The case describes how a leading Chinese management software provider Yonyou (formerly known as "UFIDA") disrupted its value chain-based business model to transform itself into a platform provider. The case describes Yonyou's past success, the market forces and internal reasons for the change, and what Yonyou did internally to make the transformation happen. In (2013) when the new strategy was launched, Yonyou faced typical problems as it transformed into an Internet-based platform company. These included: Capitalizing on its past strengths to support the new models; simultaneously both changing its business model and stabilizing its business in a stressed industry; attracting and retaining new staff without incurring serious cultural dilution.
Authors :: F. Warren McFarlan, Zheng Xiaoming, Ziqian Zhao
Swot Analysis of "Yonyou 2013" written by F. Warren McFarlan, Zheng Xiaoming, Ziqian Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Yonyou Yonyou's facing as an external strategic factors. Some of the topics covered in Yonyou 2013 case study are - Strategic Management Strategies, Change management, IT and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Yonyou 2013 casestudy better are - – there is increasing trade war between United States & China, geopolitical disruptions, increasing government debt because of Covid-19 spendings, technology disruption, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies,
increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Yonyou 2013 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Yonyou Yonyou's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Yonyou Yonyou's 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 Yonyou 2013 can be done for the following purposes –
1. Strategic planning using facts provided in Yonyou 2013 case study
2. Improving business portfolio management of Yonyou Yonyou's
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 Yonyou Yonyou's
Strengths Yonyou 2013 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Yonyou Yonyou's in Yonyou 2013 Harvard Business Review case study are -
Effective Research and Development (R&D)
– Yonyou Yonyou's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Yonyou 2013 - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Strategy & Execution industry
– Yonyou 2013 firm has clearly differentiated products in the market place. This has enabled Yonyou Yonyou's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Yonyou Yonyou's to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Yonyou Yonyou's in the sector have low bargaining power. Yonyou 2013 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Yonyou Yonyou's to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Yonyou Yonyou's 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.
Cross disciplinary teams
– Horizontal connected teams at the Yonyou Yonyou's 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.
Learning organization
- Yonyou Yonyou's 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 Yonyou Yonyou's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Yonyou 2013 Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Yonyou Yonyou's 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 F. Warren McFarlan, Zheng Xiaoming, Ziqian Zhao 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.
Organizational Resilience of Yonyou Yonyou's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Yonyou Yonyou's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Yonyou Yonyou's 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 Yonyou 2013 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Yonyou Yonyou's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Yonyou Yonyou's 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.
Ability to recruit top talent
– Yonyou Yonyou's is one of the leading recruiters in the industry. Managers in the Yonyou 2013 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Strategy & Execution field
– Yonyou Yonyou's 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 Yonyou Yonyou's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Yonyou 2013 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Yonyou 2013 are -
Capital Spending Reduction
– Even during the low interest decade, Yonyou Yonyou's 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.
Aligning sales with marketing
– It come across in the case study Yonyou 2013 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Yonyou 2013 can leverage the sales team experience to cultivate customer relationships as Yonyou Yonyou's is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Yonyou 2013, 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Yonyou 2013 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 Yonyou Yonyou's 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Yonyou 2013 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 Yonyou Yonyou's has relatively successful track record of launching new products.
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 Yonyou Yonyou's supply chain. Even after few cautionary changes mentioned in the HBR case study - Yonyou 2013, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Yonyou Yonyou's vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Yonyou 2013, it seems that the employees of Yonyou Yonyou's 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.
Increasing silos among functional specialists
– The organizational structure of Yonyou Yonyou's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Yonyou Yonyou's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Yonyou Yonyou's to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Yonyou Yonyou's products
– To increase the profitability and margins on the products, Yonyou Yonyou's needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Yonyou 2013, in the dynamic environment Yonyou Yonyou's has struggled to respond to the nimble upstart competition. Yonyou Yonyou's 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, Yonyou Yonyou's 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. Yonyou Yonyou's 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.
Opportunities Yonyou 2013 | 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 Yonyou 2013 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. Yonyou Yonyou's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Yonyou Yonyou's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Yonyou 2013 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.
Manufacturing automation
– Yonyou Yonyou's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Yonyou Yonyou's 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, Yonyou 2013, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Yonyou Yonyou's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Yonyou Yonyou's 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 Yonyou Yonyou's to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Yonyou Yonyou's 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Yonyou Yonyou's is facing challenges because of the dominance of functional experts in the organization. Yonyou 2013 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.
Learning at scale
– Online learning technologies has now opened space for Yonyou Yonyou's 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.
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 Yonyou Yonyou's in the consumer business. Now Yonyou Yonyou's can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Yonyou Yonyou's 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.
Using analytics as competitive advantage
– Yonyou Yonyou's 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 Yonyou 2013 - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Yonyou Yonyou's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Yonyou Yonyou's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Yonyou 2013 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Yonyou 2013 are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Yonyou Yonyou's 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 Yonyou 2013 .
High dependence on third party suppliers
– Yonyou Yonyou's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Yonyou 2013, Yonyou Yonyou's 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Yonyou Yonyou's 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.
Consumer confidence and its impact on Yonyou Yonyou's 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.
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. Yonyou Yonyou's 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 Yonyou Yonyou's business can come under increasing regulations regarding data privacy, data security, etc.
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.
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 Yonyou Yonyou's.
Regulatory challenges
– Yonyou Yonyou's 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.
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. Yonyou Yonyou's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Yonyou Yonyou's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Yonyou Yonyou's 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.
Stagnating economy with rate increase
– Yonyou Yonyou's 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.
Weighted SWOT Analysis of Yonyou 2013 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 Yonyou 2013 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 Yonyou 2013 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 Yonyou 2013 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 Yonyou 2013 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 Yonyou Yonyou's needs to make to build a sustainable competitive advantage.
