Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet
This note provides an overview of the Chinese Internet by describing its leading three companies: Baidu, Alibaba, and Tencent (BAT). While BAT had previously focused their respective businesses on distinct sectors of the online economy-Baidu for search, Alibaba for e-commerce, and Tencent for games and instant messaging-the proliferation of mobile devices in China introduced new territory to be conquered. By the end of 2014, BAT had each made a series of investments and acquisitions to aggressively compete with each other and with other competitors in the emerging mobile space. This note can be used as background for any discussion related to the Chinese Internet industry.
Swot Analysis of "Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet" written by Feng Zhu, Aaron Smith includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Bat Baidu facing as an external strategic factors. Some of the topics covered in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet case study are - Strategic Management Strategies, IT, Operations management and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, wage bills are increasing, talent flight as more people leaving formal jobs, technology disruption, increasing household debt because of falling income levels, geopolitical disruptions,
there is backlash against globalization, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Bat Baidu, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Bat Baidu 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet can be done for the following purposes –
1. Strategic planning using facts provided in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet case study
2. Improving business portfolio management of Bat Baidu
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 Bat Baidu
Strengths Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Bat Baidu in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet Harvard Business Review case study are -
Strong track record of project management
– Bat Baidu is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Bat Baidu
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Bat Baidu does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Bat Baidu 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 Feng Zhu, Aaron Smith 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 recruit top talent
– Bat Baidu is one of the leading recruiters in the industry. Managers in the Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Bat Baidu in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Bat Baidu 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 Bat Baidu is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Strategy & Execution field
– Bat Baidu 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 Bat Baidu in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Bat Baidu has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Bat Baidu to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Bat Baidu is one of the most innovative firm in sector. Manager in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Bat Baidu has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Bat Baidu 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.
Low bargaining power of suppliers
– Suppliers of Bat Baidu in the sector have low bargaining power. Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Bat Baidu to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Bat Baidu has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet are -
Lack of clear differentiation of Bat Baidu products
– To increase the profitability and margins on the products, Bat Baidu needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet can leverage the sales team experience to cultivate customer relationships as Bat Baidu is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Feng Zhu, Aaron Smith suggests that, Bat Baidu 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.
Products dominated business model
– Even though Bat Baidu 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 - Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Bat Baidu is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Bat Baidu 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. Bat Baidu 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet, is just above the industry average. Bat Baidu 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.
Interest costs
– Compare to the competition, Bat Baidu 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.
Capital Spending Reduction
– Even during the low interest decade, Bat Baidu 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.
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 Bat Baidu supply chain. Even after few cautionary changes mentioned in the HBR case study - Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Bat Baidu vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet, in the dynamic environment Bat Baidu has struggled to respond to the nimble upstart competition. Bat Baidu has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet | 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet are -
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 Bat Baidu in the consumer business. Now Bat Baidu can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Bat Baidu 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Bat Baidu 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, Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Bat Baidu 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.
Manufacturing automation
– Bat Baidu 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.
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. Bat Baidu can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Bat Baidu 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 Bat Baidu to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Bat Baidu can use these opportunities to build new business models that can help the communities that Bat Baidu operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Bat Baidu can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Bat Baidu can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Bat Baidu can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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.
Better consumer reach
– The expansion of the 5G network will help Bat Baidu to increase its market reach. Bat Baidu 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Bat Baidu 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.
Threats Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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.
Technology acceleration in Forth Industrial Revolution
– Bat Baidu has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Bat Baidu 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.
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. Bat Baidu 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.
Regulatory challenges
– Bat Baidu 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.
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. Bat Baidu can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Bat Baidu 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.
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 Bat Baidu in the Strategy & Execution sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Bat Baidu with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Bat Baidu business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Bat Baidu 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.
Environmental challenges
– Bat Baidu 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. Bat Baidu can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Bat Baidu
– 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 Bat Baidu.
Consumer confidence and its impact on Bat Baidu 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.
Weighted SWOT Analysis of Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Baidu, Alibaba, and Tencent: The Three Kingdoms of the Chinese Internet 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 Bat Baidu needs to make to build a sustainable competitive advantage.