Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management
Chinese Pharmaceuticals (HK) Limited, a private, family-owned business in Hong Kong that supplies Chinese medicine products to retailers in Hong Kong and Macau, faces a situation where additional cash is needed for additional inventory. Jason Kwok, the General Manager is challenged to maintain adequate inventory levels of Noto37, a Chinese herbal medicine used to control cholesterol and blood pressure levels. Without compromising the company's cash flow needs, Jason has to implement better systems internally, by improving sales forecasting and prudent inventory management, to avoid shortages of the product.
Swot Analysis of "Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management" written by Ronald Lau, Joseph Santana Fernandez includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Inventory Hk facing as an external strategic factors. Some of the topics covered in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management case study are - Strategic Management Strategies, Forecasting, Health, Product development, Sales, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management casestudy better are - – technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings, geopolitical disruptions, increasing transportation and logistics costs, there is increasing trade war between United States & China, there is backlash against globalization,
increasing household debt because of falling income levels, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inventory Hk, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inventory Hk 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management can be done for the following purposes –
1. Strategic planning using facts provided in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management case study
2. Improving business portfolio management of Inventory Hk
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 Inventory Hk
Strengths Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inventory Hk in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management Harvard Business Review case study are -
Analytics focus
– Inventory Hk 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 Ronald Lau, Joseph Santana Fernandez 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 recruit top talent
– Inventory Hk is one of the leading recruiters in the industry. Managers in the Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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.
Training and development
– Inventory Hk has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management 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.
Diverse revenue streams
– Inventory Hk is present in almost all the verticals within the industry. This has provided firm in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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.
Innovation driven organization
– Inventory Hk is one of the most innovative firm in sector. Manager in Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Inventory Hk 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management 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.
Organizational Resilience of Inventory Hk
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Inventory Hk does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Inventory Hk has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Inventory Hk 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.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Inventory Hk digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inventory Hk has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Strong track record of project management
– Inventory Hk is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Inventory Hk 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.
Weaknesses Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management are -
Lack of clear differentiation of Inventory Hk products
– To increase the profitability and margins on the products, Inventory Hk needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Inventory Hk 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 - Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management HBR case study mentions - Inventory Hk 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.
Interest costs
– Compare to the competition, Inventory Hk 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.
High cash cycle compare to competitors
Inventory Hk 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.
Skills based hiring
– The stress on hiring functional specialists at Inventory Hk 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Inventory Hk has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Inventory Hk is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Inventory Hk needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Inventory Hk to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Inventory Hk is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ronald Lau, Joseph Santana Fernandez suggests that, Inventory Hk 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Inventory Hk 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.
Opportunities Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Inventory Hk 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, Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Inventory Hk 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.
Creating value in data economy
– The success of analytics program of Inventory Hk has opened avenues for new revenue streams for the organization in the industry. This can help Inventory Hk to build a more holistic ecosystem as suggested in the Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management case study. Inventory Hk can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Inventory Hk 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.
Developing new processes and practices
– Inventory Hk can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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 Inventory Hk 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Inventory Hk can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Inventory Hk can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inventory Hk can use these opportunities to build new business models that can help the communities that Inventory Hk operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
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. Inventory Hk can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Inventory Hk can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
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 Inventory Hk in the consumer business. Now Inventory Hk can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Inventory Hk to increase its market reach. Inventory Hk 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.
Threats Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management are -
Shortening product life cycle
– it is one of the major threat that Inventory Hk is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management, Inventory Hk 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 .
Stagnating economy with rate increase
– Inventory Hk 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
– Inventory Hk 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. Inventory Hk can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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 Inventory Hk in the Technology & Operations sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Inventory Hk 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory Management .
Increasing wage structure of Inventory Hk
– 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 Inventory Hk.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Inventory Hk with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Inventory Hk 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.
Consumer confidence and its impact on Inventory Hk 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.
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 Inventory Hk business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Chinese Pharmaceuticals (HK) Limited: Effective Forecasting for Optimal Inventory 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 Inventory Hk needs to make to build a sustainable competitive advantage.
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