China Kelon Group (B): Integration After Merger SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of China Kelon Group (B): Integration After Merger
Deals with the issue of integrating two large business groups after the No. 6 air conditioner manufacturer, Kelon Group, acquired the No. 5 air conditioner producer, Huabao. Whereas Kelon Group is a nonstate-owned company, Huabao was spun off from a state-owned enterprise group. It was a landmark acquisition case in which a nonstate entrepreneurial firm took over a state enterprise that had a strong name brand and national reputation. The two companies have different resource bases, history, tradition, corporate culture, management style, product features, and reward systems. They were traditionally close rivals located in the same township. The combined capacity will make the new Kelon-Huabao the top air conditioner manufacturer in terms of market share, assuming a successful merger and integration.
Swot Analysis of "China Kelon Group (B): Integration After Merger" written by Justin Tan, Paul W. Beamish includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kelon Huabao facing as an external strategic factors. Some of the topics covered in China Kelon Group (B): Integration After Merger case study are - Strategic Management Strategies, Entrepreneurship, Manufacturing, Organizational structure, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the China Kelon Group (B): Integration After Merger casestudy better are - – talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, wage bills are increasing, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, geopolitical disruptions,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of China Kelon Group (B): Integration After Merger
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China Kelon Group (B): Integration After Merger case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kelon Huabao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kelon Huabao 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 Kelon Group (B): Integration After Merger can be done for the following purposes –
1. Strategic planning using facts provided in China Kelon Group (B): Integration After Merger case study
2. Improving business portfolio management of Kelon Huabao
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 Kelon Huabao
Strengths China Kelon Group (B): Integration After Merger | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kelon Huabao in China Kelon Group (B): Integration After Merger Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Kelon Huabao in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Kelon Huabao 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 Kelon Huabao is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in China Kelon Group (B): Integration After Merger Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Kelon Huabao has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kelon Huabao to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Kelon Huabao 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 Justin Tan, Paul W. Beamish 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.
Diverse revenue streams
– Kelon Huabao is present in almost all the verticals within the industry. This has provided firm in China Kelon Group (B): Integration After Merger 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.
Effective Research and Development (R&D)
– Kelon Huabao 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 Kelon Group (B): Integration After Merger - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Kelon Huabao
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kelon Huabao does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the China Kelon Group (B): Integration After Merger 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.
Sustainable margins compare to other players in Strategy & Execution industry
– China Kelon Group (B): Integration After Merger firm has clearly differentiated products in the market place. This has enabled Kelon Huabao to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Kelon Huabao to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Kelon Huabao has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kelon Huabao 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 Kelon Huabao 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.
Ability to recruit top talent
– Kelon Huabao is one of the leading recruiters in the industry. Managers in the China Kelon Group (B): Integration After Merger are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses China Kelon Group (B): Integration After Merger | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Kelon Group (B): Integration After Merger are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study China Kelon Group (B): Integration After Merger, in the dynamic environment Kelon Huabao has struggled to respond to the nimble upstart competition. Kelon Huabao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As China Kelon Group (B): Integration After Merger HBR case study mentions - Kelon Huabao 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.
Aligning sales with marketing
– It come across in the case study China Kelon Group (B): Integration After Merger 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 Kelon Group (B): Integration After Merger can leverage the sales team experience to cultivate customer relationships as Kelon Huabao is planning to shift buying processes online.
High cash cycle compare to competitors
Kelon Huabao 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 bargaining power of channel partners
– Because of the regulatory requirements, Justin Tan, Paul W. Beamish suggests that, Kelon Huabao 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.
Skills based hiring
– The stress on hiring functional specialists at Kelon Huabao 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.
Capital Spending Reduction
– Even during the low interest decade, Kelon Huabao 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.
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 Kelon Huabao supply chain. Even after few cautionary changes mentioned in the HBR case study - China Kelon Group (B): Integration After Merger, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Kelon Huabao vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study China Kelon Group (B): Integration After Merger, 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.
Lack of clear differentiation of Kelon Huabao products
– To increase the profitability and margins on the products, Kelon Huabao needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the China Kelon Group (B): Integration After Merger 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 Kelon Huabao has relatively successful track record of launching new products.
Opportunities China Kelon Group (B): Integration After Merger | 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 Kelon Group (B): Integration After Merger are -
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 Kelon Huabao in the consumer business. Now Kelon Huabao can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Kelon Huabao 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.
Learning at scale
– Online learning technologies has now opened space for Kelon Huabao 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.
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 Kelon Huabao 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, Kelon Huabao is facing challenges because of the dominance of functional experts in the organization. China Kelon Group (B): Integration After Merger 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Kelon Huabao 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 Kelon Huabao to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Kelon Huabao can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Kelon Huabao 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 Kelon Group (B): Integration After Merger - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kelon Huabao to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Kelon Huabao 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Kelon Huabao 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 Kelon Group (B): Integration After Merger, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Kelon Huabao 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 Kelon Huabao 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.
Building a culture of innovation
– managers at Kelon Huabao 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.
Threats China Kelon Group (B): Integration After Merger External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China Kelon Group (B): Integration After Merger are -
Increasing wage structure of Kelon Huabao
– 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 Kelon Huabao.
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 Kelon Huabao.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kelon Huabao 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 Kelon Group (B): Integration After Merger .
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 Kelon Huabao in the Strategy & Execution sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Kelon Huabao 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.
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. Kelon Huabao 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 Kelon Huabao 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.
High dependence on third party suppliers
– Kelon Huabao 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.
Shortening product life cycle
– it is one of the major threat that Kelon Huabao is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Kelon Huabao has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Kelon Huabao 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.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kelon Huabao 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.
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 Kelon Huabao business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of China Kelon Group (B): Integration After Merger 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 Kelon Group (B): Integration After Merger 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 Kelon Group (B): Integration After Merger 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 Kelon Group (B): Integration After Merger 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 Kelon Group (B): Integration After Merger 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 Kelon Huabao needs to make to build a sustainable competitive advantage.