Sunmoon: Transforming an Asset Heavy Legacy Business Model SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Sunmoon: Transforming an Asset Heavy Legacy Business Model
Set in 2016, this case presents the ten-year long journey undertaken by SunMoon to transform its legacy business model that had led the company to become a loss-making, cost-inefficient and debt-ridden entity in 2007. Gary Loh, who joined the company in 2007, spearheaded the efforts to restructure the debt, modernise operations, and change the business model. However, the process was arduous, being besieged on one hand by financial issues such as capital inadequacy, downward spiral in revenues and increasing losses; and on the other hand by operational issues such as inter-personal conflicts, debt settlement challenges and labour unrest. The case further discusses how SunMoon, after having divested its non-performing assets and non-core businesses, set out to achieve its new strategic vision to be an asset-light, brand-focused, and consumer-oriented company. Its new business model centred on building and leveraging SunMoon's brand equity, developing a larger retail network across more geographies and dealing in a wider range of products. While SunMoon's deal with Yiguo (Alibaba backed) - the leading fresh food e-commerce company in China, was a testament to its new model, fruits being a commodity product and the highly fragmented nature of the industry raised various concerns: Would SunMoon be able to become the industry benchmark in quality for both buyers and growers, and provide an aggregator platform like Uber or Airbnb? Would it be able to create the last mile connectivity with end-consumers and provide brand differentiation among them?
Swot Analysis of "Sunmoon: Transforming an Asset Heavy Legacy Business Model" written by Simon Schillebeeckx, Sheetal Mittal includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sunmoon Sunmoon's facing as an external strategic factors. Some of the topics covered in Sunmoon: Transforming an Asset Heavy Legacy Business Model case study are - Strategic Management Strategies, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Sunmoon: Transforming an Asset Heavy Legacy Business Model casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, etc
Introduction to SWOT Analysis of Sunmoon: Transforming an Asset Heavy Legacy Business Model
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sunmoon: Transforming an Asset Heavy Legacy Business Model case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sunmoon Sunmoon's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sunmoon Sunmoon's 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model can be done for the following purposes –
1. Strategic planning using facts provided in Sunmoon: Transforming an Asset Heavy Legacy Business Model case study
2. Improving business portfolio management of Sunmoon Sunmoon's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sunmoon Sunmoon's
Strengths Sunmoon: Transforming an Asset Heavy Legacy Business Model | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sunmoon Sunmoon's in Sunmoon: Transforming an Asset Heavy Legacy Business Model Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 switching costs
– The high switching costs that Sunmoon Sunmoon's 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 Strategy & Execution industry
– Sunmoon: Transforming an Asset Heavy Legacy Business Model firm has clearly differentiated products in the market place. This has enabled Sunmoon Sunmoon's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Sunmoon Sunmoon's to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Sunmoon Sunmoon's 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.
Organizational Resilience of Sunmoon Sunmoon's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sunmoon Sunmoon's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Sunmoon Sunmoon's 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 Sunmoon Sunmoon's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Sunmoon: Transforming an Asset Heavy Legacy Business Model Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Sunmoon Sunmoon's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sunmoon Sunmoon's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Sunmoon Sunmoon's 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 Sunmoon Sunmoon's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Diverse revenue streams
– Sunmoon Sunmoon's is present in almost all the verticals within the industry. This has provided firm in Sunmoon: Transforming an Asset Heavy Legacy Business Model 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.
Effective Research and Development (R&D)
– Sunmoon Sunmoon's 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Sunmoon Sunmoon's is one of the leading recruiters in the industry. Managers in the Sunmoon: Transforming an Asset Heavy Legacy Business Model are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Sunmoon Sunmoon's 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Sunmoon: Transforming an Asset Heavy Legacy Business Model | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sunmoon: Transforming an Asset Heavy Legacy Business Model are -
Capital Spending Reduction
– Even during the low interest decade, Sunmoon Sunmoon's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sunmoon Sunmoon's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Sunmoon: Transforming an Asset Heavy Legacy Business Model can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Sunmoon Sunmoon's 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.
Low market penetration in new markets
– Outside its home market of Sunmoon Sunmoon's, firm in the HBR case study Sunmoon: Transforming an Asset Heavy Legacy Business Model needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Sunmoon: Transforming an Asset Heavy Legacy Business Model, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.
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 Sunmoon Sunmoon's supply chain. Even after few cautionary changes mentioned in the HBR case study - Sunmoon: Transforming an Asset Heavy Legacy Business Model, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sunmoon Sunmoon's vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, Simon Schillebeeckx, Sheetal Mittal suggests that, Sunmoon Sunmoon's 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.
Increasing silos among functional specialists
– The organizational structure of Sunmoon Sunmoon's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Sunmoon Sunmoon's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sunmoon Sunmoon's to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sunmoon: Transforming an Asset Heavy Legacy Business Model, is just above the industry average. Sunmoon Sunmoon's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Sunmoon Sunmoon's 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.
Interest costs
– Compare to the competition, Sunmoon Sunmoon's 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.
Opportunities Sunmoon: Transforming an Asset Heavy Legacy Business Model | 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sunmoon Sunmoon's 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. Sunmoon Sunmoon's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sunmoon Sunmoon's can use these opportunities to build new business models that can help the communities that Sunmoon Sunmoon's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Sunmoon Sunmoon's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sunmoon Sunmoon's is facing challenges because of the dominance of functional experts in the organization. Sunmoon: Transforming an Asset Heavy Legacy Business Model 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.
Building a culture of innovation
– managers at Sunmoon Sunmoon's 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 Strategy & Execution segment.
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. Sunmoon Sunmoon's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Sunmoon Sunmoon's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon Sunmoon's 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, Sunmoon Sunmoon's 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, Sunmoon: Transforming an Asset Heavy Legacy Business Model, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sunmoon Sunmoon's 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.
Creating value in data economy
– The success of analytics program of Sunmoon Sunmoon's has opened avenues for new revenue streams for the organization in the industry. This can help Sunmoon Sunmoon's to build a more holistic ecosystem as suggested in the Sunmoon: Transforming an Asset Heavy Legacy Business Model case study. Sunmoon Sunmoon's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Sunmoon Sunmoon's 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sunmoon Sunmoon's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Sunmoon Sunmoon's 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.
Threats Sunmoon: Transforming an Asset Heavy Legacy Business Model External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sunmoon: Transforming an Asset Heavy Legacy Business Model are -
Technology acceleration in Forth Industrial Revolution
– Sunmoon Sunmoon's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Sunmoon Sunmoon's needs to keep up with the evolution of technology in the Strategy & Execution 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sunmoon Sunmoon's in the Strategy & Execution industry. The Strategy & Execution 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.
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. Sunmoon Sunmoon's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sunmoon Sunmoon's 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sunmoon Sunmoon's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Sunmoon Sunmoon's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Sunmoon Sunmoon's 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.
Stagnating economy with rate increase
– Sunmoon Sunmoon's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Sunmoon: Transforming an Asset Heavy Legacy Business Model, Sunmoon Sunmoon's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Regulatory challenges
– Sunmoon Sunmoon's 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 Strategy & Execution industry regulations.
Environmental challenges
– Sunmoon Sunmoon's 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. Sunmoon Sunmoon's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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. Sunmoon Sunmoon's 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.
Weighted SWOT Analysis of Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon: Transforming an Asset Heavy Legacy Business Model 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 Sunmoon Sunmoon's needs to make to build a sustainable competitive advantage.