BAIC and the Saab Automobile Acquisition Opportunity SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BAIC and the Saab Automobile Acquisition Opportunity
The chief financial officer at Beijing Automobile Group Co. Ltd., a large Chinese state-owned automobile manufacturer, is weighing up whether the company should purchase an equity stake and/or access to the intellectual property rights and production equipment of Saab Automobile, the troubled Swedish premium automaker owned by General Motors. Previous experience of Chinese technology acquisitions in the auto sector has given him pause for thought. He has to weigh up the likely return on investment, the ability of the company's workforce to absorb and develop new technology, and the role of competitors in China's rapidly growing auto market. He has three options: purchase access to Saab's intellectual property rights alone, purchase an equity stake as well as access to those rights or do neither. If he goes ahead with either of the first two options, and if the gamble pays off, he will enhance his own reputation and that of his company. However, if the gamble fails, not only reputation but potentially a lot of money will be lost and much effort wasted in trying to absorb a foreign product into current operations.
Swot Analysis of "BAIC and the Saab Automobile Acquisition Opportunity" written by Simon Parker, Yang Wang, Ma Chunguang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Automobile Saab facing as an external strategic factors. Some of the topics covered in BAIC and the Saab Automobile Acquisition Opportunity case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the BAIC and the Saab Automobile Acquisition Opportunity casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs,
wage bills are increasing, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of BAIC and the Saab Automobile Acquisition Opportunity
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BAIC and the Saab Automobile Acquisition Opportunity case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Automobile Saab, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity can be done for the following purposes –
1. Strategic planning using facts provided in BAIC and the Saab Automobile Acquisition Opportunity case study
2. Improving business portfolio management of Automobile Saab
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 Automobile Saab
Strengths BAIC and the Saab Automobile Acquisition Opportunity | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Automobile Saab in BAIC and the Saab Automobile Acquisition Opportunity Harvard Business Review case study are -
Ability to lead change in Strategy & Execution field
– Automobile Saab 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 Automobile Saab in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Automobile Saab is present in almost all the verticals within the industry. This has provided firm in BAIC and the Saab Automobile Acquisition Opportunity 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.
High switching costs
– The high switching costs that Automobile Saab 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.
Training and development
– Automobile Saab has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in BAIC and the Saab Automobile Acquisition Opportunity 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.
Successful track record of launching new products
– Automobile Saab has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Automobile Saab 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.
Ability to recruit top talent
– Automobile Saab is one of the leading recruiters in the industry. Managers in the BAIC and the Saab Automobile Acquisition Opportunity are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Automobile Saab is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Automobile Saab has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Automobile Saab to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Automobile Saab 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 Automobile Saab is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BAIC and the Saab Automobile Acquisition Opportunity Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Automobile Saab
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Automobile Saab does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses BAIC and the Saab Automobile Acquisition Opportunity | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BAIC and the Saab Automobile Acquisition Opportunity are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Automobile Saab is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study BAIC and the Saab Automobile Acquisition Opportunity can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study BAIC and the Saab Automobile Acquisition Opportunity, is just above the industry average. Automobile Saab 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Simon Parker, Yang Wang, Ma Chunguang suggests that, Automobile Saab 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.
Products dominated business model
– Even though Automobile Saab 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 - BAIC and the Saab Automobile Acquisition Opportunity should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Automobile Saab is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Automobile Saab needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Automobile Saab to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study BAIC and the Saab Automobile Acquisition Opportunity 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 BAIC and the Saab Automobile Acquisition Opportunity can leverage the sales team experience to cultivate customer relationships as Automobile Saab is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study BAIC and the Saab Automobile Acquisition Opportunity, 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.
Interest costs
– Compare to the competition, Automobile Saab 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.
High operating costs
– Compare to the competitors, firm in the HBR case study BAIC and the Saab Automobile Acquisition Opportunity 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 Automobile Saab 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Automobile Saab has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Automobile Saab even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study BAIC and the Saab Automobile Acquisition Opportunity, it seems that the employees of Automobile Saab 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.
Opportunities BAIC and the Saab Automobile Acquisition Opportunity | 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 BAIC and the Saab Automobile Acquisition Opportunity are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Automobile Saab 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 Automobile Saab to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Automobile Saab can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. BAIC and the Saab Automobile Acquisition Opportunity 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.
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. Automobile Saab can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Automobile Saab has opened avenues for new revenue streams for the organization in the industry. This can help Automobile Saab to build a more holistic ecosystem as suggested in the BAIC and the Saab Automobile Acquisition Opportunity case study. Automobile Saab can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Automobile Saab to increase its market reach. Automobile Saab 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.
Manufacturing automation
– Automobile Saab 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.
Using analytics as competitive advantage
– Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Automobile Saab to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Automobile Saab 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.
Leveraging digital technologies
– Automobile Saab 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, Automobile Saab 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, BAIC and the Saab Automobile Acquisition Opportunity, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Automobile Saab can use these opportunities to build new business models that can help the communities that Automobile Saab operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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 Automobile Saab 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.
Building a culture of innovation
– managers at Automobile Saab 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.
Threats BAIC and the Saab Automobile Acquisition Opportunity External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BAIC and the Saab Automobile Acquisition Opportunity 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 Automobile Saab in the Strategy & Execution sector and impact the bottomline of the organization.
Regulatory challenges
– Automobile Saab 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Automobile Saab with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Automobile Saab 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. Automobile Saab can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Automobile Saab 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.
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 Automobile Saab business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Automobile Saab 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.
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 Automobile Saab.
Increasing wage structure of Automobile Saab
– 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 Automobile Saab.
Technology acceleration in Forth Industrial Revolution
– Automobile Saab has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Automobile Saab 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity .
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. Automobile Saab 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 Automobile Saab 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 BAIC and the Saab Automobile Acquisition Opportunity 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 BAIC and the Saab Automobile Acquisition Opportunity 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 BAIC and the Saab Automobile Acquisition Opportunity 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 BAIC and the Saab Automobile Acquisition Opportunity 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 BAIC and the Saab Automobile Acquisition Opportunity 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 Automobile Saab needs to make to build a sustainable competitive advantage.