Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company
This case describes a Chinese software outsourcing vendor's struggle with its market choices, in response to the rippling effect of the global financial crisis. It also introduces Chinese software outsourcing vendors' capability development, market conditions, and idiosyncrasies. ChiITech is representative of Chinese software vendors, in terms of its development history, environment conditions, experience of the financial crisis, and countermeasures. Students can learn about the evolution and current status of the China-Japan software outsourcing industry through this case, and more specifically how vendors make market choices in a highly volatile market.
Swot Analysis of "Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company" written by Fang Su, Ji-Ye Mao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Outsourcing Vendors facing as an external strategic factors. Some of the topics covered in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company case study are - Strategic Management Strategies, Operations management and Technology & Operations.
Some of the macro environment factors that can be used to understand the Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, there is backlash against globalization, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, increasing commodity prices, etc
Introduction to SWOT Analysis of Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Outsourcing Vendors, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Outsourcing Vendors 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company can be done for the following purposes –
1. Strategic planning using facts provided in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company case study
2. Improving business portfolio management of Outsourcing Vendors
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 Outsourcing Vendors
Strengths Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Outsourcing Vendors in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company Harvard Business Review case study are -
Ability to recruit top talent
– Outsourcing Vendors is one of the leading recruiters in the industry. Managers in the Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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.
Cross disciplinary teams
– Horizontal connected teams at the Outsourcing Vendors 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.
Strong track record of project management
– Outsourcing Vendors is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Outsourcing Vendors is present in almost all the verticals within the industry. This has provided firm in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company 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.
Low bargaining power of suppliers
– Suppliers of Outsourcing Vendors in the sector have low bargaining power. Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Outsourcing Vendors to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Technology & Operations industry
– Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company firm has clearly differentiated products in the market place. This has enabled Outsourcing Vendors to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Outsourcing Vendors to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Outsourcing Vendors in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Outsourcing Vendors has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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.
Highly skilled collaborators
– Outsourcing Vendors 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Outsourcing Vendors 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 Fang Su, Ji-Ye Mao 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 Technology & Operations field
– Outsourcing Vendors 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 Outsourcing Vendors in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Outsourcing Vendors has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Outsourcing Vendors 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.
Weaknesses Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company are -
Products dominated business model
– Even though Outsourcing Vendors 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 - Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Outsourcing Vendors 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Outsourcing Vendors 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.
Increasing silos among functional specialists
– The organizational structure of Outsourcing Vendors is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Outsourcing Vendors needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Outsourcing Vendors to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company, 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 cash cycle compare to competitors
Outsourcing Vendors has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Outsourcing Vendors 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 to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Outsourcing Vendors is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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.
Slow decision making process
– As mentioned earlier in the report, Outsourcing Vendors 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. Outsourcing Vendors even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High operating costs
– Compare to the competitors, firm in the HBR case study Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company 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 Outsourcing Vendors 's lucrative customers.
Lack of clear differentiation of Outsourcing Vendors products
– To increase the profitability and margins on the products, Outsourcing Vendors needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Outsourcing Vendors 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, Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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.
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 Outsourcing Vendors in the consumer business. Now Outsourcing Vendors can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Outsourcing Vendors 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.
Better consumer reach
– The expansion of the 5G network will help Outsourcing Vendors to increase its market reach. Outsourcing Vendors 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.
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 Outsourcing Vendors 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.
Learning at scale
– Online learning technologies has now opened space for Outsourcing Vendors 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
– Outsourcing Vendors can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Outsourcing Vendors 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.
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. Outsourcing Vendors can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Outsourcing Vendors has opened avenues for new revenue streams for the organization in the industry. This can help Outsourcing Vendors to build a more holistic ecosystem as suggested in the Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company case study. Outsourcing Vendors can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Outsourcing Vendors 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Outsourcing Vendors to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Outsourcing Vendors can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Outsourcing Vendors has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company are -
Shortening product life cycle
– it is one of the major threat that Outsourcing Vendors is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Outsourcing Vendors has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Outsourcing Vendors 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Outsourcing Vendors 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech Company, Outsourcing Vendors may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
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. Outsourcing Vendors 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 wage structure of Outsourcing Vendors
– 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 Outsourcing Vendors.
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 Outsourcing Vendors in the Technology & Operations 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. Outsourcing Vendors needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
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. Outsourcing Vendors can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Outsourcing Vendors 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.
Stagnating economy with rate increase
– Outsourcing Vendors 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.
Environmental challenges
– Outsourcing Vendors 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. Outsourcing Vendors can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Outsourcing Vendors business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Market Choices of a Chinese Outsourcing Vendor: The Case of ChilTech 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 Outsourcing Vendors needs to make to build a sustainable competitive advantage.
