Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A)
The case illustrates a wide range of strategic and implementation issues that companies face in mergers and acquisitions (M&A), particularly in an emerging market such as China. The three-part case is about Sunac, a real estate company listed on Hong Kong Stock Exchange (HKSE), and its various attempts to expand by acquiring other real estate businesses in China. Case (A) describes the overall industry environment, value chain, and analyses of Sunac (the acquirer) and Greentown (the target). It explains the macroeconomic background and the details of proposed transaction in May 2014. Case (B) reveals what happened after Sunac had paid HKD6.3 billion for Greentown. Case (C) describes two further acquisition attempts by Sunac in 2015 - of Kaisa and Yurun.
Authors :: Guoli Chen, Susan H. Zhu, Siddharth Poddar
Swot Analysis of "Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A)" written by Guoli Chen, Susan H. Zhu, Siddharth Poddar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sunac Greentown facing as an external strategic factors. Some of the topics covered in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) case study are - Strategic Management Strategies, Mergers & acquisitions, Organizational structure and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) casestudy better are - – cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, wage bills are increasing, increasing household debt because of falling income levels, increasing commodity prices, increasing transportation and logistics costs,
digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sunac Greentown, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sunac Greentown 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) can be done for the following purposes –
1. Strategic planning using facts provided in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) case study
2. Improving business portfolio management of Sunac Greentown
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 Sunac Greentown
Strengths Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sunac Greentown in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) Harvard Business Review case study are -
Organizational Resilience of Sunac Greentown
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sunac Greentown does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Strategy & Execution industry
– Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) firm has clearly differentiated products in the market place. This has enabled Sunac Greentown to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sunac Greentown to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Sunac Greentown has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sunac Greentown 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.
Superior customer experience
– The customer experience strategy of Sunac Greentown in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Sunac Greentown 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.
Training and development
– Sunac Greentown has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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.
Learning organization
- Sunac Greentown 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 Sunac Greentown is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Sunac Greentown is present in almost all the verticals within the industry. This has provided firm in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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.
Ability to lead change in Strategy & Execution field
– Sunac Greentown 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 Sunac Greentown in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Sunac Greentown 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Sunac Greentown in the sector have low bargaining power. Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sunac Greentown to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Sunac Greentown has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sunac Greentown to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) are -
No frontier risks strategy
– After analyzing the HBR case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), 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.
Products dominated business model
– Even though Sunac Greentown 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 - Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Sunac Greentown 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Sunac Greentown needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), in the dynamic environment Sunac Greentown has struggled to respond to the nimble upstart competition. Sunac Greentown has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Sunac Greentown 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. Sunac Greentown 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 cash cycle compare to competitors
Sunac Greentown 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, Sunac Greentown 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 bargaining power of channel partners
– Because of the regulatory requirements, Guoli Chen, Susan H. Zhu, Siddharth Poddar suggests that, Sunac Greentown 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.
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 Sunac Greentown supply chain. Even after few cautionary changes mentioned in the HBR case study - Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sunac Greentown vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Sunac Greentown 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.
Opportunities Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) | 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) are -
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. Sunac Greentown can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Sunac Greentown 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.
Creating value in data economy
– The success of analytics program of Sunac Greentown has opened avenues for new revenue streams for the organization in the industry. This can help Sunac Greentown to build a more holistic ecosystem as suggested in the Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) case study. Sunac Greentown can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sunac Greentown is facing challenges because of the dominance of functional experts in the organization. Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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
– Sunac Greentown can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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.
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 Sunac Greentown in the consumer business. Now Sunac Greentown can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Sunac Greentown 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.
Leveraging digital technologies
– Sunac Greentown can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sunac Greentown can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sunac Greentown can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sunac Greentown 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sunac Greentown 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 Sunac Greentown to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Sunac Greentown 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sunac Greentown to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) are -
Shortening product life cycle
– it is one of the major threat that Sunac Greentown is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Sunac Greentown has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sunac Greentown 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sunac Greentown with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sunac Greentown 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) .
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), Sunac Greentown 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 .
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 Sunac Greentown business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Sunac Greentown in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sunac Greentown 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.
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. Sunac Greentown 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.
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. Sunac Greentown needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Consumer confidence and its impact on Sunac Greentown 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac Greentown needs to make to build a sustainable competitive advantage.