White Gold in Benin: Chinese Investment in Cotton SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of White Gold in Benin: Chinese Investment in Cotton
In mid-June 2011, the Chinese president of the China-Benin joint venture Benin Textile Company (Compagnie Beninoise des Textiles, or CBT) was deeply worried about the supply of cotton in Benin. Since 2009, CBT had faced significant challenges in obtaining a reliable cotton supply. In 2010, the company had already placed its cotton orders, but local Beninese cotton producers were unwilling to deliver cotton at the earlier agreed-on price due to the rising market price. CBT was forced to stop production for five months and could not deliver on numerous contracts. The president of CBT was unsure whether to stay in West Africa and if so, how to improve the cotton supply situation. He had four options: maintain the status quo and hope for improvements, withdraw from West Africa, buy cotton contracts from other countries, or invest in cotton production. Which would be the best option for his company? The authors are Zhangfeng Fei, Xiaokang Zhao and Kejing Zhang are affiliated with Donghua University. Alex Beamish is affiliated with Ivey Publishing.
Authors :: Zhangfeng Fei, Xiaokang Zhao, Kejing Zhang, Alex Beamish
Swot Analysis of "White Gold in Benin: Chinese Investment in Cotton" written by Zhangfeng Fei, Xiaokang Zhao, Kejing Zhang, Alex Beamish includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cotton Cbt facing as an external strategic factors. Some of the topics covered in White Gold in Benin: Chinese Investment in Cotton case study are - Strategic Management Strategies, Manufacturing, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the White Gold in Benin: Chinese Investment in Cotton casestudy better are - – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, there is backlash against globalization, challanges to central banks by blockchain based private currencies, technology disruption, wage bills are increasing, increasing government debt because of Covid-19 spendings,
increasing commodity prices, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of White Gold in Benin: Chinese Investment in Cotton
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in White Gold in Benin: Chinese Investment in Cotton case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cotton Cbt, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton can be done for the following purposes –
1. Strategic planning using facts provided in White Gold in Benin: Chinese Investment in Cotton case study
2. Improving business portfolio management of Cotton Cbt
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cotton Cbt
Strengths White Gold in Benin: Chinese Investment in Cotton | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cotton Cbt in White Gold in Benin: Chinese Investment in Cotton Harvard Business Review case study are -
Learning organization
- Cotton Cbt 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 Cotton Cbt is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in White Gold in Benin: Chinese Investment in Cotton Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Cotton Cbt has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in White Gold in Benin: Chinese Investment in Cotton 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.
Operational resilience
– The operational resilience strategy in the White Gold in Benin: Chinese Investment in Cotton 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.
Highly skilled collaborators
– Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Superior customer experience
– The customer experience strategy of Cotton Cbt in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Global Business field
– Cotton Cbt 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 Cotton Cbt in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Cotton Cbt
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cotton Cbt does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Cotton Cbt 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.
Sustainable margins compare to other players in Global Business industry
– White Gold in Benin: Chinese Investment in Cotton firm has clearly differentiated products in the market place. This has enabled Cotton Cbt to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Cotton Cbt to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Cotton Cbt 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.
Effective Research and Development (R&D)
– Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Cotton Cbt is present in almost all the verticals within the industry. This has provided firm in White Gold in Benin: Chinese Investment in Cotton 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.
Weaknesses White Gold in Benin: Chinese Investment in Cotton | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of White Gold in Benin: Chinese Investment in Cotton are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study White Gold in Benin: Chinese Investment in Cotton, is just above the industry average. Cotton Cbt 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.
Skills based hiring
– The stress on hiring functional specialists at Cotton Cbt 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.
Need for greater diversity
– Cotton Cbt 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study White Gold in Benin: Chinese Investment in Cotton, in the dynamic environment Cotton Cbt has struggled to respond to the nimble upstart competition. Cotton Cbt has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study White Gold in Benin: Chinese Investment in Cotton 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 White Gold in Benin: Chinese Investment in Cotton can leverage the sales team experience to cultivate customer relationships as Cotton Cbt is planning to shift buying processes online.
High cash cycle compare to competitors
Cotton Cbt 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study White Gold in Benin: Chinese Investment in Cotton, it seems that the employees of Cotton Cbt don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Lack of clear differentiation of Cotton Cbt products
– To increase the profitability and margins on the products, Cotton Cbt needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Cotton Cbt 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.
Increasing silos among functional specialists
– The organizational structure of Cotton Cbt is dominated by functional specialists. It is not different from other players in the Global Business segment. Cotton Cbt needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cotton Cbt to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton | 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 White Gold in Benin: Chinese Investment in Cotton are -
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 Cotton Cbt in the consumer business. Now Cotton Cbt can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cotton Cbt is facing challenges because of the dominance of functional experts in the organization. White Gold in Benin: Chinese Investment in Cotton 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.
Leveraging digital technologies
– Cotton Cbt 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.
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 Cotton Cbt 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.
Learning at scale
– Online learning technologies has now opened space for Cotton Cbt 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.
Using analytics as competitive advantage
– Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cotton Cbt to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Cotton Cbt can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Cotton Cbt can develop new processes and procedures in Global Business 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.
Creating value in data economy
– The success of analytics program of Cotton Cbt has opened avenues for new revenue streams for the organization in the industry. This can help Cotton Cbt to build a more holistic ecosystem as suggested in the White Gold in Benin: Chinese Investment in Cotton case study. Cotton Cbt can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cotton Cbt in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Cotton Cbt 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 Cotton Cbt can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Cotton Cbt can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Threats White Gold in Benin: Chinese Investment in Cotton External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study White Gold in Benin: Chinese Investment in Cotton are -
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. Cotton Cbt 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study White Gold in Benin: Chinese Investment in Cotton, Cotton Cbt may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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 Cotton Cbt.
Regulatory challenges
– Cotton Cbt 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 Global Business industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cotton Cbt 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 White Gold in Benin: Chinese Investment in Cotton .
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. Cotton Cbt needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Cotton Cbt is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Cotton Cbt 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. Cotton Cbt can take advantage of this fund but it will also bring new competitors in the Global Business industry.
High dependence on third party suppliers
– Cotton Cbt 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cotton Cbt with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Cotton Cbt 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.
Stagnating economy with rate increase
– Cotton Cbt 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.
Technology acceleration in Forth Industrial Revolution
– Cotton Cbt has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Cotton Cbt needs to keep up with the evolution of technology in the Global Business 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.
Weighted SWOT Analysis of White Gold in Benin: Chinese Investment in Cotton 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 White Gold in Benin: Chinese Investment in Cotton 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 White Gold in Benin: Chinese Investment in Cotton 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 White Gold in Benin: Chinese Investment in Cotton 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 White Gold in Benin: Chinese Investment in Cotton 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 Cotton Cbt needs to make to build a sustainable competitive advantage.