Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A)
Esquel Group, leading manufacturer of quality shirts, sought to negotiate long-term partnerships with often-exploited farmers in Xinjiang (western China) to procure a superior cotton variety. Seeking to secure a large supply of specialty cotton in an ethical and socially responsible fashion, Esquel undertook a major 2002 initiative to negotiate value-creating contracts among itself, local Xinjiang municipal governments, and cotton farmers. Aware that contract enforcement in China can be challenging, Esquel offered the region's poor, often-suspicious farmers attractive advanced financing, guaranteed minimum pricing, and other generous terms in return for an agreement to sell their crop exclusively to Esquel. The case concludes with the specialty cotton harvest shaping up as very good while demand for the premium cotton fiber appears to be stronger than ever.
Swot Analysis of "Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A)" written by James K. Sebenius, Cheng (Jason) Qian includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cotton Esquel facing as an external strategic factors. Some of the topics covered in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) case study are - Strategic Management Strategies, Growth strategy, Joint ventures, Leadership, Negotiations, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) casestudy better are - – supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, technology disruption, there is backlash against globalization, central banks are concerned over increasing inflation, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, etc
Introduction to SWOT Analysis of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cotton Esquel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) can be done for the following purposes –
1. Strategic planning using facts provided in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) case study
2. Improving business portfolio management of Cotton Esquel
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 Cotton Esquel
Strengths Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cotton Esquel in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) Harvard Business Review case study are -
Successful track record of launching new products
– Cotton Esquel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cotton Esquel 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.
Effective Research and Development (R&D)
– Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Cotton Esquel is one of the leading recruiters in the industry. Managers in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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.
Ability to lead change in Strategy & Execution field
– Cotton Esquel 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 Cotton Esquel in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cotton Esquel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cotton Esquel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Cotton Esquel 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 James K. Sebenius, Cheng (Jason) Qian 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.
Training and development
– Cotton Esquel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Cotton Esquel 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 Cotton Esquel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cotton Esquel 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.
Cross disciplinary teams
– Horizontal connected teams at the Cotton Esquel 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
– Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Cotton Esquel is present in almost all the verticals within the industry. This has provided firm in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), is just above the industry average. Cotton Esquel 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, Cotton Esquel 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.
Lack of clear differentiation of Cotton Esquel products
– To increase the profitability and margins on the products, Cotton Esquel needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– It come across in the case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) can leverage the sales team experience to cultivate customer relationships as Cotton Esquel is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), in the dynamic environment Cotton Esquel has struggled to respond to the nimble upstart competition. Cotton Esquel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) HBR case study mentions - Cotton Esquel 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.
Low market penetration in new markets
– Outside its home market of Cotton Esquel, firm in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High cash cycle compare to competitors
Cotton Esquel 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.
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 Cotton Esquel supply chain. Even after few cautionary changes mentioned in the HBR case study - Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cotton Esquel vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Cotton Esquel 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.
Opportunities Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) are -
Better consumer reach
– The expansion of the 5G network will help Cotton Esquel to increase its market reach. Cotton Esquel 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.
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. Cotton Esquel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cotton Esquel 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, Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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.
Buying journey improvements
– Cotton Esquel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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
– Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cotton Esquel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Cotton Esquel 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cotton Esquel 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 Cotton Esquel 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 Cotton Esquel 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, Cotton Esquel 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.
Learning at scale
– Online learning technologies has now opened space for Cotton Esquel 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 Cotton Esquel in the consumer business. Now Cotton Esquel can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Cotton Esquel can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Cotton Esquel can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cotton Esquel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Cotton Esquel.
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 Cotton Esquel in the Strategy & Execution sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Cotton Esquel 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.
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.
Technology acceleration in Forth Industrial Revolution
– Cotton Esquel has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cotton Esquel 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.
Environmental challenges
– Cotton Esquel 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. Cotton Esquel can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Cotton Esquel needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Cotton Esquel 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 Cotton Esquel 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.
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 Cotton Esquel business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Cotton Esquel 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.
Regulatory challenges
– Cotton Esquel 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.
Weighted SWOT Analysis of Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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 Cotton Esquel needs to make to build a sustainable competitive advantage.
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