Case Study Description of Xiangdu: Succession of Entrepreneurial Spirit
This case discusses the question of the inheritance of power and entrepreneurial spirit in the family run Xinjiang Yier High Technique Agriculture Company and its wine brand and subsidiary Xinjiang Xiangdu Winery Co. Ltd. (Xiangdu). In 1998, the company's founder took her family to break new ground for growing grapes in the vast expanse of the Gobi Desert. In 2002, she founded Xiangdu, and the company's focus gradually shifted from grape growing to wine making and upgrading the grape processing infrastructure. In June 2016, having reached age 65, the founder called a senior management meeting to discuss a number of challenges that Xiangdu was facing. After her departure, could Xiangdu continue to achieve great success? Should the founder fulfill her husband's last wish to make Xiangdu a public company? How should Xiangdu move forward? The authors Jean Lee and Liman Zhao are affiliated with China Europe International Business School.
Swot Analysis of "Xiangdu: Succession of Entrepreneurial Spirit" written by Jean Lee, Liman Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Xiangdu Grape facing as an external strategic factors. Some of the topics covered in Xiangdu: Succession of Entrepreneurial Spirit case study are - Strategic Management Strategies, Succession planning and Organizational Development.
Some of the macro environment factors that can be used to understand the Xiangdu: Succession of Entrepreneurial Spirit casestudy better are - – increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, geopolitical disruptions, cloud computing is disrupting traditional business models,
there is backlash against globalization, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Xiangdu: Succession of Entrepreneurial Spirit
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Xiangdu: Succession of Entrepreneurial Spirit case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Xiangdu Grape, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Xiangdu Grape 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 Xiangdu: Succession of Entrepreneurial Spirit can be done for the following purposes –
1. Strategic planning using facts provided in Xiangdu: Succession of Entrepreneurial Spirit case study
2. Improving business portfolio management of Xiangdu Grape
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Xiangdu Grape
Strengths Xiangdu: Succession of Entrepreneurial Spirit | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Xiangdu Grape in Xiangdu: Succession of Entrepreneurial Spirit Harvard Business Review case study are -
Effective Research and Development (R&D)
– Xiangdu Grape 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 Xiangdu: Succession of Entrepreneurial Spirit - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Xiangdu Grape 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 Xiangdu Grape is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Xiangdu: Succession of Entrepreneurial Spirit Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Xiangdu Grape 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.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Xiangdu Grape digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Xiangdu Grape 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.
Analytics focus
– Xiangdu Grape 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 Jean Lee, Liman 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.
Operational resilience
– The operational resilience strategy in the Xiangdu: Succession of Entrepreneurial Spirit 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
– Xiangdu Grape has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Xiangdu Grape to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Xiangdu Grape in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Xiangdu Grape is one of the leading recruiters in the industry. Managers in the Xiangdu: Succession of Entrepreneurial Spirit are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Organizational Development industry
– Xiangdu: Succession of Entrepreneurial Spirit firm has clearly differentiated products in the market place. This has enabled Xiangdu Grape to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Xiangdu Grape to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Xiangdu Grape 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 Xiangdu: Succession of Entrepreneurial Spirit HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Xiangdu Grape has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Xiangdu: Succession of Entrepreneurial Spirit 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.
Weaknesses Xiangdu: Succession of Entrepreneurial Spirit | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Xiangdu: Succession of Entrepreneurial Spirit are -
Slow to strategic competitive environment developments
– As Xiangdu: Succession of Entrepreneurial Spirit HBR case study mentions - Xiangdu Grape 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.
Products dominated business model
– Even though Xiangdu Grape 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 - Xiangdu: Succession of Entrepreneurial Spirit should strive to include more intangible value offerings along with its core products and services.
High cash cycle compare to competitors
Xiangdu Grape 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.
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 Xiangdu Grape supply chain. Even after few cautionary changes mentioned in the HBR case study - Xiangdu: Succession of Entrepreneurial Spirit, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Xiangdu Grape vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Xiangdu Grape is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Xiangdu: Succession of Entrepreneurial Spirit can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Xiangdu Grape 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 decision making process
– As mentioned earlier in the report, Xiangdu Grape 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. Xiangdu Grape 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.
Increasing silos among functional specialists
– The organizational structure of Xiangdu Grape is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Xiangdu Grape needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Xiangdu Grape to focus more on services rather than just following the product oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Xiangdu: Succession of Entrepreneurial Spirit, in the dynamic environment Xiangdu Grape has struggled to respond to the nimble upstart competition. Xiangdu Grape has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Xiangdu Grape 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 operating costs
– Compare to the competitors, firm in the HBR case study Xiangdu: Succession of Entrepreneurial Spirit has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Xiangdu Grape 's lucrative customers.
Opportunities Xiangdu: Succession of Entrepreneurial Spirit | 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 Xiangdu: Succession of Entrepreneurial Spirit are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Xiangdu Grape can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Xiangdu Grape can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Xiangdu Grape 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Xiangdu Grape 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 Xiangdu Grape to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Xiangdu Grape to increase its market reach. Xiangdu Grape 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.
Building a culture of innovation
– managers at Xiangdu Grape 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 Organizational Development segment.
Loyalty marketing
– Xiangdu Grape 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 Xiangdu Grape has opened avenues for new revenue streams for the organization in the industry. This can help Xiangdu Grape to build a more holistic ecosystem as suggested in the Xiangdu: Succession of Entrepreneurial Spirit case study. Xiangdu Grape can build new products and services such as - data insight services, data privacy related products, data based consulting services, 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 Xiangdu Grape in the consumer business. Now Xiangdu Grape can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Xiangdu Grape 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, Xiangdu: Succession of Entrepreneurial Spirit, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Xiangdu Grape can use the latest technology developments to improve its manufacturing and designing process in Organizational Development 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.
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. Xiangdu Grape can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Xiangdu Grape 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.
Threats Xiangdu: Succession of Entrepreneurial Spirit External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Xiangdu: Succession of Entrepreneurial Spirit are -
Stagnating economy with rate increase
– Xiangdu Grape 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.
Increasing wage structure of Xiangdu Grape
– 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 Xiangdu Grape.
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. Xiangdu Grape 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 Xiangdu Grape in the Organizational Development sector and impact the bottomline of the organization.
Consumer confidence and its impact on Xiangdu Grape 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.
Regulatory challenges
– Xiangdu Grape 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 Organizational Development industry regulations.
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. Xiangdu Grape needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
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 Xiangdu Grape.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Xiangdu Grape with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Xiangdu Grape business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Xiangdu Grape in the Organizational Development industry. The Organizational Development 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Xiangdu: Succession of Entrepreneurial Spirit, Xiangdu Grape may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Weighted SWOT Analysis of Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu Grape needs to make to build a sustainable competitive advantage.