high switching costs that Shareholding Steel 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.
Highly skilled collaborators
– Shareholding Steel 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 Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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.
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 -
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 Shareholding Steel supply chain. Even after few cautionary changes mentioned in the HBR case study - Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shareholding Steel vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Shareholding Steel 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance, in the dynamic environment Shareholding Steel has struggled to respond to the nimble upstart competition. Shareholding Steel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance 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 Shareholding Steel has relatively successful track record of launching new products.
Slow to strategic competitive environment developments
– As Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance HBR case study mentions - Shareholding Steel 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.
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.
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.
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.
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.
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 -
Low interest rates
– Even though inflation is raising its head in most developed economies, Shareholding Steel 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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shareholding Steel 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 Shareholding Steel to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Shareholding Steel 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.
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.
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.
Creating value in data economy
– The success of analytics program of Shareholding Steel has opened avenues for new revenue streams for the organization in the industry. This can help Shareholding Steel to build a more holistic ecosystem as suggested in the Baoshan Iron & Steel Co. Ltd.: Crafting a Three-Way Cross-Border, Cross-Shareholding Alliance case study. Shareholding Steel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Shareholding Steel 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shareholding Steel 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.
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 -
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.
Regulatory challenges
– Shareholding Steel 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.
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.
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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shareholding Steel 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.
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.
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.
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shareholding Steel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Shareholding Steel 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.
Environmental challenges
– Shareholding Steel 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. Shareholding Steel can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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