China's Interlaken: Competitive Advantage through Cultural Replication SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of China's Interlaken: Competitive Advantage through Cultural Replication
Interlaken Village in Shenzhen, China, is an exact replica of the Swiss village of Interlaken, which is part of OCT East, a US$450 million investment in the thriving Pearl River Delta. This is a management strategy case for students to think outside the box about business strategies. In standard competitive strategy literature, firms should avoid being imitated or imitating others in order to gain unique competitive advantages. This case, however, examines whether copying can be a sustainable source of competitive advantage.
Swot Analysis of "China's Interlaken: Competitive Advantage through Cultural Replication" written by Ali Farhoomand, Minyi Huang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Interlaken Village facing as an external strategic factors. Some of the topics covered in China's Interlaken: Competitive Advantage through Cultural Replication case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the China's Interlaken: Competitive Advantage through Cultural Replication casestudy better are - – wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing household debt because of falling income levels, increasing energy prices, there is backlash against globalization, cloud computing is disrupting traditional business models,
increasing commodity prices, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of China's Interlaken: Competitive Advantage through Cultural Replication
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China's Interlaken: Competitive Advantage through Cultural Replication case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Interlaken Village, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Interlaken Village operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of China's Interlaken: Competitive Advantage through Cultural Replication can be done for the following purposes –
1. Strategic planning using facts provided in China's Interlaken: Competitive Advantage through Cultural Replication case study
2. Improving business portfolio management of Interlaken Village
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 Interlaken Village
Strengths China's Interlaken: Competitive Advantage through Cultural Replication | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Interlaken Village in China's Interlaken: Competitive Advantage through Cultural Replication Harvard Business Review case study are -
Highly skilled collaborators
– Interlaken Village has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in China's Interlaken: Competitive Advantage through Cultural Replication HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Interlaken Village 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 Interlaken Village in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Interlaken Village
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Interlaken Village does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Strategy & Execution industry
– China's Interlaken: Competitive Advantage through Cultural Replication firm has clearly differentiated products in the market place. This has enabled Interlaken Village to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Interlaken Village to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the China's Interlaken: Competitive Advantage through Cultural Replication 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.
Diverse revenue streams
– Interlaken Village is present in almost all the verticals within the industry. This has provided firm in China's Interlaken: Competitive Advantage through Cultural Replication 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.
Cross disciplinary teams
– Horizontal connected teams at the Interlaken Village 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.
High switching costs
– The high switching costs that Interlaken Village 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
– Interlaken Village is one of the leading recruiters in the industry. Managers in the China's Interlaken: Competitive Advantage through Cultural Replication are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Interlaken Village has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Interlaken Village 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.
Innovation driven organization
– Interlaken Village is one of the most innovative firm in sector. Manager in China's Interlaken: Competitive Advantage through Cultural Replication Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Interlaken Village is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses China's Interlaken: Competitive Advantage through Cultural Replication | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China's Interlaken: Competitive Advantage through Cultural Replication are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study China's Interlaken: Competitive Advantage through Cultural Replication, is just above the industry average. Interlaken Village needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study China's Interlaken: Competitive Advantage through Cultural Replication, in the dynamic environment Interlaken Village has struggled to respond to the nimble upstart competition. Interlaken Village has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Interlaken Village 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Interlaken Village is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study China's Interlaken: Competitive Advantage through Cultural Replication can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Interlaken Village 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's Interlaken: Competitive Advantage through Cultural Replication that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case China's Interlaken: Competitive Advantage through Cultural Replication can leverage the sales team experience to cultivate customer relationships as Interlaken Village is planning to shift buying processes online.
Need for greater diversity
– Interlaken Village 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali Farhoomand, Minyi Huang suggests that, Interlaken Village is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the China's Interlaken: Competitive Advantage through Cultural Replication 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 Interlaken Village has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Interlaken Village is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Interlaken Village needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Interlaken Village to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As China's Interlaken: Competitive Advantage through Cultural Replication HBR case study mentions - Interlaken Village 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.
Opportunities China's Interlaken: Competitive Advantage through Cultural Replication | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study China's Interlaken: Competitive Advantage through Cultural Replication are -
Better consumer reach
– The expansion of the 5G network will help Interlaken Village to increase its market reach. Interlaken Village 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.
Using analytics as competitive advantage
– Interlaken Village has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study China's Interlaken: Competitive Advantage through Cultural Replication - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Interlaken Village to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Interlaken Village can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, China's Interlaken: Competitive Advantage through Cultural Replication, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Interlaken Village has opened avenues for new revenue streams for the organization in the industry. This can help Interlaken Village to build a more holistic ecosystem as suggested in the China's Interlaken: Competitive Advantage through Cultural Replication case study. Interlaken Village can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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. Interlaken Village can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Interlaken Village 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.
Manufacturing automation
– Interlaken Village 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Interlaken Village 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.
Learning at scale
– Online learning technologies has now opened space for Interlaken Village 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 Strategy & Execution industry, but it has also influenced the consumer preferences. Interlaken Village can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Interlaken Village 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. Interlaken Village 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Interlaken Village is facing challenges because of the dominance of functional experts in the organization. China's Interlaken: Competitive Advantage through Cultural Replication case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Interlaken Village can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats China's Interlaken: Competitive Advantage through Cultural Replication External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China's Interlaken: Competitive Advantage through Cultural Replication are -
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 Interlaken Village in the Strategy & Execution sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Interlaken Village is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Interlaken Village business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Interlaken Village 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. Interlaken Village can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Interlaken Village can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Interlaken Village with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Interlaken Village.
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. Interlaken Village 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Interlaken Village can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study China's Interlaken: Competitive Advantage through Cultural Replication .
Regulatory challenges
– Interlaken Village needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Stagnating economy with rate increase
– Interlaken Village 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 acceleration in Forth Industrial Revolution
– Interlaken Village has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Interlaken Village 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.
Weighted SWOT Analysis of China's Interlaken: Competitive Advantage through Cultural Replication Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study China's Interlaken: Competitive Advantage through Cultural Replication needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study China's Interlaken: Competitive Advantage through Cultural Replication is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study China's Interlaken: Competitive Advantage through Cultural Replication is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of China's Interlaken: Competitive Advantage through Cultural Replication 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 Interlaken Village needs to make to build a sustainable competitive advantage.
