Suntech Power Holdings: How to Avoid Bankruptcy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Suntech Power Holdings: How to Avoid Bankruptcy
In 2013, Suntech Power Holdings Co., Ltd. (STP) was facing the threat of bankruptcy. The chief executive officer (CEO), who had founded the company in China in 2001, was aware of the complexity and challenges of an emerging global industry (solar energy) and economy (China). Fears of energy shortages had fuelled the growth rate for the global solar energy industry, and governments in many countries had introduced subsidies for solar energy initiatives. Consequently, the company had grown from a technology start-up to the leading global producer of photovoltaic solar cells and modules in 2011. However, by 2013, the company was facing financial distress and the threat of bankruptcy. Many factors, including the fluctuating cost of silicon, difficulty finding a stable silicon supplier, the 2008 economic downturn, an uncooperative management team, and the subsequent decline in the solar energy market had caused major problems for STP. How could the CEO turn this company around and avoid bankruptcy? The authors Daniel Han Ming Chng and Ziqian (Stella) Zhao are affiliated with China Europe International Business School.
Swot Analysis of "Suntech Power Holdings: How to Avoid Bankruptcy" written by Daniel Han Ming Chng, Ziqian Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Solar Stp facing as an external strategic factors. Some of the topics covered in Suntech Power Holdings: How to Avoid Bankruptcy case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Suntech Power Holdings: How to Avoid Bankruptcy casestudy better are - – talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, technology disruption, digital marketing is dominated by two big players Facebook and Google,
there is backlash against globalization, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Suntech Power Holdings: How to Avoid Bankruptcy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Suntech Power Holdings: How to Avoid Bankruptcy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Solar Stp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Solar Stp 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 Suntech Power Holdings: How to Avoid Bankruptcy can be done for the following purposes –
1. Strategic planning using facts provided in Suntech Power Holdings: How to Avoid Bankruptcy case study
2. Improving business portfolio management of Solar Stp
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Solar Stp
Strengths Suntech Power Holdings: How to Avoid Bankruptcy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Solar Stp in Suntech Power Holdings: How to Avoid Bankruptcy Harvard Business Review case study are -
Analytics focus
– Solar Stp 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 Daniel Han Ming Chng, Ziqian Zhao 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)
– Solar Stp 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 Suntech Power Holdings: How to Avoid 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.
Strong track record of project management
– Solar Stp is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Solar Stp in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Solar Stp is present in almost all the verticals within the industry. This has provided firm in Suntech Power Holdings: How to Avoid 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.
Operational resilience
– The operational resilience strategy in the Suntech Power Holdings: How to Avoid 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.
Cross disciplinary teams
– Horizontal connected teams at the Solar Stp 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.
Highly skilled collaborators
– Solar Stp 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 Suntech Power Holdings: How to Avoid Bankruptcy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Solar Stp 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 Solar Stp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Suntech Power Holdings: How to Avoid Bankruptcy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Solar Stp is one of the most innovative firm in sector. Manager in Suntech Power Holdings: How to Avoid Bankruptcy 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 Solar Stp 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Suntech Power Holdings: How to Avoid Bankruptcy firm has clearly differentiated products in the market place. This has enabled Solar Stp to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Solar Stp to invest into research and development (R&D) and innovation.
Weaknesses Suntech Power Holdings: How to Avoid Bankruptcy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Suntech Power Holdings: How to Avoid Bankruptcy are -
High bargaining power of channel partners
– Because of the regulatory requirements, Daniel Han Ming Chng, Ziqian Zhao suggests that, Solar Stp 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.
Lack of clear differentiation of Solar Stp products
– To increase the profitability and margins on the products, Solar Stp needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Solar Stp 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.
Interest costs
– Compare to the competition, Solar Stp 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.
Products dominated business model
– Even though Solar Stp 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 - Suntech Power Holdings: How to Avoid Bankruptcy should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Solar Stp is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Suntech Power Holdings: How to Avoid Bankruptcy 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 to strategic competitive environment developments
– As Suntech Power Holdings: How to Avoid Bankruptcy HBR case study mentions - Solar Stp 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.
Aligning sales with marketing
– It come across in the case study Suntech Power Holdings: How to Avoid Bankruptcy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Suntech Power Holdings: How to Avoid Bankruptcy can leverage the sales team experience to cultivate customer relationships as Solar Stp is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study Suntech Power Holdings: How to Avoid Bankruptcy, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Suntech Power Holdings: How to Avoid Bankruptcy, in the dynamic environment Solar Stp has struggled to respond to the nimble upstart competition. Solar Stp has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Solar Stp 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.
Opportunities Suntech Power Holdings: How to Avoid 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 Suntech Power Holdings: How to Avoid Bankruptcy are -
Leveraging digital technologies
– Solar Stp 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.
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 Solar Stp in the consumer business. Now Solar Stp can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Solar Stp can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Suntech Power Holdings: How to Avoid 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.
Developing new processes and practices
– Solar Stp can develop new processes and procedures in Leadership & Managing People 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Solar Stp can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Solar Stp is facing challenges because of the dominance of functional experts in the organization. Suntech Power Holdings: How to Avoid 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.
Creating value in data economy
– The success of analytics program of Solar Stp has opened avenues for new revenue streams for the organization in the industry. This can help Solar Stp to build a more holistic ecosystem as suggested in the Suntech Power Holdings: How to Avoid Bankruptcy case study. Solar Stp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Solar Stp 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
– Solar Stp can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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 Solar Stp 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 Solar Stp to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Solar Stp can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Solar Stp can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Solar Stp in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Solar Stp 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, Suntech Power Holdings: How to Avoid Bankruptcy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Suntech Power Holdings: How to Avoid Bankruptcy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Suntech Power Holdings: How to Avoid Bankruptcy are -
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. Solar Stp needs to understand the core reasons impacting the Leadership & Managing People 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 Solar Stp in the Leadership & Managing People sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Solar Stp in the Leadership & Managing People industry. The Leadership & Managing People 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.
Environmental challenges
– Solar Stp 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. Solar Stp can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Solar Stp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Solar Stp 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 Solar Stp is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Solar Stp
– 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 Solar Stp.
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 Solar Stp business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Solar Stp 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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Solar Stp needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Solar Stp 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 Suntech Power Holdings: How to Avoid Bankruptcy .
Weighted SWOT Analysis of Suntech Power Holdings: How to Avoid 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 Suntech Power Holdings: How to Avoid 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 Suntech Power Holdings: How to Avoid 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 Suntech Power Holdings: How to Avoid 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 Suntech Power Holdings: How to Avoid 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 Solar Stp needs to make to build a sustainable competitive advantage.
