Options for growth: The case of Haier (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Options for growth: The case of Haier (B)
The cases focus on how Zhang Ruimin, CEO of the Qingdao refrigerator factory, managed to turn around a nearly bankrupt factory which produced bad quality refrigerators into one of the world's largest white goods producers. With a series of rigorous steps, Ruimin succeeded in improving the quality of the refrigerators by putting the right incentives and processes into place. In addition, he expanded the product range into other areas of the white goods sector, and last but not least, moved aggressively into foreign markets with inroads into the largest and most competitive markets of America and Europe.
Swot Analysis of "Options for growth: The case of Haier (B)" written by Franziska Frank includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Ruimin Refrigerators facing as an external strategic factors. Some of the topics covered in Options for growth: The case of Haier (B) case study are - Strategic Management Strategies, Innovation, Leadership, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Options for growth: The case of Haier (B) casestudy better are - – wage bills are increasing, technology disruption, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs,
supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Options for growth: The case of Haier (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Options for growth: The case of Haier (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Ruimin Refrigerators, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Ruimin Refrigerators 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 Options for growth: The case of Haier (B) can be done for the following purposes –
1. Strategic planning using facts provided in Options for growth: The case of Haier (B) case study
2. Improving business portfolio management of Ruimin Refrigerators
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 Ruimin Refrigerators
Strengths Options for growth: The case of Haier (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Ruimin Refrigerators in Options for growth: The case of Haier (B) Harvard Business Review case study are -
Sustainable margins compare to other players in Strategy & Execution industry
– Options for growth: The case of Haier (B) firm has clearly differentiated products in the market place. This has enabled Ruimin Refrigerators to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Ruimin Refrigerators to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Ruimin Refrigerators 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.
Successful track record of launching new products
– Ruimin Refrigerators has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Ruimin Refrigerators 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
– Ruimin Refrigerators is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Ruimin Refrigerators 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.
Low bargaining power of suppliers
– Suppliers of Ruimin Refrigerators in the sector have low bargaining power. Options for growth: The case of Haier (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Ruimin Refrigerators to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Ruimin Refrigerators 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 Franziska Frank 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.
Operational resilience
– The operational resilience strategy in the Options for growth: The case of Haier (B) 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.
Ability to recruit top talent
– Ruimin Refrigerators is one of the leading recruiters in the industry. Managers in the Options for growth: The case of Haier (B) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Ruimin Refrigerators 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 Options for growth: The case of Haier (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Ruimin Refrigerators has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Ruimin Refrigerators to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Ruimin Refrigerators has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Options for growth: The case of Haier (B) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Options for growth: The case of Haier (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Options for growth: The case of Haier (B) are -
High cash cycle compare to competitors
Ruimin Refrigerators 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.
No frontier risks strategy
– After analyzing the HBR case study Options for growth: The case of Haier (B), 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Ruimin Refrigerators is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Options for growth: The case of Haier (B) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Options for growth: The case of Haier (B), in the dynamic environment Ruimin Refrigerators has struggled to respond to the nimble upstart competition. Ruimin Refrigerators has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Ruimin Refrigerators products
– To increase the profitability and margins on the products, Ruimin Refrigerators needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Ruimin Refrigerators 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.
Slow to strategic competitive environment developments
– As Options for growth: The case of Haier (B) HBR case study mentions - Ruimin Refrigerators 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, Ruimin Refrigerators 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 decision making process
– As mentioned earlier in the report, Ruimin Refrigerators 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. Ruimin Refrigerators 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.
Interest costs
– Compare to the competition, Ruimin Refrigerators has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, firm in the HBR case study Options for growth: The case of Haier (B) 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 Ruimin Refrigerators 's lucrative customers.
Opportunities Options for growth: The case of Haier (B) | 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 Options for growth: The case of Haier (B) are -
Building a culture of innovation
– managers at Ruimin Refrigerators 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.
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. Ruimin Refrigerators can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Ruimin Refrigerators can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Options for growth: The case of Haier (B) 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.
Using analytics as competitive advantage
– Ruimin Refrigerators 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 Options for growth: The case of Haier (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Ruimin Refrigerators to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Ruimin Refrigerators 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Ruimin Refrigerators 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
– Ruimin Refrigerators 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.
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. Ruimin Refrigerators can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Ruimin Refrigerators 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Ruimin Refrigerators 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.
Creating value in data economy
– The success of analytics program of Ruimin Refrigerators has opened avenues for new revenue streams for the organization in the industry. This can help Ruimin Refrigerators to build a more holistic ecosystem as suggested in the Options for growth: The case of Haier (B) case study. Ruimin Refrigerators can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Ruimin Refrigerators 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Ruimin Refrigerators 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 Ruimin Refrigerators to hire the very best people irrespective of their geographical location.
Threats Options for growth: The case of Haier (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Options for growth: The case of Haier (B) are -
Technology acceleration in Forth Industrial Revolution
– Ruimin Refrigerators has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Ruimin Refrigerators 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.
Environmental challenges
– Ruimin Refrigerators needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Ruimin Refrigerators can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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 Ruimin Refrigerators in the Strategy & Execution sector and impact the bottomline of the organization.
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. Ruimin Refrigerators 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.
Increasing wage structure of Ruimin Refrigerators
– 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 Ruimin Refrigerators.
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 Ruimin Refrigerators.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Ruimin Refrigerators with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Ruimin Refrigerators is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Options for growth: The case of Haier (B), Ruimin Refrigerators 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 .
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 Ruimin Refrigerators 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Ruimin Refrigerators 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.
Weighted SWOT Analysis of Options for growth: The case of Haier (B) 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 Options for growth: The case of Haier (B) 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 Options for growth: The case of Haier (B) 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 Options for growth: The case of Haier (B) 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 Options for growth: The case of Haier (B) 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 Ruimin Refrigerators needs to make to build a sustainable competitive advantage.