Case Study Description of Hefei Xingtai Financial Holding Group: Risk Management
On May 8, 2012, the president of Hefei Xingtai Financial Holding Group (Xingtai) received a message from a senior officer of the Hefei Municipal Government, the company's authorizing body, asking that Xingtai provide financial support to PanTeng Company (PanTeng), a solar power manufacturing company. In order to survive, PanTeng needed Xingtai to provide a guarantee for a A?100 million business loan from a commercial bank. PanTeng had already been turned down by Xingtai Financing Guaranty, one of Xingtai's subsidiaries, because of the potentially high level of guarantee risk. If Xingtai provided a guarantee, it could be liable to reimburse the loan due to PanTeng's high-risk operation, lose its risk management expertise, and face further violations. However, denying the senior officer's request would hamper Xingtai's important relationship with the local government. Should Xingtai take a chance and approve the loan, or should it deny the guarantee? Jiuchang Wei is affiliated with University of Science and Technology China. Lei Zhou is affiliated with University of Science and Technology.
Swot Analysis of "Hefei Xingtai Financial Holding Group: Risk Management" written by Jiuchang Wei, Lei Zhou, Liqiang Sun includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xingtai Panteng facing as an external strategic factors. Some of the topics covered in Hefei Xingtai Financial Holding Group: Risk Management case study are - Strategic Management Strategies, Financial management, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Hefei Xingtai Financial Holding Group: Risk Management casestudy better are - – increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, central banks are concerned over increasing inflation,
technology disruption, increasing commodity prices, etc
Introduction to SWOT Analysis of Hefei Xingtai Financial Holding Group: Risk Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hefei Xingtai Financial Holding Group: Risk Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xingtai Panteng, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xingtai Panteng 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 Hefei Xingtai Financial Holding Group: Risk Management can be done for the following purposes –
1. Strategic planning using facts provided in Hefei Xingtai Financial Holding Group: Risk Management case study
2. Improving business portfolio management of Xingtai Panteng
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 Xingtai Panteng
Strengths Hefei Xingtai Financial Holding Group: Risk Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xingtai Panteng in Hefei Xingtai Financial Holding Group: Risk Management Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Xingtai Panteng 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 Xingtai Panteng in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Xingtai Panteng 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.
Highly skilled collaborators
– Xingtai Panteng 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 Hefei Xingtai Financial Holding Group: Risk Management HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Xingtai Panteng is one of the most innovative firm in sector. Manager in Hefei Xingtai Financial Holding Group: Risk Management Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Xingtai Panteng is present in almost all the verticals within the industry. This has provided firm in Hefei Xingtai Financial Holding Group: Risk Management case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Xingtai Panteng 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 Hefei Xingtai Financial Holding Group: Risk Management - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Xingtai Panteng digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xingtai Panteng has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Strategy & Execution industry
– Hefei Xingtai Financial Holding Group: Risk Management firm has clearly differentiated products in the market place. This has enabled Xingtai Panteng to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Xingtai Panteng to invest into research and development (R&D) and innovation.
Strong track record of project management
– Xingtai Panteng 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
- Xingtai Panteng 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 Xingtai Panteng is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hefei Xingtai Financial Holding Group: Risk Management Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Xingtai Panteng has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hefei Xingtai Financial Holding Group: Risk Management 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.
High brand equity
– Xingtai Panteng has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xingtai Panteng to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Hefei Xingtai Financial Holding Group: Risk Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hefei Xingtai Financial Holding Group: Risk Management are -
Increasing silos among functional specialists
– The organizational structure of Xingtai Panteng is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Xingtai Panteng needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xingtai Panteng to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Hefei Xingtai Financial Holding Group: Risk Management, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 Xingtai Panteng supply chain. Even after few cautionary changes mentioned in the HBR case study - Hefei Xingtai Financial Holding Group: Risk Management, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xingtai Panteng vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Xingtai Panteng products
– To increase the profitability and margins on the products, Xingtai Panteng needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hefei Xingtai Financial Holding Group: Risk Management, is just above the industry average. Xingtai Panteng 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xingtai Panteng is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hefei Xingtai Financial Holding Group: Risk Management 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, Xingtai Panteng 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 Xingtai Panteng, firm in the HBR case study Hefei Xingtai Financial Holding Group: Risk Management needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Xingtai Panteng 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.
Capital Spending Reduction
– Even during the low interest decade, Xingtai Panteng 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hefei Xingtai Financial Holding Group: Risk Management, in the dynamic environment Xingtai Panteng has struggled to respond to the nimble upstart competition. Xingtai Panteng has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Hefei Xingtai Financial Holding Group: Risk Management | 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 Hefei Xingtai Financial Holding Group: Risk Management are -
Manufacturing automation
– Xingtai Panteng 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xingtai Panteng is facing challenges because of the dominance of functional experts in the organization. Hefei Xingtai Financial Holding Group: Risk Management case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xingtai Panteng to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Xingtai Panteng to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Xingtai Panteng 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 Hefei Xingtai Financial Holding Group: Risk Management - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xingtai Panteng to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xingtai Panteng can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Xingtai Panteng in the consumer business. Now Xingtai Panteng 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. Xingtai Panteng can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Xingtai Panteng 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. Xingtai Panteng 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.
Buying journey improvements
– Xingtai Panteng can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hefei Xingtai Financial Holding Group: Risk Management 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Xingtai Panteng can use these opportunities to build new business models that can help the communities that Xingtai Panteng operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Xingtai Panteng in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Xingtai Panteng to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Xingtai Panteng 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.
Threats Hefei Xingtai Financial Holding Group: Risk Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hefei Xingtai Financial Holding Group: Risk Management are -
Technology acceleration in Forth Industrial Revolution
– Xingtai Panteng has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Xingtai Panteng 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.
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 Xingtai Panteng in the Strategy & Execution sector and impact the bottomline of the organization.
Environmental challenges
– Xingtai Panteng 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. Xingtai Panteng can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
High dependence on third party suppliers
– Xingtai Panteng 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.
Stagnating economy with rate increase
– Xingtai Panteng 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.
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 Xingtai Panteng business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Xingtai Panteng 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.
Consumer confidence and its impact on Xingtai Panteng 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xingtai Panteng with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Xingtai Panteng
– 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 Xingtai Panteng.
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.
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. Xingtai Panteng can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Xingtai Panteng is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Hefei Xingtai Financial Holding Group: Risk Management 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 Hefei Xingtai Financial Holding Group: Risk Management 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 Hefei Xingtai Financial Holding Group: Risk Management 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 Hefei Xingtai Financial Holding Group: Risk Management 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 Hefei Xingtai Financial Holding Group: Risk Management 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 Xingtai Panteng needs to make to build a sustainable competitive advantage.
