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 - – wage bills are increasing, cloud computing is disrupting traditional business models, technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies,
there is increasing trade war between United States & China, central banks are concerned over increasing inflation, 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 -
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.
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.
Ability to lead change in Organizational Development field
– Xiangdu Grape is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Xiangdu Grape in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Xiangdu Grape is one of the most innovative firm in sector. Manager in Xiangdu: Succession of Entrepreneurial Spirit Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Xiangdu Grape
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Xiangdu Grape does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Xiangdu Grape 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.
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.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Xiangdu Grape in the sector have low bargaining power. Xiangdu: Succession of Entrepreneurial Spirit has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Xiangdu Grape to manage not only supply disruptions but also source products at highly competitive prices.
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 -
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.
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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu Grape has relatively successful track record of launching new products.
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.
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.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Jean Lee, Liman Zhao suggests that, Xiangdu Grape 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.
Capital Spending Reduction
– Even during the low interest decade, Xiangdu Grape 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.
Aligning sales with marketing
– It come across in the case study Xiangdu: Succession of Entrepreneurial Spirit 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 Xiangdu: Succession of Entrepreneurial Spirit can leverage the sales team experience to cultivate customer relationships as Xiangdu Grape is planning to shift buying processes online.
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.
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 -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Xiangdu Grape is facing challenges because of the dominance of functional experts in the organization. Xiangdu: Succession of Entrepreneurial Spirit 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.
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 Xiangdu Grape 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.
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.
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.
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.
Using analytics as competitive advantage
– Xiangdu Grape 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 Xiangdu: Succession of Entrepreneurial Spirit - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Xiangdu Grape to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Xiangdu Grape 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. Xiangdu Grape 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.
Buying journey improvements
– Xiangdu Grape can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Xiangdu: Succession of Entrepreneurial Spirit 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.
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.
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.
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.
Learning at scale
– Online learning technologies has now opened space for Xiangdu Grape to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 -
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.
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.
High dependence on third party suppliers
– Xiangdu Grape 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.
Technology acceleration in Forth Industrial Revolution
– Xiangdu Grape has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Xiangdu Grape needs to keep up with the evolution of technology in the Organizational Development 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.
Environmental challenges
– Xiangdu Grape 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. Xiangdu Grape can take advantage of this fund but it will also bring new competitors in the Organizational Development 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.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Xiangdu Grape can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Xiangdu Grape is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
