CITIC Tower II: The Real Option SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of CITIC Tower II: The Real Option
Citic Pacific Ltd. (CPL) had to decide whether to purchase newly reclaimed land at the waterfront of Victoria Harbour, Hong Kong, and develop a Grade A office building for investment purposes. The decision was to be made at an approaching cyclical high point in the market for Grade A office space, in the second half of 2000. CPL knew that the commercial real estate market was extremely cyclical and that very few companies active in the market had managed to time rental cycles and investment strategy successfully. If Citic Tower II came onto the market at the right time, it might be far more promising than it appeared in mid-2000. Nobody knows when the "right time" is, of course, but being able to defer the decision to develop while still retaining control over the site could buy time and the option to retain what could be a very good opportunity. In other words, CPL had to value its options.
Swot Analysis of "CITIC Tower II: The Real Option" written by Frederik Pretorius, Mary Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cpl Citic facing as an external strategic factors. Some of the topics covered in CITIC Tower II: The Real Option case study are - Strategic Management Strategies, Financial markets, Project management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the CITIC Tower II: The Real Option casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models,
geopolitical disruptions, technology disruption, etc
Introduction to SWOT Analysis of CITIC Tower II: The Real Option
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CITIC Tower II: The Real Option case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cpl Citic, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cpl Citic 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 CITIC Tower II: The Real Option can be done for the following purposes –
1. Strategic planning using facts provided in CITIC Tower II: The Real Option case study
2. Improving business portfolio management of Cpl Citic
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cpl Citic
Strengths CITIC Tower II: The Real Option | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cpl Citic in CITIC Tower II: The Real Option Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Cpl Citic 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.
Effective Research and Development (R&D)
– Cpl Citic 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 CITIC Tower II: The Real Option - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Cpl Citic is one of the most innovative firm in sector. Manager in CITIC Tower II: The Real Option Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Cpl Citic is present in almost all the verticals within the industry. This has provided firm in CITIC Tower II: The Real Option 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.
Training and development
– Cpl Citic has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in CITIC Tower II: The Real Option 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.
Sustainable margins compare to other players in Finance & Accounting industry
– CITIC Tower II: The Real Option firm has clearly differentiated products in the market place. This has enabled Cpl Citic to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Cpl Citic to invest into research and development (R&D) and innovation.
Organizational Resilience of Cpl Citic
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cpl Citic does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Cpl Citic in the sector have low bargaining power. CITIC Tower II: The Real Option has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cpl Citic to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Cpl Citic 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 CITIC Tower II: The Real Option HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Cpl Citic is one of the leading recruiters in the industry. Managers in the CITIC Tower II: The Real Option 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
– Cpl Citic has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cpl Citic has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Cpl Citic in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses CITIC Tower II: The Real Option | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CITIC Tower II: The Real Option are -
Slow decision making process
– As mentioned earlier in the report, Cpl Citic 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. Cpl Citic 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.
Products dominated business model
– Even though Cpl Citic 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 - CITIC Tower II: The Real Option should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Cpl Citic 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.
Lack of clear differentiation of Cpl Citic products
– To increase the profitability and margins on the products, Cpl Citic needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study CITIC Tower II: The Real Option, in the dynamic environment Cpl Citic has struggled to respond to the nimble upstart competition. Cpl Citic has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study CITIC Tower II: The Real Option, is just above the industry average. Cpl Citic 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.
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 Cpl Citic supply chain. Even after few cautionary changes mentioned in the HBR case study - CITIC Tower II: The Real Option, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cpl Citic vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Cpl Citic is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Cpl Citic needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cpl Citic to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study CITIC Tower II: The Real Option, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
High operating costs
– Compare to the competitors, firm in the HBR case study CITIC Tower II: The Real Option 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 Cpl Citic 's lucrative customers.
Slow to strategic competitive environment developments
– As CITIC Tower II: The Real Option HBR case study mentions - Cpl Citic 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.
Opportunities CITIC Tower II: The Real Option | 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 CITIC Tower II: The Real Option are -
Loyalty marketing
– Cpl Citic 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.
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. Cpl Citic can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Cpl Citic 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 Cpl Citic 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 Cpl Citic to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cpl Citic 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.
Developing new processes and practices
– Cpl Citic can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Cpl Citic in the consumer business. Now Cpl Citic can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cpl Citic is facing challenges because of the dominance of functional experts in the organization. CITIC Tower II: The Real Option 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cpl Citic can use these opportunities to build new business models that can help the communities that Cpl Citic operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cpl Citic in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Cpl Citic 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 Finance & Accounting segment.
Using analytics as competitive advantage
– Cpl Citic 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 CITIC Tower II: The Real Option - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cpl Citic to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Cpl Citic can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Threats CITIC Tower II: The Real Option External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CITIC Tower II: The Real Option are -
Stagnating economy with rate increase
– Cpl Citic 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 CITIC Tower II: The Real Option, Cpl Citic may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
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. Cpl Citic 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cpl Citic 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 Cpl Citic 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.
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.
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. Cpl Citic needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Cpl Citic is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Cpl Citic has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Cpl Citic needs to keep up with the evolution of technology in the Finance & Accounting 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.
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 Cpl Citic business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Cpl Citic
– 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 Cpl Citic.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cpl Citic can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Weighted SWOT Analysis of CITIC Tower II: The Real Option 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 CITIC Tower II: The Real Option 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 CITIC Tower II: The Real Option 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 CITIC Tower II: The Real Option 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 CITIC Tower II: The Real Option 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 Cpl Citic needs to make to build a sustainable competitive advantage.
