Shanshan Enterprise: Reform Pioneer of China's Garment Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Shanshan Enterprise: Reform Pioneer of China's Garment Industry
In 1989, the first enterprise to launch TV commercials for garments in Mainland China, Shanshan Enterprise, had caught the public's attention--and it remained in the spotlight ever since. Such attention was not merely the result of leading the development of the garment industry in China, but more a result of the company's many surprising moves that triggered heated debates. Highlights these debates and China's garment industry. Allows for a discussion on the future of China's fashion industries, brand management and multibrand strategies, distribution strategy, and diversification strategy. Exemplifies how a Chinese private company starts a business, the problems Chinese garment companies are facing, how to manage brand and distribution channels, and how to pursue a new profit point and conduct diversification.
Swot Analysis of "Shanshan Enterprise: Reform Pioneer of China's Garment Industry" written by Yigang Pan, Zhou Zemin includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Garment Shanshan facing as an external strategic factors. Some of the topics covered in Shanshan Enterprise: Reform Pioneer of China's Garment Industry case study are - Strategic Management Strategies, Risk management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Shanshan Enterprise: Reform Pioneer of China's Garment Industry casestudy better are - – increasing commodity prices, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, technology disruption, there is increasing trade war between United States & China, wage bills are increasing, supply chains are disrupted by pandemic ,
digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Shanshan Enterprise: Reform Pioneer of China's Garment Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shanshan Enterprise: Reform Pioneer of China's Garment Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Garment Shanshan, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Garment Shanshan 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry can be done for the following purposes –
1. Strategic planning using facts provided in Shanshan Enterprise: Reform Pioneer of China's Garment Industry case study
2. Improving business portfolio management of Garment Shanshan
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 Garment Shanshan
Strengths Shanshan Enterprise: Reform Pioneer of China's Garment Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Garment Shanshan in Shanshan Enterprise: Reform Pioneer of China's Garment Industry Harvard Business Review case study are -
Highly skilled collaborators
– Garment Shanshan 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Garment Shanshan has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Garment Shanshan digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Garment Shanshan 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.
Diverse revenue streams
– Garment Shanshan is present in almost all the verticals within the industry. This has provided firm in Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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.
Effective Research and Development (R&D)
– Garment Shanshan 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Garment Shanshan is one of the most innovative firm in sector. Manager in Shanshan Enterprise: Reform Pioneer of China's Garment Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Garment Shanshan is one of the leading recruiters in the industry. Managers in the Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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
– Shanshan Enterprise: Reform Pioneer of China's Garment Industry firm has clearly differentiated products in the market place. This has enabled Garment Shanshan to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Garment Shanshan to invest into research and development (R&D) and innovation.
Analytics focus
– Garment Shanshan 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 Yigang Pan, Zhou Zemin 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.
Strong track record of project management
– Garment Shanshan is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Garment Shanshan has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Garment Shanshan 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.
Cross disciplinary teams
– Horizontal connected teams at the Garment Shanshan 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.
Weaknesses Shanshan Enterprise: Reform Pioneer of China's Garment Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanshan Enterprise: Reform Pioneer of China's Garment Industry are -
Low market penetration in new markets
– Outside its home market of Garment Shanshan, firm in the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Garment Shanshan 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. Garment Shanshan 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Garment Shanshan has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry, it seems that the employees of Garment Shanshan 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.
No frontier risks strategy
– After analyzing the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry, 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 operating costs
– Compare to the competitors, firm in the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Garment Shanshan 's lucrative customers.
Interest costs
– Compare to the competition, Garment Shanshan 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry, is just above the industry average. Garment Shanshan 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.
Skills based hiring
– The stress on hiring functional specialists at Garment Shanshan has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Aligning sales with marketing
– It come across in the case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry can leverage the sales team experience to cultivate customer relationships as Garment Shanshan is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry, in the dynamic environment Garment Shanshan has struggled to respond to the nimble upstart competition. Garment Shanshan has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Shanshan Enterprise: Reform Pioneer of China's Garment Industry | 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry are -
Leveraging digital technologies
– Garment Shanshan can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Learning at scale
– Online learning technologies has now opened space for Garment Shanshan 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.
Manufacturing automation
– Garment Shanshan 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.
Buying journey improvements
– Garment Shanshan can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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.
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. Garment Shanshan can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Garment Shanshan can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Garment Shanshan 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Garment Shanshan is facing challenges because of the dominance of functional experts in the organization. Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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.
Loyalty marketing
– Garment Shanshan 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.
Better consumer reach
– The expansion of the 5G network will help Garment Shanshan to increase its market reach. Garment Shanshan 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Garment Shanshan 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, Garment Shanshan 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Garment Shanshan can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Shanshan Enterprise: Reform Pioneer of China's Garment Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Garment Shanshan 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 Garment Shanshan 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.
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 Garment Shanshan business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Garment Shanshan 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.
High dependence on third party suppliers
– Garment Shanshan 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.
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. Garment Shanshan 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.
Technology acceleration in Forth Industrial Revolution
– Garment Shanshan has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Garment Shanshan 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shanshan Enterprise: Reform Pioneer of China's Garment Industry, Garment Shanshan 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 .
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. Garment Shanshan can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Garment Shanshan.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Garment Shanshan 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry .
Shortening product life cycle
– it is one of the major threat that Garment Shanshan is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
Weighted SWOT Analysis of Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Shanshan Enterprise: Reform Pioneer of China's Garment Industry 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 Garment Shanshan needs to make to build a sustainable competitive advantage.