Refinancing the Western Harbour Crossing, Hong Kong SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Refinancing the Western Harbour Crossing, Hong Kong
Deals with the operational phase of a privately operated urban infrastructure project, Hong Kong's Western Harbour Crossing, a toll road tunnel from West Kowloon to Sai Ying Pun on Hong Kong Island, developed as part of the prestigious Airport Core Program supporting the new Hong Kong Airport development in the early- to mid-1990s. The tunnel opened for business in 1997 and has underperformed financially since then. Explores the hypothetical purchase of the tunnel as an infrastructure portfolio asset by a prominent bank acting for a private equity group. The bank is also interested in providing long-term debt financing on a non-recourse/limited recourse basis to the potential purchasers. Revisits the economics of the project, valuation of the tunnel as a going venture, and financing of the purchase, and discusses the merits of investing in it as a portfolio decision. Considers two corporate/project finance activities. First, as a fundamental capital budgeting function, considers valuation of the Western Harbour Crossing as a going concern relative to its historical cost ("book value") in order to highlight the problems associated with sunk costs and irreversibility in underperforming real fixed assets structured as project-financed ventures. Secondly, outlines the potential purchaser's financing decision and the approach that banks take in syndicating very large financial commitments to very risky projects.
Swot Analysis of "Refinancing the Western Harbour Crossing, Hong Kong" written by Mary Ho, Frederik Pretorius includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tunnel Harbour facing as an external strategic factors. Some of the topics covered in Refinancing the Western Harbour Crossing, Hong Kong case study are - Strategic Management Strategies, Financial management, Project management, Risk management and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Refinancing the Western Harbour Crossing, Hong Kong casestudy better are - – digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Refinancing the Western Harbour Crossing, Hong Kong
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Refinancing the Western Harbour Crossing, Hong Kong case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tunnel Harbour, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong can be done for the following purposes –
1. Strategic planning using facts provided in Refinancing the Western Harbour Crossing, Hong Kong case study
2. Improving business portfolio management of Tunnel Harbour
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 Tunnel Harbour
Strengths Refinancing the Western Harbour Crossing, Hong Kong | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tunnel Harbour in Refinancing the Western Harbour Crossing, Hong Kong Harvard Business Review case study are -
Strong track record of project management
– Tunnel Harbour is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Tunnel Harbour in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Tunnel Harbour has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tunnel Harbour to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Tunnel Harbour is one of the leading recruiters in the industry. Managers in the Refinancing the Western Harbour Crossing, Hong Kong 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 Tunnel Harbour 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.
Cross disciplinary teams
– Horizontal connected teams at the Tunnel Harbour 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.
Innovation driven organization
– Tunnel Harbour is one of the most innovative firm in sector. Manager in Refinancing the Western Harbour Crossing, Hong Kong Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Tunnel Harbour 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 Mary Ho, Frederik Pretorius 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 Tunnel Harbour in the sector have low bargaining power. Refinancing the Western Harbour Crossing, Hong Kong has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tunnel Harbour to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Tunnel Harbour
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tunnel Harbour does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– Refinancing the Western Harbour Crossing, Hong Kong firm has clearly differentiated products in the market place. This has enabled Tunnel Harbour to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Tunnel Harbour to invest into research and development (R&D) and innovation.
Weaknesses Refinancing the Western Harbour Crossing, Hong Kong | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Refinancing the Western Harbour Crossing, Hong Kong are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Refinancing the Western Harbour Crossing, Hong Kong, it seems that the employees of Tunnel Harbour 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.
Increasing silos among functional specialists
– The organizational structure of Tunnel Harbour is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Tunnel Harbour needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tunnel Harbour to focus more on services rather than just following the product oriented approach.
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 Tunnel Harbour supply chain. Even after few cautionary changes mentioned in the HBR case study - Refinancing the Western Harbour Crossing, Hong Kong, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Tunnel Harbour vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Tunnel Harbour has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Mary Ho, Frederik Pretorius suggests that, Tunnel Harbour 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.
Capital Spending Reduction
– Even during the low interest decade, Tunnel Harbour 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Refinancing the Western Harbour Crossing, Hong Kong, is just above the industry average. Tunnel Harbour 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.
Low market penetration in new markets
– Outside its home market of Tunnel Harbour, firm in the HBR case study Refinancing the Western Harbour Crossing, Hong Kong needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Refinancing the Western Harbour Crossing, Hong Kong 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 Tunnel Harbour 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Refinancing the Western Harbour Crossing, Hong Kong 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 Refinancing the Western Harbour Crossing, Hong Kong can leverage the sales team experience to cultivate customer relationships as Tunnel Harbour is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Tunnel Harbour 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.
Opportunities Refinancing the Western Harbour Crossing, Hong Kong | 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 Refinancing the Western Harbour Crossing, Hong Kong are -
Better consumer reach
– The expansion of the 5G network will help Tunnel Harbour to increase its market reach. Tunnel Harbour 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, Tunnel Harbour can use these opportunities to build new business models that can help the communities that Tunnel Harbour operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Tunnel Harbour 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tunnel Harbour 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.
Using analytics as competitive advantage
– Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tunnel Harbour to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Tunnel Harbour can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Refinancing the Western Harbour Crossing, Hong Kong 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tunnel Harbour 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
– Tunnel Harbour 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 Tunnel Harbour in the consumer business. Now Tunnel Harbour can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Tunnel Harbour 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, Tunnel Harbour 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, Refinancing the Western Harbour Crossing, Hong Kong, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Tunnel Harbour 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Tunnel Harbour 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. Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Refinancing the Western Harbour Crossing, Hong Kong are -
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. Tunnel Harbour can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Tunnel Harbour 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
– Tunnel Harbour has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Tunnel Harbour 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tunnel Harbour with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Tunnel Harbour 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.
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 Tunnel Harbour.
Consumer confidence and its impact on Tunnel Harbour 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong .
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.
Increasing wage structure of Tunnel Harbour
– 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 Tunnel Harbour.
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. Tunnel Harbour 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.
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 Tunnel Harbour in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tunnel Harbour in the Finance & Accounting industry. The Finance & Accounting 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.
Weighted SWOT Analysis of Refinancing the Western Harbour Crossing, Hong Kong 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 Refinancing the Western Harbour Crossing, Hong Kong 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 Refinancing the Western Harbour Crossing, Hong Kong 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 Refinancing the Western Harbour Crossing, Hong Kong 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 Refinancing the Western Harbour Crossing, Hong Kong 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 Tunnel Harbour needs to make to build a sustainable competitive advantage.