China Metal Recycling Holdings Limited: Scrap King Gets Scrapped SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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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 - – wage bills are increasing, increasing commodity prices, cloud computing is disrupting traditional business models, technology disruption, increasing transportation and logistics costs, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic ,
increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, 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 -
High switching costs
– The high switching costs that Recycling Sfc 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
– 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.
Analytics focus
– Recycling Sfc 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 Amy Lau, Jun Han, Katrina Tai 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.
Effective Research and Development (R&D)
– Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Recycling Sfc is one of the leading recruiters in the industry. Managers in the China Metal Recycling Holdings Limited: Scrap King Gets Scrapped are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Cross disciplinary teams
– Horizontal connected teams at the Recycling Sfc 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.
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.
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.
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.
Learning organization
- Recycling Sfc 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 Recycling Sfc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in China Metal Recycling Holdings Limited: Scrap King Gets Scrapped Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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 -
Need for greater diversity
– Recycling Sfc 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 Recycling Sfc 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.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped, in the dynamic environment Recycling Sfc has struggled to respond to the nimble upstart competition. Recycling Sfc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Recycling Sfc 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.
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.
Capital Spending Reduction
– Even during the low interest decade, Recycling Sfc 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.
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.
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.
No frontier risks strategy
– After analyzing the HBR case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
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.
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 -
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.
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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Recycling Sfc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
Buying journey improvements
– Recycling Sfc can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. China Metal Recycling Holdings Limited: Scrap King Gets Scrapped 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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Recycling Sfc can use these opportunities to build new business models that can help the communities that Recycling Sfc operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Recycling Sfc 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. Recycling Sfc 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.
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.
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 -
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 Recycling Sfc business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
Increasing wage structure of Recycling Sfc
– 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 Recycling Sfc.
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.
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.
Shortening product life cycle
– it is one of the major threat that Recycling Sfc is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Recycling Sfc with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 .
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 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.
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.