Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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Case Study SWOT Analysis Solution
Case Study Description of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version
Esquel Group, leading manufacturer of quality shirts, sought to negotiate long-term partnerships with often-exploited farmers in Xinjiang (western China) to procure a superior cotton variety. Seeking to secure a large supply of specialty cotton in an ethical and socially responsible fashion, Esquel undertook a major 2002 initiative to negotiate value-creating contracts among itself, local Xinjiang municipal governments, and cotton farmers. Aware that contract enforcement in China can be challenging, Esquel offered the region's poor, often-suspicious farmers attractive advanced financing, guaranteed minimum pricing, and other generous terms in return for an agreement to sell their crop exclusively to Esquel. The case concludes with the specialty cotton harvest shaping up as very good while demand for the premium cotton fiber appears to be stronger than ever.
Swot Analysis of "Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version" written by James K. Sebenius, Cheng (Jason) Qian includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cotton Esquel facing as an external strategic factors. Some of the topics covered in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version case study are - Strategic Management Strategies, Growth strategy, Joint ventures, Leadership, Negotiations, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings,
there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cotton Esquel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version can be done for the following purposes –
1. Strategic planning using facts provided in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version case study
2. Improving business portfolio management of Cotton Esquel
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 Cotton Esquel
Strengths Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cotton Esquel in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version Harvard Business Review case study are -
Analytics focus
– Cotton Esquel 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 James K. Sebenius, Cheng (Jason) Qian 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.
Superior customer experience
– The customer experience strategy of Cotton Esquel in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Strategy & Execution field
– Cotton Esquel 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 Cotton Esquel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cotton Esquel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cotton Esquel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Cotton Esquel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cotton Esquel 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.
Highly skilled collaborators
– Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Cotton Esquel is one of the leading recruiters in the industry. Managers in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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.
Cross disciplinary teams
– Horizontal connected teams at the Cotton Esquel 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.
Strong track record of project management
– Cotton Esquel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Cotton Esquel is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Cotton Esquel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Cotton Esquel in the sector have low bargaining power. Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cotton Esquel to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version are -
Workers concerns about automation
– As automation is fast increasing in the segment, Cotton Esquel 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version, it seems that the employees of Cotton Esquel 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.
Skills based hiring
– The stress on hiring functional specialists at Cotton Esquel 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Cotton Esquel has relatively successful track record of launching new products.
Lack of clear differentiation of Cotton Esquel products
– To increase the profitability and margins on the products, Cotton Esquel needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version can leverage the sales team experience to cultivate customer relationships as Cotton Esquel is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version, is just above the industry average. Cotton Esquel 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version, in the dynamic environment Cotton Esquel has struggled to respond to the nimble upstart competition. Cotton Esquel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High bargaining power of channel partners
– Because of the regulatory requirements, James K. Sebenius, Cheng (Jason) Qian suggests that, Cotton Esquel 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Cotton Esquel 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cotton Esquel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version | 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cotton Esquel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Cotton Esquel 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
– Cotton Esquel 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.
Developing new processes and practices
– Cotton Esquel 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.
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 Cotton Esquel in the consumer business. Now Cotton Esquel can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cotton Esquel 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. Cotton Esquel 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.
Better consumer reach
– The expansion of the 5G network will help Cotton Esquel to increase its market reach. Cotton Esquel 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cotton Esquel 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 Cotton Esquel to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cotton Esquel is facing challenges because of the dominance of functional experts in the organization. Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cotton Esquel 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.
Building a culture of innovation
– managers at Cotton Esquel can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Cotton Esquel has opened avenues for new revenue streams for the organization in the industry. This can help Cotton Esquel to build a more holistic ecosystem as suggested in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version case study. Cotton Esquel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Cotton Esquel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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.
Threats Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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. Cotton Esquel 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 Cotton Esquel 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
– Cotton Esquel 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.
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.
Shortening product life cycle
– it is one of the major threat that Cotton Esquel is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Cotton Esquel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Regulatory challenges
– Cotton Esquel 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cotton Esquel 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.
Consumer confidence and its impact on Cotton Esquel 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 wage structure of Cotton Esquel
– 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 Cotton Esquel.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version, Cotton Esquel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Cotton Esquel.
Weighted SWOT Analysis of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Spanish Version 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 Cotton Esquel needs to make to build a sustainable competitive advantage.
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