BYD: The Art of Precise Profit Management SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of BYD: The Art of Precise Profit Management
BYD Company Limited (BYD) manufactured rechargeable batteries, mobile phone components, and automobiles. In 2008, the company caught the attention of Warren Buffet's investment group, and their investment in BYD caused BYD's share price to increase 917.86 per cent over just a year, setting Chinese investors' expectations high for BYD's release of A-shares, planned for June 2011. BYD's 2010 annual report showed that the company's performance had already taken a dip, but its prospectus was optimistic about the market prospects. The first quarter report for 2011, issued the day before the A-shares were to be released, was not as optimistic. BYD's A-shares fared well on the first day of release, but the company's net profits declined remarkably, and reports forecasted further decline. However, the company's 2011 annual report showed a drop in operating profits of just 49.04 per cent year over year-just slightly less than the 50 per cent decline that would have triggered intervention by the securities regulators. Was the company making a remarkable recovery? Were BYD's A-shares still a sound investment, or had the company "managed" its financial statements to protect itself and its securities underwriters? Yuan Ding, Hua Zhang and Chun (Jane) Xie are affiliated with China Europe International Business School.
Swot Analysis of "BYD: The Art of Precise Profit Management" written by Yuan Ding, Hua Zhang, Chun Xie includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Byd's Byd facing as an external strategic factors. Some of the topics covered in BYD: The Art of Precise Profit Management case study are - Strategic Management Strategies, IPO, Manufacturing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the BYD: The Art of Precise Profit Management casestudy better are - – wage bills are increasing, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, there is increasing trade war between United States & China, central banks are concerned over increasing inflation, there is backlash against globalization,
increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of BYD: The Art of Precise Profit Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in BYD: The Art of Precise Profit Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Byd's Byd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Byd's Byd 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 BYD: The Art of Precise Profit Management can be done for the following purposes –
1. Strategic planning using facts provided in BYD: The Art of Precise Profit Management case study
2. Improving business portfolio management of Byd's Byd
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 Byd's Byd
Strengths BYD: The Art of Precise Profit Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Byd's Byd in BYD: The Art of Precise Profit Management Harvard Business Review case study are -
Ability to lead change in Finance & Accounting field
– Byd's Byd 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 Byd's Byd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Byd's Byd 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 Byd's Byd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in BYD: The Art of Precise Profit Management Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Byd's Byd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Byd's Byd 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.
Diverse revenue streams
– Byd's Byd is present in almost all the verticals within the industry. This has provided firm in BYD: The Art of Precise Profit Management 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.
Analytics focus
– Byd's Byd 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 Yuan Ding, Hua Zhang, Chun Xie 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.
Innovation driven organization
– Byd's Byd is one of the most innovative firm in sector. Manager in BYD: The Art of Precise Profit Management Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Byd's Byd 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.
Highly skilled collaborators
– Byd's Byd 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 BYD: The Art of Precise Profit Management HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Finance & Accounting industry
– BYD: The Art of Precise Profit Management firm has clearly differentiated products in the market place. This has enabled Byd's Byd to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Byd's Byd to invest into research and development (R&D) and innovation.
High brand equity
– Byd's Byd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Byd's Byd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Byd's Byd is one of the leading recruiters in the industry. Managers in the BYD: The Art of Precise Profit Management are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Byd's Byd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses BYD: The Art of Precise Profit Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of BYD: The Art of Precise Profit Management are -
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 Byd's Byd supply chain. Even after few cautionary changes mentioned in the HBR case study - BYD: The Art of Precise Profit Management, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Byd's Byd vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Byd's Byd 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.
Capital Spending Reduction
– Even during the low interest decade, Byd's Byd 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study BYD: The Art of Precise Profit Management, in the dynamic environment Byd's Byd has struggled to respond to the nimble upstart competition. Byd's Byd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Byd's Byd 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.
Slow to strategic competitive environment developments
– As BYD: The Art of Precise Profit Management HBR case study mentions - Byd's Byd 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Byd's Byd is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study BYD: The Art of Precise Profit Management can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study BYD: The Art of Precise Profit Management, is just above the industry average. Byd's Byd needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High cash cycle compare to competitors
Byd's Byd 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Byd's Byd 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study BYD: The Art of Precise Profit Management, it seems that the employees of Byd's Byd 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.
Opportunities BYD: The Art of Precise Profit Management | 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 BYD: The Art of Precise Profit Management are -
Leveraging digital technologies
– Byd's Byd 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Byd's Byd is facing challenges because of the dominance of functional experts in the organization. BYD: The Art of Precise Profit Management 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Byd's Byd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Byd's Byd has opened avenues for new revenue streams for the organization in the industry. This can help Byd's Byd to build a more holistic ecosystem as suggested in the BYD: The Art of Precise Profit Management case study. Byd's Byd can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Byd's Byd can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Byd's Byd to increase its market reach. Byd's Byd will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Byd's Byd can use these opportunities to build new business models that can help the communities that Byd's Byd operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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 Byd's Byd 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 Byd's Byd in the consumer business. Now Byd's Byd can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Byd's Byd 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.
Manufacturing automation
– Byd's Byd 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Byd's Byd 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 Byd's Byd to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Byd's Byd 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.
Threats BYD: The Art of Precise Profit Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study BYD: The Art of Precise Profit Management are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Byd's Byd can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study BYD: The Art of Precise Profit Management .
High dependence on third party suppliers
– Byd's Byd 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.
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. Byd's Byd 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.
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 Byd's Byd 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. Byd's Byd needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Byd's Byd 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.
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.
Consumer confidence and its impact on Byd's Byd 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.
Shortening product life cycle
– it is one of the major threat that Byd's Byd is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
Stagnating economy with rate increase
– Byd's Byd 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.
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 Byd's Byd business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Byd's Byd
– 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 Byd's Byd.
Weighted SWOT Analysis of BYD: The Art of Precise Profit Management 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 BYD: The Art of Precise Profit Management 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 BYD: The Art of Precise Profit Management 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 BYD: The Art of Precise Profit Management 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 BYD: The Art of Precise Profit Management 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 Byd's Byd needs to make to build a sustainable competitive advantage.