Haier's U.S. Refrigerator Strategy 2005, Chinese Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Haier's U.S. Refrigerator Strategy 2005, Chinese Version
Haier, the first Chinese consumer durable brand in the United States, succeeded in the compact refrigerator, freezer, and air conditioner markets and then built a U.S. factory to enter the full-size market. Issues include the value of a local entrepreneur to the Asian manufacturer entering the United States; brand building and price positioning; the sourcing location decision trade-off between production costs and logistics costs; the role of change in the U.S. appliance distribution channels; global and regional competitive analysis; the response of U.S. competitors to the global sourcing evolution; and the time horizons of Chinese company management.
Authors :: Pankaj Ghemawat, Thomas M. Hout, Jordan Siegel
Swot Analysis of "Haier's U.S. Refrigerator Strategy 2005, Chinese Version" written by Pankaj Ghemawat, Thomas M. Hout, Jordan Siegel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Refrigerator U.s facing as an external strategic factors. Some of the topics covered in Haier's U.S. Refrigerator Strategy 2005, Chinese Version case study are - Strategic Management Strategies, Costs, Globalization, Operations management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Haier's U.S. Refrigerator Strategy 2005, Chinese Version casestudy better are - – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, wage bills are increasing, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google,
technology disruption, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Haier's U.S. Refrigerator Strategy 2005, Chinese Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Haier's U.S. Refrigerator Strategy 2005, Chinese Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Refrigerator U.s, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Refrigerator U.s 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 Haier's U.S. Refrigerator Strategy 2005, Chinese Version can be done for the following purposes –
1. Strategic planning using facts provided in Haier's U.S. Refrigerator Strategy 2005, Chinese Version case study
2. Improving business portfolio management of Refrigerator U.s
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 Refrigerator U.s
Strengths Haier's U.S. Refrigerator Strategy 2005, Chinese Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Refrigerator U.s in Haier's U.S. Refrigerator Strategy 2005, Chinese Version Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Haier's U.S. Refrigerator Strategy 2005, Chinese Version firm has clearly differentiated products in the market place. This has enabled Refrigerator U.s to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Refrigerator U.s to invest into research and development (R&D) and innovation.
Ability to lead change in Strategy & Execution field
– Refrigerator U.s 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 Refrigerator U.s in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Refrigerator U.s has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Haier's U.S. Refrigerator Strategy 2005, Chinese Version 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.
Organizational Resilience of Refrigerator U.s
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Refrigerator U.s does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Refrigerator U.s 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.
Innovation driven organization
– Refrigerator U.s is one of the most innovative firm in sector. Manager in Haier's U.S. Refrigerator Strategy 2005, Chinese Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Haier's U.S. Refrigerator Strategy 2005, Chinese 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.
Analytics focus
– Refrigerator U.s 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 Pankaj Ghemawat, Thomas M. Hout, Jordan Siegel 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 Refrigerator U.s in the sector have low bargaining power. Haier's U.S. Refrigerator Strategy 2005, Chinese Version has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Refrigerator U.s to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Refrigerator U.s 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.
Ability to recruit top talent
– Refrigerator U.s is one of the leading recruiters in the industry. Managers in the Haier's U.S. Refrigerator Strategy 2005, Chinese 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.
Successful track record of launching new products
– Refrigerator U.s has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Refrigerator U.s 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.
Weaknesses Haier's U.S. Refrigerator Strategy 2005, Chinese Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Haier's U.S. Refrigerator Strategy 2005, Chinese Version are -
Slow decision making process
– As mentioned earlier in the report, Refrigerator U.s 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. Refrigerator U.s 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.
Increasing silos among functional specialists
– The organizational structure of Refrigerator U.s is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Refrigerator U.s needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Refrigerator U.s to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Haier's U.S. Refrigerator Strategy 2005, Chinese Version HBR case study mentions - Refrigerator U.s 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Refrigerator U.s 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.
Need for greater diversity
– Refrigerator U.s has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Refrigerator U.s 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 operating costs
– Compare to the competitors, firm in the HBR case study Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Refrigerator U.s 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Refrigerator U.s, firm in the HBR case study Haier's U.S. Refrigerator Strategy 2005, Chinese Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Refrigerator U.s products
– To increase the profitability and margins on the products, Refrigerator U.s needs to provide more differentiated products than what it is currently offering in the marketplace.
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 Refrigerator U.s supply chain. Even after few cautionary changes mentioned in the HBR case study - Haier's U.S. Refrigerator Strategy 2005, Chinese Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Refrigerator U.s vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Refrigerator U.s has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Haier's U.S. Refrigerator Strategy 2005, Chinese Version are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Refrigerator U.s can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Refrigerator U.s in the consumer business. Now Refrigerator U.s can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Refrigerator U.s 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Refrigerator U.s 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, Haier's U.S. Refrigerator Strategy 2005, Chinese Version, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Refrigerator U.s can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Refrigerator U.s 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Refrigerator U.s is facing challenges because of the dominance of functional experts in the organization. Haier's U.S. Refrigerator Strategy 2005, Chinese 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.
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. Refrigerator U.s 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. Refrigerator U.s 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.
Creating value in data economy
– The success of analytics program of Refrigerator U.s has opened avenues for new revenue streams for the organization in the industry. This can help Refrigerator U.s to build a more holistic ecosystem as suggested in the Haier's U.S. Refrigerator Strategy 2005, Chinese Version case study. Refrigerator U.s can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Refrigerator U.s 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Refrigerator U.s in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Refrigerator U.s 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
– Refrigerator U.s 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.
Threats Haier's U.S. Refrigerator Strategy 2005, Chinese Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Haier's U.S. Refrigerator Strategy 2005, Chinese Version are -
Technology acceleration in Forth Industrial Revolution
– Refrigerator U.s has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Refrigerator U.s needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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. Refrigerator U.s can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Refrigerator U.s 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Haier's U.S. Refrigerator Strategy 2005, Chinese Version, Refrigerator U.s may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Refrigerator U.s business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Refrigerator U.s 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.
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
– Refrigerator U.s 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Refrigerator U.s with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Refrigerator U.s is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Refrigerator U.s
– 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 Refrigerator U.s.
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 Refrigerator U.s.
High dependence on third party suppliers
– Refrigerator U.s 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.
Weighted SWOT Analysis of Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Haier's U.S. Refrigerator Strategy 2005, Chinese 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 Refrigerator U.s needs to make to build a sustainable competitive advantage.
