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 commodity prices, competitive advantages are harder to sustain because of technology dispersion, technology disruption, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing energy prices, cloud computing is disrupting traditional business models,
customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, 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 -
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.
Operational resilience
– The operational resilience strategy in the Smart Strategic Transformation of Changhong Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
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.
Ability to recruit top talent
– Changhong Appliance is one of the leading recruiters in the industry. Managers in the Smart Strategic Transformation of Changhong are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
Analytics focus
– Changhong Appliance is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by F. Warren McFarlan, Bo Mao, Fei Meng can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Strategy & Execution field
– Changhong Appliance 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 Changhong Appliance in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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 -
Increasing silos among functional specialists
– The organizational structure of Changhong Appliance is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Changhong Appliance needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Changhong Appliance to focus more on services rather than just following the product oriented approach.
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.
Low market penetration in new markets
– Outside its home market of Changhong Appliance, firm in the HBR case study Smart Strategic Transformation of Changhong needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Smart Strategic Transformation of Changhong, in the dynamic environment Changhong Appliance has struggled to respond to the nimble upstart competition. Changhong Appliance has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
Slow to strategic competitive environment developments
– As Smart Strategic Transformation of Changhong HBR case study mentions - Changhong Appliance takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Changhong Appliance is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Smart Strategic Transformation of Changhong 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 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.
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.
Lack of clear differentiation of Changhong Appliance products
– To increase the profitability and margins on the products, Changhong Appliance needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
Developing new processes and practices
– Changhong Appliance 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.
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.
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. Changhong Appliance 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 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.
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.
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.
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.
Leveraging digital technologies
– Changhong Appliance 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.
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.
Buying journey improvements
– Changhong Appliance can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Smart Strategic Transformation of Changhong 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Changhong Appliance 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, Smart Strategic Transformation of Changhong, 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, 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.
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.
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.
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.
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Smart Strategic Transformation of Changhong, Changhong Appliance may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Changhong Appliance 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 Smart Strategic Transformation of Changhong .
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.
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.
Consumer confidence and its impact on Changhong Appliance 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.
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.
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.
