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 - – technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, central banks are concerned over increasing inflation, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, there is backlash against globalization,
increasing energy prices, there is increasing trade war between United States & China, 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 -
Innovation driven organization
– Cotton Cbt is one of the most innovative firm in sector. Manager in White Gold in Benin: Chinese Investment in Cotton Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Cotton Cbt 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 Zhangfeng Fei, Xiaokang Zhao, Kejing Zhang, Alex Beamish 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.
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.
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.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Cotton Cbt in the sector have low bargaining power. White Gold in Benin: Chinese Investment in Cotton has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cotton Cbt to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Cotton Cbt has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cotton Cbt to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Cotton Cbt is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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 -
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cotton Cbt is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study White Gold in Benin: Chinese Investment in Cotton can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
High operating costs
– Compare to the competitors, firm in the HBR case study White Gold in Benin: Chinese Investment in Cotton 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 Cotton Cbt 's lucrative customers.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Zhangfeng Fei, Xiaokang Zhao, Kejing Zhang, Alex Beamish suggests that, Cotton Cbt 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.
Slow to strategic competitive environment developments
– As White Gold in Benin: Chinese Investment in Cotton HBR case study mentions - Cotton Cbt 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.
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 Cotton Cbt supply chain. Even after few cautionary changes mentioned in the HBR case study - White Gold in Benin: Chinese Investment in Cotton, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cotton Cbt vulnerable to further global disruptions in South East Asia.
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.
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.
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 -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cotton Cbt can use these opportunities to build new business models that can help the communities that Cotton Cbt operates in. Secondly it can use opportunities from government spending in Global Business sector.
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.
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.
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.
Building a culture of innovation
– managers at Cotton Cbt 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 Global Business segment.
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.
Better consumer reach
– The expansion of the 5G network will help Cotton Cbt to increase its market reach. Cotton Cbt 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.
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.
Loyalty marketing
– Cotton Cbt 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 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.
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.
Buying journey improvements
– Cotton Cbt can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. White Gold in Benin: Chinese Investment in Cotton 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cotton Cbt 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 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 -
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.
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.
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 Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cotton Cbt can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 .
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.
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.
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.
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 Cotton Cbt in the Global Business sector and impact the bottomline of the organization.
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 Cotton Cbt business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cotton Cbt in the Global Business industry. The Global Business 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.
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 .
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.