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 - – banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, increasing commodity prices, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, technology disruption, 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 -
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.
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.
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.
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.
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.
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.
Ability to recruit top talent
– Xingtai Panteng is one of the leading recruiters in the industry. Managers in the Hefei Xingtai Financial Holding Group: Risk Management are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Organizational Resilience of Xingtai Panteng
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xingtai Panteng does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Superior customer experience
– The customer experience strategy of Xingtai Panteng in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Hefei Xingtai Financial Holding Group: Risk Management, it seems that the employees of Xingtai Panteng 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.
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.
Products dominated business model
– Even though Xingtai Panteng 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 - Hefei Xingtai Financial Holding Group: Risk Management should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Hefei Xingtai Financial Holding Group: Risk Management has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Xingtai Panteng 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Jiuchang Wei, Lei Zhou, Liqiang Sun suggests that, Xingtai Panteng 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Xingtai Panteng 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.
Skills based hiring
– The stress on hiring functional specialists at Xingtai Panteng 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.
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.
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.
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 -
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. Xingtai Panteng can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
Leveraging digital technologies
– Xingtai Panteng 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xingtai Panteng 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.
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.
Better consumer reach
– The expansion of the 5G network will help Xingtai Panteng to increase its market reach. Xingtai Panteng 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.
Loyalty marketing
– Xingtai Panteng has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Building a culture of innovation
– managers at Xingtai Panteng 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 Strategy & Execution segment.
Creating value in data economy
– The success of analytics program of Xingtai Panteng has opened avenues for new revenue streams for the organization in the industry. This can help Xingtai Panteng to build a more holistic ecosystem as suggested in the Hefei Xingtai Financial Holding Group: Risk Management case study. Xingtai Panteng can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
Developing new processes and practices
– Xingtai Panteng can develop new processes and procedures in Strategy & Execution 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xingtai Panteng 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, Hefei Xingtai Financial Holding Group: Risk Management, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 -
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.
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.
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.
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.
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 Xingtai Panteng.
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 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. Xingtai Panteng needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xingtai Panteng in the Strategy & Execution industry. The Strategy & Execution 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.
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.
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.
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.
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.
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.