Lianhua Supermarket: Success Through IT Application SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Lianhua Supermarket: Success Through IT Application
Lianhua Supermarket Holdings Co., Ltd. was a modern-day legend in China. Starting with 41 stores in 1995 and reporting a loss of 5 million Renminbi, it had grown into the largest chain store conglomerate in China by the end of 2004. This success was attributed to its adoption of IT applications. However, with China's accession to the World Trade Organization and the subsequent entry of a large number of international players, the competitive landscape is changing. Compared with global leaders, Lianhua still lags behind in terms of profitability and management. Once more, IT applications are playing a critical role in helping Lianhua to meet the new challenges and retain its market leadership position in China.
Swot Analysis of "Lianhua Supermarket: Success Through IT Application" written by Xianghau Lu, Wenbo Chen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Lianhua Supermarket facing as an external strategic factors. Some of the topics covered in Lianhua Supermarket: Success Through IT Application case study are - Strategic Management Strategies, IT, Marketing and Technology & Operations.
Some of the macro environment factors that can be used to understand the Lianhua Supermarket: Success Through IT Application casestudy better are - – challanges to central banks by blockchain based private currencies, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
there is backlash against globalization, geopolitical disruptions, etc
Introduction to SWOT Analysis of Lianhua Supermarket: Success Through IT Application
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lianhua Supermarket: Success Through IT Application case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Lianhua Supermarket, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Lianhua Supermarket 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 Lianhua Supermarket: Success Through IT Application can be done for the following purposes –
1. Strategic planning using facts provided in Lianhua Supermarket: Success Through IT Application case study
2. Improving business portfolio management of Lianhua Supermarket
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Lianhua Supermarket
Strengths Lianhua Supermarket: Success Through IT Application | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Lianhua Supermarket in Lianhua Supermarket: Success Through IT Application Harvard Business Review case study are -
High brand equity
– Lianhua Supermarket has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Lianhua Supermarket to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Lianhua Supermarket has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Lianhua Supermarket 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.
Training and development
– Lianhua Supermarket has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lianhua Supermarket: Success Through IT Application 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.
Sustainable margins compare to other players in Technology & Operations industry
– Lianhua Supermarket: Success Through IT Application firm has clearly differentiated products in the market place. This has enabled Lianhua Supermarket to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Lianhua Supermarket to invest into research and development (R&D) and innovation.
Organizational Resilience of Lianhua Supermarket
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Lianhua Supermarket does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Lianhua Supermarket is one of the most innovative firm in sector. Manager in Lianhua Supermarket: Success Through IT Application Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Lianhua Supermarket is present in almost all the verticals within the industry. This has provided firm in Lianhua Supermarket: Success Through IT Application 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.
Ability to lead change in Technology & Operations field
– Lianhua Supermarket 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 Lianhua Supermarket in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Lianhua Supermarket 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 Lianhua Supermarket is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Lianhua Supermarket: Success Through IT Application Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Lianhua Supermarket digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Lianhua Supermarket has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Cross disciplinary teams
– Horizontal connected teams at the Lianhua Supermarket 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.
Ability to recruit top talent
– Lianhua Supermarket is one of the leading recruiters in the industry. Managers in the Lianhua Supermarket: Success Through IT Application are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Lianhua Supermarket: Success Through IT Application | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Lianhua Supermarket: Success Through IT Application are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Lianhua Supermarket: Success Through IT Application, it seems that the employees of Lianhua Supermarket 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Lianhua Supermarket: Success Through IT Application, in the dynamic environment Lianhua Supermarket has struggled to respond to the nimble upstart competition. Lianhua Supermarket 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 Lianhua Supermarket is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Lianhua Supermarket needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Lianhua Supermarket to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Lianhua Supermarket needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Capital Spending Reduction
– Even during the low interest decade, Lianhua Supermarket 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.
Lack of clear differentiation of Lianhua Supermarket products
– To increase the profitability and margins on the products, Lianhua Supermarket needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study Lianhua Supermarket: Success Through IT Application, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Xianghau Lu, Wenbo Chen suggests that, Lianhua Supermarket 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Lianhua Supermarket is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Lianhua Supermarket: Success Through IT Application can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Lianhua Supermarket has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Lianhua Supermarket: Success Through IT Application | 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 Lianhua Supermarket: Success Through IT Application are -
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. Lianhua Supermarket can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Lianhua Supermarket 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 Technology & Operations segment.
Using analytics as competitive advantage
– Lianhua Supermarket 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 Lianhua Supermarket: Success Through IT Application - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Lianhua Supermarket to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Lianhua Supermarket can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Lianhua Supermarket 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.
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 Lianhua Supermarket in the consumer business. Now Lianhua Supermarket can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Lianhua Supermarket is facing challenges because of the dominance of functional experts in the organization. Lianhua Supermarket: Success Through IT Application 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.
Learning at scale
– Online learning technologies has now opened space for Lianhua Supermarket 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Lianhua Supermarket 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.
Developing new processes and practices
– Lianhua Supermarket can develop new processes and procedures in Technology & Operations 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.
Better consumer reach
– The expansion of the 5G network will help Lianhua Supermarket to increase its market reach. Lianhua Supermarket 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.
Creating value in data economy
– The success of analytics program of Lianhua Supermarket has opened avenues for new revenue streams for the organization in the industry. This can help Lianhua Supermarket to build a more holistic ecosystem as suggested in the Lianhua Supermarket: Success Through IT Application case study. Lianhua Supermarket can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Lianhua Supermarket in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats Lianhua Supermarket: Success Through IT Application External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Lianhua Supermarket: Success Through IT Application are -
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 Lianhua Supermarket business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Lianhua Supermarket 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. Lianhua Supermarket can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 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. Lianhua Supermarket needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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 Lianhua Supermarket in the Technology & Operations sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Lianhua Supermarket with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Lianhua Supermarket 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Lianhua Supermarket in the Technology & Operations industry. The Technology & Operations 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 Lianhua Supermarket is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Lianhua Supermarket can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Lianhua Supermarket
– 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 Lianhua Supermarket.
Stagnating economy with rate increase
– Lianhua Supermarket 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.
Technology acceleration in Forth Industrial Revolution
– Lianhua Supermarket has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Lianhua Supermarket needs to keep up with the evolution of technology in the Technology & Operations 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.
Weighted SWOT Analysis of Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket: Success Through IT Application 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 Lianhua Supermarket needs to make to build a sustainable competitive advantage.
