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 - – talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, increasing transportation and logistics costs, increasing commodity prices,
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 -
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.
Operational resilience
– The operational resilience strategy in the Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A) 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Sunac Greentown is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sunac Greentown needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sunac Greentown to focus more on services rather than just following the product oriented approach.
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.
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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sunac's Acquisition of Greentown in the Chinese Real Estate Market (A), is just above the industry average. Sunac Greentown 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.
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.
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.
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 -
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.
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.
Developing new processes and practices
– Sunac Greentown 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.
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.
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.
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.
Manufacturing automation
– Sunac Greentown 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.
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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sunac Greentown 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.
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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sunac Greentown can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Sunac Greentown can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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 -
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.
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.
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.
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.
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.
High dependence on third party suppliers
– Sunac Greentown 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.
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) .
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.
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.
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 .
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.
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.
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.