Case Study Description of Smart Strategic Transformation of Changhong
The recent internet storm has swept almost all industries. In China, Suning, the giant home appliance chain company, has implemented comprehensive internet transformation, the internet and communication companies such as Baidu, Alibaba, Tencent, Lenovo, LeTV and Xiaomi have invaded into the home appliance industry one after another, taking their advantage in content, platform, operation systems, and so on, and therefore greatly influenced the whole color TV industry. To cope with the post-PC changes, in 2013, Changhong has upgraded its previous "Three Coordinates" strategy (business model, value chain, industrial form) into a "New Three Coordinates" strategy (intelligence, network, collaboration), and launched its new generation of home appliance products, ChiQ series, intending to make remarkable breakthroughs to create new competitive edges. It has also extended its accumulated IT systems to set up centralized IT platforms for production, transaction, and R&D, and even tried to edge into the field of "intelligent home, intelligent community, intelligent city". Can these measures, however, represent new directions of the home appliance industry and internet companies and make Changhong, once the "King of Color TV" twenty years ago, gain its leadership in the new internet era?
Swot Analysis of "Smart Strategic Transformation of Changhong" written by F. Warren McFarlan, Bo Mao, Fei Meng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Changhong Appliance facing as an external strategic factors. Some of the topics covered in Smart Strategic Transformation of Changhong case study are - Strategic Management Strategies, IT, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Smart Strategic Transformation of Changhong casestudy better are - – increasing energy prices, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing commodity prices, talent flight as more people leaving formal jobs, there is backlash against globalization,
increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Smart Strategic Transformation of Changhong
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Smart Strategic Transformation of Changhong case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Changhong Appliance, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Changhong Appliance 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 Smart Strategic Transformation of Changhong can be done for the following purposes –
1. Strategic planning using facts provided in Smart Strategic Transformation of Changhong case study
2. Improving business portfolio management of Changhong Appliance
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 Changhong Appliance
Strengths Smart Strategic Transformation of Changhong | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Changhong Appliance in Smart Strategic Transformation of Changhong Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Changhong Appliance in the sector have low bargaining power. Smart Strategic Transformation of Changhong has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Changhong Appliance to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Changhong Appliance is one of the most innovative firm in sector. Manager in Smart Strategic Transformation of Changhong Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Changhong Appliance 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Smart Strategic Transformation of Changhong firm has clearly differentiated products in the market place. This has enabled Changhong Appliance to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Changhong Appliance to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Changhong Appliance 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.
Diverse revenue streams
– Changhong Appliance is present in almost all the verticals within the industry. This has provided firm in Smart Strategic Transformation of Changhong 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.
Organizational Resilience of Changhong Appliance
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Changhong Appliance does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Changhong Appliance 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 Smart Strategic Transformation of Changhong HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Changhong Appliance has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Changhong Appliance 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.
Superior customer experience
– The customer experience strategy of Changhong Appliance in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Changhong Appliance 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 Changhong Appliance is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Smart Strategic Transformation of Changhong Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Effective Research and Development (R&D)
– Changhong Appliance 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 Smart Strategic Transformation of Changhong - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Smart Strategic Transformation of Changhong | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Smart Strategic Transformation of Changhong are -
High bargaining power of channel partners
– Because of the regulatory requirements, F. Warren McFarlan, Bo Mao, Fei Meng suggests that, Changhong Appliance 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.
Slow decision making process
– As mentioned earlier in the report, Changhong Appliance 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. Changhong Appliance 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.
Products dominated business model
– Even though Changhong Appliance 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 - Smart Strategic Transformation of Changhong should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Changhong Appliance 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Smart Strategic Transformation of Changhong, it seems that the employees of Changhong Appliance 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.
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 Changhong Appliance supply chain. Even after few cautionary changes mentioned in the HBR case study - Smart Strategic Transformation of Changhong, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Changhong Appliance vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Smart Strategic Transformation of Changhong, 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 star products
– The top 2 products and services of the firm as mentioned in the Smart Strategic Transformation of Changhong 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 Changhong Appliance has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Smart Strategic Transformation of Changhong, is just above the industry average. Changhong Appliance 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.
Aligning sales with marketing
– It come across in the case study Smart Strategic Transformation of Changhong 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 Smart Strategic Transformation of Changhong can leverage the sales team experience to cultivate customer relationships as Changhong Appliance is planning to shift buying processes online.
Need for greater diversity
– Changhong Appliance 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.
Opportunities Smart Strategic Transformation of Changhong | 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 Smart Strategic Transformation of Changhong are -
Using analytics as competitive advantage
– Changhong Appliance 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 Smart Strategic Transformation of Changhong - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Changhong Appliance to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Changhong Appliance 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.
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. Changhong Appliance 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. Changhong Appliance 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.
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. Changhong Appliance can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Changhong Appliance has opened avenues for new revenue streams for the organization in the industry. This can help Changhong Appliance to build a more holistic ecosystem as suggested in the Smart Strategic Transformation of Changhong case study. Changhong Appliance can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Changhong Appliance 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Changhong Appliance can use these opportunities to build new business models that can help the communities that Changhong Appliance operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Building a culture of innovation
– managers at Changhong Appliance 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Changhong Appliance 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Changhong Appliance 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Changhong Appliance is facing challenges because of the dominance of functional experts in the organization. Smart Strategic Transformation of Changhong 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 Changhong Appliance 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 Changhong Appliance to hire the very best people irrespective of their geographical location.
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 Changhong Appliance 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 Smart Strategic Transformation of Changhong External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Smart Strategic Transformation of Changhong are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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 Changhong Appliance.
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 Changhong Appliance business can come under increasing regulations regarding data privacy, data security, etc.
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 Changhong Appliance in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Changhong Appliance 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.
Shortening product life cycle
– it is one of the major threat that Changhong Appliance is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Changhong Appliance needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Changhong Appliance can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Changhong Appliance 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.
Increasing wage structure of Changhong Appliance
– 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 Changhong Appliance.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Changhong Appliance with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Changhong Appliance can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Smart Strategic Transformation of Changhong 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 Smart Strategic Transformation of Changhong 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 Smart Strategic Transformation of Changhong 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 Smart Strategic Transformation of Changhong 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 Smart Strategic Transformation of Changhong 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 Changhong Appliance needs to make to build a sustainable competitive advantage.