Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
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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 - – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, geopolitical disruptions, technology disruption, talent flight as more people leaving formal jobs, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , 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 -
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.
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.
Operational resilience
– The operational resilience strategy in the Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (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.
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.
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.
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.
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.
Sustainable margins compare to other players in Strategy & Execution industry
– Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) firm has clearly differentiated products in the market place. This has enabled Cotton Esquel to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cotton Esquel to invest into research and development (R&D) and innovation.
Learning organization
- Cotton Esquel 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 Cotton Esquel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Cotton Esquel is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cotton Esquel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cotton Esquel to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Cotton Esquel 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 - Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, James K. Sebenius, Cheng (Jason) Qian suggests that, Cotton Esquel 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.
Interest costs
– Compare to the competition, Cotton Esquel 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cotton Esquel is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Cotton Esquel 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. Cotton Esquel 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cotton Esquel 's lucrative customers.
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.
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 -
Loyalty marketing
– Cotton Esquel 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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cotton Esquel 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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cotton Esquel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
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.
Developing new processes and practices
– Cotton Esquel 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.
Building a culture of innovation
– managers at Cotton Esquel 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cotton Esquel is facing challenges because of the dominance of functional experts in the organization. Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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. Cotton Esquel 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. Cotton Esquel 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.
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.
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 -
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. Cotton Esquel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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. Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A), Cotton Esquel may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Cotton Esquel in the Strategy & Execution sector and impact the bottomline of the organization.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cotton Esquel 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 Esquel Group: Building a Sustainable Partnership with Cotton Farmers in Xinjiang (A) .
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.
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.
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.
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.
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.
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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