Case Study Description of Luotang Power: Variances Explained, Spanish Version
The general manager of Luotang Power, a coal-fired power plant located in central China, reviews annual results before a meeting with the board of directors. He thought the company performed well during the year and both plant availability and fuel economy had improved over the previous year. However, the positive performance does not show in the financial results and he must investigate before presenting to the board. He considers performing a variance analysis to better understand plant performance compared to the previous year. He also examines the contractual arrangement the plant has with the provincial power company for a minimum purchase of electricity to supplement regional demand. The company had been successful at selling excess electricity to the power plant but over the past 12 months, demand has decreased. Students must complete a quantitative analysis of the plant's performance and prepare recommendations to improve reporting and evaluation of the plant's performance. This case can be used in an introductory managerial accounting course to explore variance analysis and incentives in contracts.
Swot Analysis of "Luotang Power: Variances Explained, Spanish Version" written by Robert L. Simons, Craig J Chapman includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Plant Luotang facing as an external strategic factors. Some of the topics covered in Luotang Power: Variances Explained, Spanish Version case study are - Strategic Management Strategies, Assessing performance, Financial analysis, Financial management, Motivating people, Negotiations, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Luotang Power: Variances Explained, Spanish Version casestudy better are - – increasing transportation and logistics costs, technology disruption, central banks are concerned over increasing inflation, there is backlash against globalization, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Luotang Power: Variances Explained, Spanish Version
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Luotang Power: Variances Explained, Spanish Version case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Plant Luotang, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Plant Luotang 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 Luotang Power: Variances Explained, Spanish Version can be done for the following purposes –
1. Strategic planning using facts provided in Luotang Power: Variances Explained, Spanish Version case study
2. Improving business portfolio management of Plant Luotang
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 Plant Luotang
Strengths Luotang Power: Variances Explained, Spanish Version | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Plant Luotang in Luotang Power: Variances Explained, Spanish Version Harvard Business Review case study are -
Effective Research and Development (R&D)
– Plant Luotang 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 Luotang Power: Variances Explained, Spanish Version - 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 lead change in Finance & Accounting field
– Plant Luotang 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 Plant Luotang in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Plant Luotang has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Plant Luotang to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Plant Luotang
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Plant Luotang does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Plant Luotang 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 Luotang Power: Variances Explained, Spanish Version HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Plant Luotang is one of the most innovative firm in sector. Manager in Luotang Power: Variances Explained, Spanish Version Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Plant Luotang has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Plant Luotang 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.
Cross disciplinary teams
– Horizontal connected teams at the Plant Luotang 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Luotang Power: Variances Explained, Spanish Version firm has clearly differentiated products in the market place. This has enabled Plant Luotang to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Plant Luotang to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Luotang Power: Variances Explained, Spanish Version 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
- Plant Luotang 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 Plant Luotang is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Luotang Power: Variances Explained, Spanish Version Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Plant Luotang is present in almost all the verticals within the industry. This has provided firm in Luotang Power: Variances Explained, Spanish Version 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 Luotang Power: Variances Explained, Spanish Version | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Luotang Power: Variances Explained, Spanish Version are -
Increasing silos among functional specialists
– The organizational structure of Plant Luotang is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Plant Luotang needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Plant Luotang to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Robert L. Simons, Craig J Chapman suggests that, Plant Luotang 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.
Products dominated business model
– Even though Plant Luotang 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 - Luotang Power: Variances Explained, Spanish Version should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Plant Luotang products
– To increase the profitability and margins on the products, Plant Luotang needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Plant Luotang 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 decision making process
– As mentioned earlier in the report, Plant Luotang 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. Plant Luotang 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 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 Plant Luotang supply chain. Even after few cautionary changes mentioned in the HBR case study - Luotang Power: Variances Explained, Spanish Version, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Plant Luotang vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Luotang Power: Variances Explained, Spanish Version, it seems that the employees of Plant Luotang 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.
Need for greater diversity
– Plant Luotang 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.
Slow to strategic competitive environment developments
– As Luotang Power: Variances Explained, Spanish Version HBR case study mentions - Plant Luotang 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Luotang Power: Variances Explained, Spanish Version, is just above the industry average. Plant Luotang 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.
Opportunities Luotang Power: Variances Explained, Spanish Version | 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 Luotang Power: Variances Explained, Spanish Version are -
Learning at scale
– Online learning technologies has now opened space for Plant Luotang 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.
Manufacturing automation
– Plant Luotang can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Plant Luotang 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, Luotang Power: Variances Explained, Spanish Version, 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
– Plant Luotang can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Luotang Power: Variances Explained, Spanish Version 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.
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. Plant Luotang can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Plant Luotang can use these opportunities to build new business models that can help the communities that Plant Luotang operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Plant Luotang in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Plant Luotang 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 Plant Luotang to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Plant Luotang 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 Luotang Power: Variances Explained, Spanish Version - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Plant Luotang to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Plant Luotang has opened avenues for new revenue streams for the organization in the industry. This can help Plant Luotang to build a more holistic ecosystem as suggested in the Luotang Power: Variances Explained, Spanish Version case study. Plant Luotang can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Plant Luotang 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.
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 Plant Luotang 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.
Building a culture of innovation
– managers at Plant Luotang 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 Finance & Accounting segment.
Threats Luotang Power: Variances Explained, Spanish Version External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Luotang Power: Variances Explained, Spanish Version are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Luotang Power: Variances Explained, Spanish Version, Plant Luotang 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 .
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. Plant Luotang 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.
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 Plant Luotang.
Shortening product life cycle
– it is one of the major threat that Plant Luotang is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Plant Luotang with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Plant Luotang has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Plant Luotang 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.
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.
Regulatory challenges
– Plant Luotang 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.
High dependence on third party suppliers
– Plant Luotang 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.
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 Plant Luotang in the Finance & Accounting sector and impact the bottomline of the organization.
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 Plant Luotang business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Plant Luotang 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.
Weighted SWOT Analysis of Luotang Power: Variances Explained, Spanish Version 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 Luotang Power: Variances Explained, Spanish Version 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 Luotang Power: Variances Explained, Spanish Version 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 Luotang Power: Variances Explained, Spanish Version 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 Luotang Power: Variances Explained, Spanish Version 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 Plant Luotang needs to make to build a sustainable competitive advantage.
