Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company

Ian Lee, Whirlpool's VP for North Asia, had been negotiating a possible acquisition with Jackie Jin, the chairman of a leading Chinese appliance manufacturer named Hefei Rongshida Sanyo Electric Company (Hefei Sanyo), for almost six months when suddenly Hefei Sanyo's stock price jumped 25% in the first two weeks of May 2013. The sudden price increase not only increased the likely acquisition price for an ownership stake in Hefei Sanyo, but also meant that Whirlpool had lost the luxury of both time and secrecy. Lee had to quickly decide how to structure a deal that enabled Whirlpool to acquire controlling ownership position (>50%) in the state-owned enterprise (SOE)-something that had not been done before; how much to pay for the stake; and how to ensure commercial, regulatory, and political approval for the deal.

Authors :: Benjamin C. Esty, Nancy Hua Dai

Topics :: Finance & Accounting

Tags :: Financial analysis, Financial management, Government, Mergers & acquisitions, Negotiations, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company" written by Benjamin C. Esty, Nancy Hua Dai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hefei Sanyo facing as an external strategic factors. Some of the topics covered in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company case study are - Strategic Management Strategies, Financial analysis, Financial management, Government, Mergers & acquisitions, Negotiations and Finance & Accounting.

Some of the macro environment factors that can be used to understand the Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, increasing energy prices, increasing commodity prices, central banks are concerned over increasing inflation, there is backlash against globalization, cloud computing is disrupting traditional business models, geopolitical disruptions, wage bills are increasing, etc

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Introduction to SWOT Analysis of Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hefei Sanyo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hefei Sanyo 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company can be done for the following purposes –
1. Strategic planning using facts provided in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company case study
2. Improving business portfolio management of Hefei Sanyo
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hefei Sanyo

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Strengths Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Hefei Sanyo in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company Harvard Business Review case study are -

Training and development

– Hefei Sanyo has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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.

Learning organization

- Hefei Sanyo 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 Hefei Sanyo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company Harvard Business Review case study emphasize – knowledge, initiative, and innovation.

High switching costs

– The high switching costs that Hefei Sanyo 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.

Sustainable margins compare to other players in Finance & Accounting industry

– Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company firm has clearly differentiated products in the market place. This has enabled Hefei Sanyo to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Hefei Sanyo to invest into research and development (R&D) and innovation.

Innovation driven organization

– Hefei Sanyo is one of the most innovative firm in sector. Manager in Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

High brand equity

– Hefei Sanyo has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hefei Sanyo to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Cross disciplinary teams

– Horizontal connected teams at the Hefei Sanyo 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.

Analytics focus

– Hefei Sanyo 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 Benjamin C. Esty, Nancy Hua Dai 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.

Ability to lead change in Finance & Accounting field

– Hefei Sanyo 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 Hefei Sanyo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Ability to recruit top talent

– Hefei Sanyo is one of the leading recruiters in the industry. Managers in the Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.

Superior customer experience

– The customer experience strategy of Hefei Sanyo in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Digital Transformation in Finance & Accounting segment

- digital transformation varies from industry to industry. For Hefei Sanyo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hefei Sanyo 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.

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Weaknesses Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company are -

Need for greater diversity

– Hefei Sanyo has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

Aligning sales with marketing

– It come across in the case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company can leverage the sales team experience to cultivate customer relationships as Hefei Sanyo is planning to shift buying processes online.

Increasing silos among functional specialists

– The organizational structure of Hefei Sanyo is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Hefei Sanyo needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hefei Sanyo to focus more on services rather than just following the product oriented approach.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Hefei Sanyo has relatively successful track record of launching new products.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hefei Sanyo is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company, it seems that the employees of Hefei Sanyo 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.

Lack of clear differentiation of Hefei Sanyo products

– To increase the profitability and margins on the products, Hefei Sanyo needs to provide more differentiated products than what it is currently offering in the marketplace.

Slow decision making process

– As mentioned earlier in the report, Hefei Sanyo 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. Hefei Sanyo 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.

Capital Spending Reduction

– Even during the low interest decade, Hefei Sanyo 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.

Skills based hiring

– The stress on hiring functional specialists at Hefei Sanyo 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.

Low market penetration in new markets

– Outside its home market of Hefei Sanyo, firm in the HBR case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

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Opportunities Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company | 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company are -

Learning at scale

– Online learning technologies has now opened space for Hefei Sanyo 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.

Changes in consumer behavior post Covid-19

– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hefei Sanyo 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. Hefei Sanyo 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.

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 Hefei Sanyo 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.

Creating value in data economy

– The success of analytics program of Hefei Sanyo has opened avenues for new revenue streams for the organization in the industry. This can help Hefei Sanyo to build a more holistic ecosystem as suggested in the Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company case study. Hefei Sanyo 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 Hefei Sanyo 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 Hefei Sanyo to hire the very best people irrespective of their geographical location.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Hefei Sanyo is facing challenges because of the dominance of functional experts in the organization. Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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.

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 Hefei Sanyo in the consumer business. Now Hefei Sanyo can target international markets with far fewer capital restrictions requirements than the existing system.

Developing new processes and practices

– Hefei Sanyo can develop new processes and procedures in Finance & Accounting 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.

Leveraging digital technologies

– Hefei Sanyo can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Better consumer reach

– The expansion of the 5G network will help Hefei Sanyo to increase its market reach. Hefei Sanyo 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Hefei Sanyo 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, Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hefei Sanyo can use these opportunities to build new business models that can help the communities that Hefei Sanyo operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.

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. Hefei Sanyo can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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Threats Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company are -

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 Hefei Sanyo.

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. Hefei Sanyo 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.

Regulatory challenges

– Hefei Sanyo 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 Finance & Accounting industry regulations.

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 Hefei Sanyo business can come under increasing regulations regarding data privacy, data security, etc.

Technology disruption because of hacks, piracy etc

– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.

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.

Increasing wage structure of Hefei Sanyo

– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Hefei Sanyo.

Stagnating economy with rate increase

– Hefei Sanyo 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company, Hefei Sanyo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Hefei Sanyo in the Finance & Accounting industry. The Finance & Accounting 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.

Technology acceleration in Forth Industrial Revolution

– Hefei Sanyo has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Hefei Sanyo needs to keep up with the evolution of technology in the Finance & Accounting 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.

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 Hefei Sanyo in the Finance & Accounting sector and impact the bottomline of the organization.

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. Hefei Sanyo needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.

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Weighted SWOT Analysis of Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Whirlpool Corp.: Structuring the Deal to Acquire Hefei Rongshida Sanyo Electric Company 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 Hefei Sanyo needs to make to build a sustainable competitive advantage.

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