Cracking the Puzzle of Wuxi Suntech's Bankruptcy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cracking the Puzzle of Wuxi Suntech's Bankruptcy
Wuxi Suntech was founded in 2001 by Dr. Shi Zhengrong, an internationally recognized scholar in the photovoltaic (PV) and renewable energy engineering. Suntech, the first private Chinese company to list on the New York Stock Exchange, was the largest solar PV manufacturer in China and the world's third largest. Its story was once recognized as a 'perfect match' of the promising new energy industry with the technical know-how and the comparative advantage of Chinese manufactured exports as well as the financial power of global capital markets. The bankruptcy of such a successful company was hence a puzzle to the business society in China and the world. How did the company rapidly emerge as an industry leader in the booming solar PV market but suddenly fail during the global financial crisis period? The case of Wuxi Suntech's bankruptcy under Dr. Shi's leadership provides rich material for the analysis of business strategy, industry structure, entrepreneurship, emerging markets and finance.
Swot Analysis of "Cracking the Puzzle of Wuxi Suntech's Bankruptcy" written by Cao Yong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wuxi Pv facing as an external strategic factors. Some of the topics covered in Cracking the Puzzle of Wuxi Suntech's Bankruptcy case study are - Strategic Management Strategies, Financial management, Government, IPO, Manufacturing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Cracking the Puzzle of Wuxi Suntech's Bankruptcy casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, there is backlash against globalization, etc
Introduction to SWOT Analysis of Cracking the Puzzle of Wuxi Suntech's Bankruptcy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cracking the Puzzle of Wuxi Suntech's Bankruptcy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wuxi Pv, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wuxi Pv 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy can be done for the following purposes –
1. Strategic planning using facts provided in Cracking the Puzzle of Wuxi Suntech's Bankruptcy case study
2. Improving business portfolio management of Wuxi Pv
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Wuxi Pv
Strengths Cracking the Puzzle of Wuxi Suntech's Bankruptcy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wuxi Pv in Cracking the Puzzle of Wuxi Suntech's Bankruptcy Harvard Business Review case study are -
Diverse revenue streams
– Wuxi Pv is present in almost all the verticals within the industry. This has provided firm in Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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.
Highly skilled collaborators
– Wuxi Pv 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Wuxi Pv 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 Cao Yong 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.
Effective Research and Development (R&D)
– Wuxi Pv 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Wuxi Pv is one of the most innovative firm in sector. Manager in Cracking the Puzzle of Wuxi Suntech's Bankruptcy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Cracking the Puzzle of Wuxi Suntech's Bankruptcy firm has clearly differentiated products in the market place. This has enabled Wuxi Pv to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Wuxi Pv to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Wuxi Pv in the sector have low bargaining power. Cracking the Puzzle of Wuxi Suntech's Bankruptcy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Wuxi Pv to manage not only supply disruptions but also source products at highly competitive prices.
Operational resilience
– The operational resilience strategy in the Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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.
High brand equity
– Wuxi Pv has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wuxi Pv to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Wuxi Pv 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.
High switching costs
– The high switching costs that Wuxi Pv 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.
Ability to recruit top talent
– Wuxi Pv is one of the leading recruiters in the industry. Managers in the Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cracking the Puzzle of Wuxi Suntech's Bankruptcy are -
Interest costs
– Compare to the competition, Wuxi Pv 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.
Skills based hiring
– The stress on hiring functional specialists at Wuxi Pv 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.
Products dominated business model
– Even though Wuxi Pv 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 - Cracking the Puzzle of Wuxi Suntech's Bankruptcy should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Cao Yong suggests that, Wuxi Pv 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cracking the Puzzle of Wuxi Suntech's Bankruptcy, in the dynamic environment Wuxi Pv has struggled to respond to the nimble upstart competition. Wuxi Pv 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 Wuxi Pv is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Wuxi Pv needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Wuxi Pv to focus more on services rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Wuxi Pv 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. Wuxi Pv 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.
Lack of clear differentiation of Wuxi Pv products
– To increase the profitability and margins on the products, Wuxi Pv needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cracking the Puzzle of Wuxi Suntech's Bankruptcy, is just above the industry average. Wuxi Pv 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.
Low market penetration in new markets
– Outside its home market of Wuxi Pv, firm in the HBR case study Cracking the Puzzle of Wuxi Suntech's Bankruptcy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Wuxi Pv 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.
Opportunities Cracking the Puzzle of Wuxi Suntech's Bankruptcy | 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy are -
Creating value in data economy
– The success of analytics program of Wuxi Pv has opened avenues for new revenue streams for the organization in the industry. This can help Wuxi Pv to build a more holistic ecosystem as suggested in the Cracking the Puzzle of Wuxi Suntech's Bankruptcy case study. Wuxi Pv can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Wuxi Pv can use these opportunities to build new business models that can help the communities that Wuxi Pv operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wuxi Pv in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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 Wuxi Pv 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.
Using analytics as competitive advantage
– Wuxi Pv 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Wuxi Pv to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Wuxi Pv can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Wuxi Pv can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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.
Better consumer reach
– The expansion of the 5G network will help Wuxi Pv to increase its market reach. Wuxi Pv 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Wuxi Pv is facing challenges because of the dominance of functional experts in the organization. Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wuxi Pv can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Wuxi Pv 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.
Building a culture of innovation
– managers at Wuxi Pv 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 Innovation & Entrepreneurship segment.
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 Wuxi Pv in the consumer business. Now Wuxi Pv can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Cracking the Puzzle of Wuxi Suntech's Bankruptcy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Wuxi Pv business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Wuxi Pv 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. Wuxi Pv can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Wuxi Pv 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
– Wuxi Pv has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Wuxi Pv needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Wuxi Pv 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 Wuxi Pv in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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 Wuxi Pv.
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. Wuxi Pv 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.
Consumer confidence and its impact on Wuxi Pv 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 Wuxi Pv is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Wuxi Pv in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Wuxi Pv 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.
Weighted SWOT Analysis of Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Cracking the Puzzle of Wuxi Suntech's Bankruptcy 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 Wuxi Pv needs to make to build a sustainable competitive advantage.
