Case Study Description of China's Electronic Commerce Initiative: Leapfrogging Development Stages
In May 1998, China's Ministry of Foreign Trade and Economic Cooperation (MOFTEC) launched its online market gateway, www.chinamarket.com. One month later, the Ministry of Information Industry (MII) announced a strategic venture with IBM to develop the central e-commerce platform for the country. With the central government promoting e-commerce as a means around domestic infrastructural bottlenecks such as transportation and distribution, the two initiatives were racing to become the gateway through which international e-commerce was "funnelled" into China. Given the open standards and the open access, which are a defining aspect of the growth of e-commerce, could China seriously expect to control the flow of e-commerce to such an extent?
Swot Analysis of "China's Electronic Commerce Initiative: Leapfrogging Development Stages" written by Ali F. Farhoomand, Peter Lovelock includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Commerce Gateway facing as an external strategic factors. Some of the topics covered in China's Electronic Commerce Initiative: Leapfrogging Development Stages case study are - Strategic Management Strategies, Internet and Strategy & Execution.
Some of the macro environment factors that can be used to understand the China's Electronic Commerce Initiative: Leapfrogging Development Stages casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization,
increasing energy prices, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of China's Electronic Commerce Initiative: Leapfrogging Development Stages
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China's Electronic Commerce Initiative: Leapfrogging Development Stages case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Commerce Gateway, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages can be done for the following purposes –
1. Strategic planning using facts provided in China's Electronic Commerce Initiative: Leapfrogging Development Stages case study
2. Improving business portfolio management of Commerce Gateway
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 Commerce Gateway
Strengths China's Electronic Commerce Initiative: Leapfrogging Development Stages | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Commerce Gateway in China's Electronic Commerce Initiative: Leapfrogging Development Stages Harvard Business Review case study are -
Highly skilled collaborators
– Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Commerce Gateway 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 Commerce Gateway in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Commerce Gateway 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.
Low bargaining power of suppliers
– Suppliers of Commerce Gateway in the sector have low bargaining power. China's Electronic Commerce Initiative: Leapfrogging Development Stages has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Commerce Gateway to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Commerce Gateway
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Commerce Gateway does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Commerce Gateway is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Strategy & Execution industry
– China's Electronic Commerce Initiative: Leapfrogging Development Stages firm has clearly differentiated products in the market place. This has enabled Commerce Gateway to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Commerce Gateway to invest into research and development (R&D) and innovation.
Innovation driven organization
– Commerce Gateway is one of the most innovative firm in sector. Manager in China's Electronic Commerce Initiative: Leapfrogging Development Stages Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Commerce Gateway digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Commerce Gateway 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.
Diverse revenue streams
– Commerce Gateway is present in almost all the verticals within the industry. This has provided firm in China's Electronic Commerce Initiative: Leapfrogging Development Stages case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Commerce Gateway in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses China's Electronic Commerce Initiative: Leapfrogging Development Stages | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China's Electronic Commerce Initiative: Leapfrogging Development Stages are -
Lack of clear differentiation of Commerce Gateway products
– To increase the profitability and margins on the products, Commerce Gateway needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Commerce Gateway 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 Commerce Gateway has relatively successful track record of launching new products.
Products dominated business model
– Even though Commerce Gateway has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - China's Electronic Commerce Initiative: Leapfrogging Development Stages should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Commerce Gateway 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.
No frontier risks strategy
– After analyzing the HBR case study China's Electronic Commerce Initiative: Leapfrogging Development Stages, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali F. Farhoomand, Peter Lovelock suggests that, Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 Commerce Gateway 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Commerce Gateway 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.
Increasing silos among functional specialists
– The organizational structure of Commerce Gateway is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Commerce Gateway needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Commerce Gateway to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages can leverage the sales team experience to cultivate customer relationships as Commerce Gateway is planning to shift buying processes online.
Opportunities China's Electronic Commerce Initiative: Leapfrogging Development Stages | 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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. Commerce Gateway can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Commerce Gateway is facing challenges because of the dominance of functional experts in the organization. China's Electronic Commerce Initiative: Leapfrogging Development Stages 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Commerce Gateway can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Commerce Gateway 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Commerce Gateway 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 Commerce Gateway to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Commerce Gateway to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Commerce Gateway to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Commerce Gateway 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Commerce Gateway 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, China's Electronic Commerce Initiative: Leapfrogging Development Stages, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Commerce Gateway to increase its market reach. Commerce Gateway 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.
Loyalty marketing
– Commerce Gateway 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.
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. Commerce Gateway 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. Commerce Gateway 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.
Buying journey improvements
– Commerce Gateway can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China's Electronic Commerce Initiative: Leapfrogging Development Stages are -
Technology acceleration in Forth Industrial Revolution
– Commerce Gateway has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Commerce Gateway 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.
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 Commerce Gateway.
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
– Commerce Gateway 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.
Increasing wage structure of Commerce Gateway
– 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 Commerce Gateway.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study China's Electronic Commerce Initiative: Leapfrogging Development Stages, Commerce Gateway 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 .
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Commerce Gateway 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages .
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 Commerce Gateway business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Commerce Gateway is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Commerce Gateway needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Commerce Gateway can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Stagnating economy with rate increase
– Commerce Gateway 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.
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. Commerce Gateway needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Weighted SWOT Analysis of China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 China's Electronic Commerce Initiative: Leapfrogging Development Stages 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 Commerce Gateway needs to make to build a sustainable competitive advantage.
