Case Study Description of Qingdao TGOOD Electric Corporation
Founded in 2004, TGOOD is now the largest specialized developer and producer of cubicle-type transformation and distribution equipment in China, with the main products of outdoor cubicle-type power equipment supplemented by indoor switchgear cabinets, offered mainly to the railways, coal-mining and power industries. In 2001, TGOOD president Yu Dexiang led a dozen of his young colleagues to resign from state-owned enterprises and dive into the market. By 2011, by riding on the huge wave of China's railway construction and struggling arduously, TGOOD has developed from an unknown business of 20 people and RMB 8 million assets into a growing enterprise with net assets of over RMB 1.1 billion, annual operating revenue of over RMB 600 million, and employment of around 1,000. In September 2009, TGOOD became the first company in China to trade on the Shenzhen Stock Exchange GEM. At the same time, Yu Dexiang has crafted in his special way a cohesive and complementary entrepreneurial team and core employee team. In 2011, due to the stepping-down of railway minister Liu Zhijun for corruption reasons and the severe HSR accident happened in June 2011, China slowed down its railway construction, causing a great setback to TGOOD's development. This case was written at a time that TGOOD was starting to readjust its industrial structure and Yu Dexiang was pondering about the strategic directions of the company's "second starting-up" and the new task of team building.
Authors :: F. Warren McFarlan, Zheng Xiaoming, Chen Hao, Hong Zhang
Swot Analysis of "Qingdao TGOOD Electric Corporation" written by F. Warren McFarlan, Zheng Xiaoming, Chen Hao, Hong Zhang includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tgood Dexiang facing as an external strategic factors. Some of the topics covered in Qingdao TGOOD Electric Corporation case study are - Strategic Management Strategies, Human resource management, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Qingdao TGOOD Electric Corporation casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, wage bills are increasing, there is backlash against globalization, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices,
geopolitical disruptions, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Qingdao TGOOD Electric Corporation
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Qingdao TGOOD Electric Corporation case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tgood Dexiang, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tgood Dexiang 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 Qingdao TGOOD Electric Corporation can be done for the following purposes –
1. Strategic planning using facts provided in Qingdao TGOOD Electric Corporation case study
2. Improving business portfolio management of Tgood Dexiang
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 Tgood Dexiang
Strengths Qingdao TGOOD Electric Corporation | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tgood Dexiang in Qingdao TGOOD Electric Corporation Harvard Business Review case study are -
Strong track record of project management
– Tgood Dexiang is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Training and development
– Tgood Dexiang has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Qingdao TGOOD Electric Corporation 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.
Low bargaining power of suppliers
– Suppliers of Tgood Dexiang in the sector have low bargaining power. Qingdao TGOOD Electric Corporation has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tgood Dexiang to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Tgood Dexiang is one of the most innovative firm in sector. Manager in Qingdao TGOOD Electric Corporation Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Tgood Dexiang is one of the leading recruiters in the industry. Managers in the Qingdao TGOOD Electric Corporation are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Qingdao TGOOD Electric Corporation firm has clearly differentiated products in the market place. This has enabled Tgood Dexiang to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Tgood Dexiang to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Tgood Dexiang digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tgood Dexiang 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.
Diverse revenue streams
– Tgood Dexiang is present in almost all the verticals within the industry. This has provided firm in Qingdao TGOOD Electric Corporation 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.
Operational resilience
– The operational resilience strategy in the Qingdao TGOOD Electric Corporation 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
- Tgood Dexiang 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 Tgood Dexiang is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Qingdao TGOOD Electric Corporation Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Tgood Dexiang
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tgood Dexiang does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Tgood Dexiang 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.
Weaknesses Qingdao TGOOD Electric Corporation | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Qingdao TGOOD Electric Corporation are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Qingdao TGOOD Electric Corporation, is just above the industry average. Tgood Dexiang 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.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Warren McFarlan, Zheng Xiaoming, Chen Hao, Hong Zhang suggests that, Tgood Dexiang 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Qingdao TGOOD Electric Corporation, in the dynamic environment Tgood Dexiang has struggled to respond to the nimble upstart competition. Tgood Dexiang has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Tgood Dexiang is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Tgood Dexiang needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Tgood Dexiang to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tgood Dexiang is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Qingdao TGOOD Electric Corporation can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Qingdao TGOOD Electric Corporation, 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.
Lack of clear differentiation of Tgood Dexiang products
– To increase the profitability and margins on the products, Tgood Dexiang needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Tgood Dexiang 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 - Qingdao TGOOD Electric Corporation should strive to include more intangible value offerings along with its core products and services.
Slow decision making process
– As mentioned earlier in the report, Tgood Dexiang 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. Tgood Dexiang 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.
Interest costs
– Compare to the competition, Tgood Dexiang 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.
Aligning sales with marketing
– It come across in the case study Qingdao TGOOD Electric Corporation 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 Qingdao TGOOD Electric Corporation can leverage the sales team experience to cultivate customer relationships as Tgood Dexiang is planning to shift buying processes online.
Opportunities Qingdao TGOOD Electric Corporation | 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 Qingdao TGOOD Electric Corporation are -
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. Tgood Dexiang 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. Tgood Dexiang 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.
Leveraging digital technologies
– Tgood Dexiang 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tgood Dexiang can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Tgood Dexiang has opened avenues for new revenue streams for the organization in the industry. This can help Tgood Dexiang to build a more holistic ecosystem as suggested in the Qingdao TGOOD Electric Corporation case study. Tgood Dexiang can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tgood Dexiang 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 Tgood Dexiang to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Tgood Dexiang 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Tgood Dexiang 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.
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 Tgood Dexiang 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tgood Dexiang is facing challenges because of the dominance of functional experts in the organization. Qingdao TGOOD Electric Corporation 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.
Building a culture of innovation
– managers at Tgood Dexiang 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.
Better consumer reach
– The expansion of the 5G network will help Tgood Dexiang to increase its market reach. Tgood Dexiang 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tgood Dexiang can use these opportunities to build new business models that can help the communities that Tgood Dexiang operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Manufacturing automation
– Tgood Dexiang 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.
Threats Qingdao TGOOD Electric Corporation External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Qingdao TGOOD Electric Corporation are -
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. Tgood Dexiang 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tgood Dexiang 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 Qingdao TGOOD Electric Corporation .
Consumer confidence and its impact on Tgood Dexiang 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
– Tgood Dexiang needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Technology acceleration in Forth Industrial Revolution
– Tgood Dexiang has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Tgood Dexiang 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.
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 Tgood Dexiang business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Tgood Dexiang 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.
Stagnating economy with rate increase
– Tgood Dexiang 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tgood Dexiang with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Qingdao TGOOD Electric Corporation, Tgood Dexiang 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 .
Shortening product life cycle
– it is one of the major threat that Tgood Dexiang is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Tgood Dexiang.
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.
Weighted SWOT Analysis of Qingdao TGOOD Electric Corporation 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 Qingdao TGOOD Electric Corporation 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 Qingdao TGOOD Electric Corporation 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 Qingdao TGOOD Electric Corporation 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 Qingdao TGOOD Electric Corporation 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 Tgood Dexiang needs to make to build a sustainable competitive advantage.
