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 - – geopolitical disruptions, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, increasing commodity prices, increasing energy prices, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing transportation and logistics costs, there is increasing trade war between United States & China, 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 -
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.
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.
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.
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.
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.
Successful track record of launching new products
– Recycling Sfc has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Recycling Sfc 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.
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.
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 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 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.
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.
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 -
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.
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.
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.
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study China Metal Recycling Holdings Limited: Scrap King Gets Scrapped, it seems that the employees of Recycling Sfc don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
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.
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.
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 -
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.
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.
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.
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.
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 Recycling Sfc in the consumer business. Now Recycling Sfc can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
Manufacturing automation
– Recycling Sfc can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Recycling Sfc 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 Metal Recycling Holdings Limited: Scrap King Gets Scrapped, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
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.
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.
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.
Stagnating economy with rate increase
– Recycling Sfc 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.
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.
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.
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. Recycling Sfc needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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.
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.
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.
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.
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.
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.
