Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version
Supplements the A Case 308-058. With an almost forty-year history as a business in China, the Wanxiang Group has navigated through the significantly different political and economic changes in China to succeed as a global leader in the auto parts industry, and to develop into a broad business conglomerate. Beginning in 1994, when it first began its operations in the United States, Wanxiang started to expand its role as a parts supplier into a discerning acquirer of distressed companies in the U.S. While it saw acquisition as an exciting means for growth, company strategy at its Hangzhou, China headquarters also included vertical integration with a goal of developing a full-on electric car. Were these two goals divergent or complementary: mutually supportive or exclusive?
Authors :: William C. Kirby, Nancy Hua Dai, Erica M Zendell
Swot Analysis of "Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version" written by William C. Kirby, Nancy Hua Dai, Erica M Zendell includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wanxiang 058 facing as an external strategic factors. Some of the topics covered in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version case study are - Strategic Management Strategies, Entrepreneurship, International business, Marketing, Mergers & acquisitions, Performance measurement, Strategic planning, Strategy execution and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version casestudy better are - – digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, wage bills are increasing, central banks are concerned over increasing inflation,
increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wanxiang 058, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wanxiang 058 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version can be done for the following purposes –
1. Strategic planning using facts provided in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version case study
2. Improving business portfolio management of Wanxiang 058
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 Wanxiang 058
Strengths Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wanxiang 058 in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version Harvard Business Review case study are -
High switching costs
– The high switching costs that Wanxiang 058 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.
Ability to lead change in Strategy & Execution field
– Wanxiang 058 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 Wanxiang 058 in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Wanxiang 058 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wanxiang 058 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.
Strong track record of project management
– Wanxiang 058 is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Wanxiang 058 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 William C. Kirby, Nancy Hua Dai, Erica M Zendell 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.
Diverse revenue streams
– Wanxiang 058 is present in almost all the verticals within the industry. This has provided firm in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 brand equity
– Wanxiang 058 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wanxiang 058 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Strategy & Execution industry
– Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version firm has clearly differentiated products in the market place. This has enabled Wanxiang 058 to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Wanxiang 058 to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Wanxiang 058 digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wanxiang 058 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.
Organizational Resilience of Wanxiang 058
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wanxiang 058 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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.
Learning organization
- Wanxiang 058 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 Wanxiang 058 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version are -
Slow to strategic competitive environment developments
– As Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version HBR case study mentions - Wanxiang 058 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.
High bargaining power of channel partners
– Because of the regulatory requirements, William C. Kirby, Nancy Hua Dai, Erica M Zendell suggests that, Wanxiang 058 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version, in the dynamic environment Wanxiang 058 has struggled to respond to the nimble upstart competition. Wanxiang 058 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Wanxiang 058 has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Wanxiang 058 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.
Low market penetration in new markets
– Outside its home market of Wanxiang 058, firm in the HBR case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version, 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.
Aligning sales with marketing
– It come across in the case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version can leverage the sales team experience to cultivate customer relationships as Wanxiang 058 is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang 058 has relatively successful track record of launching new products.
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 Wanxiang 058 supply chain. Even after few cautionary changes mentioned in the HBR case study - Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Wanxiang 058 vulnerable to further global disruptions in South East Asia.
Lack of clear differentiation of Wanxiang 058 products
– To increase the profitability and margins on the products, Wanxiang 058 needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version | 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version are -
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. Wanxiang 058 can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wanxiang 058 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.
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 Wanxiang 058 in the consumer business. Now Wanxiang 058 can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wanxiang 058 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, Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wanxiang 058 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.
Manufacturing automation
– Wanxiang 058 can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wanxiang 058 is facing challenges because of the dominance of functional experts in the organization. Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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.
Buying journey improvements
– Wanxiang 058 can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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.
Developing new processes and practices
– Wanxiang 058 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wanxiang 058 can use these opportunities to build new business models that can help the communities that Wanxiang 058 operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wanxiang 058 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Wanxiang 058 has opened avenues for new revenue streams for the organization in the industry. This can help Wanxiang 058 to build a more holistic ecosystem as suggested in the Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version case study. Wanxiang 058 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Wanxiang 058 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.
Threats Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version are -
Increasing wage structure of Wanxiang 058
– 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 Wanxiang 058.
High dependence on third party suppliers
– Wanxiang 058 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.
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. Wanxiang 058 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 Wanxiang 058 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 Wanxiang 058.
Regulatory challenges
– Wanxiang 058 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.
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. Wanxiang 058 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 Wanxiang 058 business can come under increasing regulations regarding data privacy, data security, etc.
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.
Consumer confidence and its impact on Wanxiang 058 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version, Wanxiang 058 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Wanxiang 058 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version .
Stagnating economy with rate increase
– Wanxiang 058 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang Group: A Chinese Company's Global Strategy (B), Chinese Version 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 Wanxiang 058 needs to make to build a sustainable competitive advantage.
