Case Study Description of Huayi Brothers: Strategic Transformation
In March 2015, Huayi Brothers Media Corporation is China's most influential entertainment company, accounting for one-fifth of the country's total yearly box office revenues. In recent years, in an effort to leverage its movie content and copyrights, the company has expanded into developing and distributing games on the Internet as well as building entertainment theme parks in Asia. Now, the chairman and co-founder is considering a partnership with Hollywood's STX Entertainment to jointly invest in and co-produce 18 films and distribute them worldwide within two years. Should the company enter into this partnership or not? What is the best strategy to move forward and grow internationally outside of China? Or should the company concentrate on bettering its competition by concentrating on its core business portfolio in visual (both movies and television), live (musical performances and theme parks) and Internet gaming in China and Asia?
Swot Analysis of "Huayi Brothers: Strategic Transformation" written by Jie Li, Jean-Louis Schaan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Huayi Entertainment facing as an external strategic factors. Some of the topics covered in Huayi Brothers: Strategic Transformation case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Huayi Brothers: Strategic Transformation casestudy better are - – there is increasing trade war between United States & China, central banks are concerned over increasing inflation, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing transportation and logistics costs, there is backlash against globalization, technology disruption,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Huayi Brothers: Strategic Transformation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Huayi Brothers: Strategic Transformation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huayi Entertainment, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huayi Entertainment 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 Huayi Brothers: Strategic Transformation can be done for the following purposes –
1. Strategic planning using facts provided in Huayi Brothers: Strategic Transformation case study
2. Improving business portfolio management of Huayi Entertainment
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 Huayi Entertainment
Strengths Huayi Brothers: Strategic Transformation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huayi Entertainment in Huayi Brothers: Strategic Transformation Harvard Business Review case study are -
High switching costs
– The high switching costs that Huayi Entertainment 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.
Ability to recruit top talent
– Huayi Entertainment is one of the leading recruiters in the industry. Managers in the Huayi Brothers: Strategic Transformation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Successful track record of launching new products
– Huayi Entertainment has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Huayi Entertainment 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.
Innovation driven organization
– Huayi Entertainment is one of the most innovative firm in sector. Manager in Huayi Brothers: Strategic Transformation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Huayi Brothers: Strategic Transformation 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.
Learning organization
- Huayi Entertainment 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 Huayi Entertainment is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Huayi Brothers: Strategic Transformation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Huayi Entertainment is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Huayi Entertainment is present in almost all the verticals within the industry. This has provided firm in Huayi Brothers: Strategic Transformation 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.
Cross disciplinary teams
– Horizontal connected teams at the Huayi Entertainment 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
– Huayi Brothers: Strategic Transformation firm has clearly differentiated products in the market place. This has enabled Huayi Entertainment to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Huayi Entertainment to invest into research and development (R&D) and innovation.
Organizational Resilience of Huayi Entertainment
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Huayi Entertainment does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Huayi Entertainment in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Huayi Brothers: Strategic Transformation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Huayi Brothers: Strategic Transformation are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Huayi Brothers: Strategic Transformation HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Huayi Entertainment has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Huayi Brothers: Strategic Transformation 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 Huayi Entertainment 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Huayi Entertainment 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.
Capital Spending Reduction
– Even during the low interest decade, Huayi Entertainment has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Huayi Brothers: Strategic Transformation HBR case study mentions - Huayi Entertainment 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.
Lack of clear differentiation of Huayi Entertainment products
– To increase the profitability and margins on the products, Huayi Entertainment needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Huayi Entertainment 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.
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 Huayi Entertainment supply chain. Even after few cautionary changes mentioned in the HBR case study - Huayi Brothers: Strategic Transformation, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Huayi Entertainment vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Huayi Brothers: Strategic Transformation, is just above the industry average. Huayi Entertainment 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Huayi Entertainment is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Huayi Brothers: Strategic Transformation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Low market penetration in new markets
– Outside its home market of Huayi Entertainment, firm in the HBR case study Huayi Brothers: Strategic Transformation needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Huayi Brothers: Strategic Transformation | 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 Huayi Brothers: Strategic Transformation are -
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. Huayi Entertainment can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Huayi Entertainment 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.
Better consumer reach
– The expansion of the 5G network will help Huayi Entertainment to increase its market reach. Huayi Entertainment 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.
Creating value in data economy
– The success of analytics program of Huayi Entertainment has opened avenues for new revenue streams for the organization in the industry. This can help Huayi Entertainment to build a more holistic ecosystem as suggested in the Huayi Brothers: Strategic Transformation case study. Huayi Entertainment can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Huayi Entertainment 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 Huayi Brothers: Strategic Transformation - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Huayi Entertainment to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Huayi Entertainment can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Huayi Brothers: Strategic Transformation 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huayi Entertainment 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 Huayi Entertainment to hire the very best people irrespective of their geographical location.
Building a culture of innovation
– managers at Huayi Entertainment 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.
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 Huayi Entertainment in the consumer business. Now Huayi Entertainment can target international markets with far fewer capital restrictions requirements than the existing system.
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. Huayi Entertainment 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. Huayi Entertainment 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Huayi Entertainment is facing challenges because of the dominance of functional experts in the organization. Huayi Brothers: Strategic Transformation 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.
Loyalty marketing
– Huayi Entertainment 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Huayi Entertainment 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.
Threats Huayi Brothers: Strategic Transformation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Huayi Brothers: Strategic Transformation are -
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. Huayi Entertainment can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Huayi Entertainment 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.
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 Huayi Entertainment.
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. Huayi Entertainment needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Increasing wage structure of Huayi Entertainment
– 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 Huayi Entertainment.
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.
Environmental challenges
– Huayi Entertainment 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. Huayi Entertainment can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huayi Entertainment 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Huayi Entertainment with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Huayi Entertainment 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 Huayi Entertainment in the Strategy & Execution sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Huayi Entertainment has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Huayi Entertainment 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 Huayi Brothers: Strategic Transformation 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 Huayi Brothers: Strategic Transformation 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 Huayi Brothers: Strategic Transformation 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 Huayi Brothers: Strategic Transformation 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 Huayi Brothers: Strategic Transformation 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 Huayi Entertainment needs to make to build a sustainable competitive advantage.
