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 - – wage bills are increasing, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy,
central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
High switching costs
– The high switching costs that Sunac Greentown 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.
Analytics focus
– Sunac Greentown 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 Guoli Chen, Susan H. Zhu, Siddharth Poddar 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 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.
Innovation driven organization
– Sunac Greentown is one of the most innovative firm in sector. Manager in Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
Strong track record of project management
– Sunac Greentown is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Sunac Greentown is one of the leading recruiters in the industry. Managers in the Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Sunac Greentown digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sunac Greentown 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.
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.
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.
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 -
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.
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.
Slow to strategic competitive environment developments
– As Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) HBR case study mentions - Sunac Greentown 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.
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.
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.
Lack of clear differentiation of Sunac Greentown products
– To increase the profitability and margins on the products, Sunac Greentown needs to provide more differentiated products than what it is currently offering in the marketplace.
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 operating costs
– Compare to the competitors, firm in the HBR case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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 Sunac Greentown 's lucrative customers.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), it seems that the employees of Sunac Greentown 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.
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.
Need for greater diversity
– Sunac Greentown has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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 -
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.
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.
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 Sunac Greentown 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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Sunac Greentown 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sunac Greentown can use these opportunities to build new business models that can help the communities that Sunac Greentown operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sunac Greentown 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, Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Sunac Greentown to increase its market reach. Sunac Greentown 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.
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 -
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.
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.
Regulatory challenges
– Sunac Greentown 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.
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.
Increasing wage structure of Sunac Greentown
– 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 Sunac Greentown.
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 .
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.
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 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.
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 Sunac Greentown.
Stagnating economy with rate increase
– Sunac Greentown 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.
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.
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.
