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 - – talent flight as more people leaving formal jobs, technology disruption, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, increasing household debt because of falling income levels, increasing transportation and logistics costs,
increasing energy prices, there is increasing trade war between United States & China, 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 -
Successful track record of launching new products
– Tunnel Harbour has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Tunnel Harbour 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.
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.
Training and development
– Tunnel Harbour has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Refinancing the Western Harbour Crossing, Hong Kong 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 Finance & Accounting field
– Tunnel Harbour 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 Tunnel Harbour in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Tunnel Harbour digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tunnel Harbour has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
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.
Effective Research and Development (R&D)
– Tunnel Harbour 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 Refinancing the Western Harbour Crossing, Hong Kong - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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 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.
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.
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 -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tunnel Harbour is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Refinancing the Western Harbour Crossing, Hong Kong can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Refinancing the Western Harbour Crossing, Hong Kong, in the dynamic environment Tunnel Harbour has struggled to respond to the nimble upstart competition. Tunnel Harbour has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Tunnel Harbour 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.
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.
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.
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.
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Refinancing the Western Harbour Crossing, Hong Kong 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 Tunnel Harbour has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Refinancing the Western Harbour Crossing, Hong Kong, 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.
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.
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 -
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tunnel Harbour 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 Tunnel Harbour to hire the very best people irrespective of their geographical location.
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.
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.
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.
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. Tunnel Harbour can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tunnel Harbour is facing challenges because of the dominance of functional experts in the organization. Refinancing the Western Harbour Crossing, Hong Kong 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, 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Tunnel Harbour to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Manufacturing automation
– Tunnel Harbour 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.
Building a culture of innovation
– managers at Tunnel Harbour 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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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.
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.
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. Tunnel Harbour needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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 Tunnel Harbour business can come under increasing regulations regarding data privacy, data security, etc.
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 .
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.