China Metal Recycling Holdings Limited: Scrap King Gets Scrapped SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of China Metal Recycling Holdings Limited: Scrap King Gets Scrapped
China Metal Recycling Holdings Ltd ("CMR" or "the Company") was said to be the largest scrap metal recycling company in mainland China. It was listed on the Hong Kong Stock Exchange in June 2009. For a few years after its initial listing, the Company reported extremely high revenue and profit growth. Many investment houses assigned its stock "buy" or "strong buy" recommendations. This optimistic situation lasted until January 2013, when California-based Glaucus Research Group issued a report pointing out that, in comparison with other publically available industry data, CMR's reported sales figures were unlikely to be true. This rang the regulatory alarm bell. The Securities and Futures Commission of Hong Kong ("SFC") conducted an investigation and found reporting fraud. On July 29, 2013, the SFC obtained court orders appointing provisional liquidators to take over the Company. CMR was suspended from trading on main board of the Hong Kong Stock Exchange. Several of the Company's key directors and officers were arrested in the next couple of weeks. The information provided in the Company's annual reports complied with Hong Kong listing requirements and financial reporting standards. It apparently had sound corporate governance structures. For three and a half consecutive years, its external auditor, a leading international accounting firm, had given its financial statements "true and fair" marks. With all these seeming positives, investors were easily misled. How can investors uncover such camouflaged financial fraud? What are the key risk areas one should focus on when analyzing a company? How can a company's financials be double-checked using publically available information?
Swot Analysis of "China Metal Recycling Holdings Limited: Scrap King Gets Scrapped" written by Amy Lau, Jun Han, Katrina Tai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Recycling Sfc facing as an external strategic factors. Some of the topics covered in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped case study are - Strategic Management Strategies, Corporate governance, Financial management, Financial markets, Operations management, Sustainability and Finance & Accounting.
Some of the macro environment factors that can be used to understand the China Metal Recycling Holdings Limited: Scrap King Gets Scrapped casestudy better are - – digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, there is increasing trade war between United States & China,
customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of China Metal Recycling Holdings Limited: Scrap King Gets Scrapped
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Recycling Sfc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped can be done for the following purposes –
1. Strategic planning using facts provided in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped case study
2. Improving business portfolio management of Recycling Sfc
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Recycling Sfc
Strengths China Metal Recycling Holdings Limited: Scrap King Gets Scrapped | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Recycling Sfc in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped Harvard Business Review case study are -
Training and development
– Recycling Sfc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Recycling Sfc
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Recycling Sfc does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Recycling Sfc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Recycling Sfc is one of the most innovative firm in sector. Manager in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Recycling Sfc in the sector have low bargaining power. China Metal Recycling Holdings Limited: Scrap King Gets Scrapped has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Recycling Sfc to manage not only supply disruptions but also source products at highly competitive prices.
Ability to lead change in Finance & Accounting field
– Recycling Sfc 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 Recycling Sfc in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Finance & Accounting industry
– China Metal Recycling Holdings Limited: Scrap King Gets Scrapped firm has clearly differentiated products in the market place. This has enabled Recycling Sfc to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Recycling Sfc to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Recycling Sfc is present in almost all the verticals within the industry. This has provided firm in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Recycling Sfc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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.
High brand equity
– Recycling Sfc has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Recycling Sfc to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses China Metal Recycling Holdings Limited: Scrap King Gets Scrapped | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China Metal Recycling Holdings Limited: Scrap King Gets Scrapped are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Recycling Sfc has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Recycling Sfc, firm in the HBR case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As China Metal Recycling Holdings Limited: Scrap King Gets Scrapped HBR case study mentions - Recycling Sfc 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.
Products dominated business model
– Even though Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Recycling Sfc products
– To increase the profitability and margins on the products, Recycling Sfc needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Recycling Sfc 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.
Aligning sales with marketing
– It come across in the case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped can leverage the sales team experience to cultivate customer relationships as Recycling Sfc is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Recycling Sfc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Recycling Sfc is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Recycling Sfc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Recycling Sfc to focus more on services rather than just following the product oriented approach.
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 Recycling Sfc supply chain. Even after few cautionary changes mentioned in the HBR case study - China Metal Recycling Holdings Limited: Scrap King Gets Scrapped, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Recycling Sfc vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Amy Lau, Jun Han, Katrina Tai suggests that, Recycling Sfc 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.
Opportunities China Metal Recycling Holdings Limited: Scrap King Gets Scrapped | 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped are -
Developing new processes and practices
– Recycling Sfc can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Using analytics as competitive advantage
– Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Recycling Sfc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Recycling Sfc 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.
Building a culture of innovation
– managers at Recycling Sfc can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Recycling Sfc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
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 Recycling Sfc 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.
Learning at scale
– Online learning technologies has now opened space for Recycling Sfc 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Recycling Sfc is facing challenges because of the dominance of functional experts in the organization. China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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.
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. Recycling Sfc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Recycling Sfc 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.
Leveraging digital technologies
– Recycling Sfc 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.
Creating value in data economy
– The success of analytics program of Recycling Sfc has opened avenues for new revenue streams for the organization in the industry. This can help Recycling Sfc to build a more holistic ecosystem as suggested in the China Metal Recycling Holdings Limited: Scrap King Gets Scrapped case study. Recycling Sfc can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Recycling Sfc to increase its market reach. Recycling Sfc 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.
Threats China Metal Recycling Holdings Limited: Scrap King Gets Scrapped External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped are -
Environmental challenges
– Recycling Sfc 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. Recycling Sfc can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Recycling Sfc in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Recycling Sfc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Recycling Sfc has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Recycling Sfc needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Recycling Sfc 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.
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, Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped .
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 Recycling Sfc.
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. Recycling Sfc 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.
Regulatory challenges
– Recycling Sfc 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 Finance & Accounting industry regulations.
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 Recycling Sfc in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Recycling Sfc 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 China Metal Recycling Holdings Limited: Scrap King Gets Scrapped, Recycling Sfc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Weighted SWOT Analysis of China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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 Recycling Sfc needs to make to build a sustainable competitive advantage.