Jiuding Capital: Private Equity Firm with Chinese Characteristics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Jiuding Capital: Private Equity Firm with Chinese Characteristics
Founded in 2007, Kunwu Jiuding Capital Co., Ltd (hereinafter referred to as Jiuding) is a Chinese private equity (PE) firm that specializes in equity investments in late-stage, pre-IPO companies. Despite its brief history, the firm had secured a strong foothold in China's PE industry with its tremendous growth and dazzling investment returns. As of 2011, Jiuding had 260 employees and 6 RMB-denominated funds with 6 million RMB under management. While investors showed strong enthusiasm for the firm, Jiuding nevertheless had generated much debate in the PE community about its pioneering investment practice - known as the "PE factory" model where investment activities were carried out in a way similar to large-scale industrial production. This model has subverted the traditional PE business practice in many ways. Concerns were raised about whether or not Jiuding's business model was sustainable in the next ten years, given the fast-changing landscape of China's PE industry.
Swot Analysis of "Jiuding Capital: Private Equity Firm with Chinese Characteristics" written by Li Liao, Ning Jia, Ziqian Zhao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jiuding Pe facing as an external strategic factors. Some of the topics covered in Jiuding Capital: Private Equity Firm with Chinese Characteristics case study are - Strategic Management Strategies, and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Jiuding Capital: Private Equity Firm with Chinese Characteristics casestudy better are - – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, technology disruption, challanges to central banks by blockchain based private currencies, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing,
increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Jiuding Capital: Private Equity Firm with Chinese Characteristics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Jiuding Capital: Private Equity Firm with Chinese Characteristics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jiuding Pe, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jiuding Pe 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics can be done for the following purposes –
1. Strategic planning using facts provided in Jiuding Capital: Private Equity Firm with Chinese Characteristics case study
2. Improving business portfolio management of Jiuding Pe
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Jiuding Pe
Strengths Jiuding Capital: Private Equity Firm with Chinese Characteristics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jiuding Pe in Jiuding Capital: Private Equity Firm with Chinese Characteristics Harvard Business Review case study are -
Sustainable margins compare to other players in Finance & Accounting industry
– Jiuding Capital: Private Equity Firm with Chinese Characteristics firm has clearly differentiated products in the market place. This has enabled Jiuding Pe to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Jiuding Pe to invest into research and development (R&D) and innovation.
Organizational Resilience of Jiuding Pe
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jiuding Pe does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Finance & Accounting field
– Jiuding Pe 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 Jiuding Pe in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Jiuding Pe 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Jiuding Pe digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jiuding Pe has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Jiuding Pe has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jiuding Pe to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Jiuding Pe is one of the most innovative firm in sector. Manager in Jiuding Capital: Private Equity Firm with Chinese Characteristics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Jiuding Pe has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jiuding Pe has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Analytics focus
– Jiuding Pe 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 Li Liao, Ning Jia, Ziqian Zhao can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Jiuding Pe 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.
Cross disciplinary teams
– Horizontal connected teams at the Jiuding Pe 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.
Learning organization
- Jiuding Pe 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 Jiuding Pe is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Jiuding Capital: Private Equity Firm with Chinese Characteristics Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Jiuding Capital: Private Equity Firm with Chinese Characteristics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Jiuding Capital: Private Equity Firm with Chinese Characteristics are -
Slow decision making process
– As mentioned earlier in the report, Jiuding Pe 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. Jiuding Pe 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.
Low market penetration in new markets
– Outside its home market of Jiuding Pe, firm in the HBR case study Jiuding Capital: Private Equity Firm with Chinese Characteristics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Jiuding Pe 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.
Products dominated business model
– Even though Jiuding Pe has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Jiuding Capital: Private Equity Firm with Chinese Characteristics should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Jiuding Pe has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High cash cycle compare to competitors
Jiuding Pe 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Jiuding Capital: Private Equity Firm with Chinese Characteristics, is just above the industry average. Jiuding Pe 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.
Increasing silos among functional specialists
– The organizational structure of Jiuding Pe is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Jiuding Pe needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jiuding Pe to focus more on services rather than just following the product oriented approach.
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 Jiuding Pe supply chain. Even after few cautionary changes mentioned in the HBR case study - Jiuding Capital: Private Equity Firm with Chinese Characteristics, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Jiuding Pe vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Jiuding Capital: Private Equity Firm with Chinese Characteristics, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Jiuding Pe 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.
Opportunities Jiuding Capital: Private Equity Firm with Chinese Characteristics | 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics are -
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 Jiuding Pe 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.
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 Jiuding Pe in the consumer business. Now Jiuding Pe can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Jiuding Pe can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Jiuding Pe can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Jiuding Pe 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.
Loyalty marketing
– Jiuding Pe 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Jiuding Pe 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, Jiuding Capital: Private Equity Firm with Chinese Characteristics, 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 Jiuding Pe has opened avenues for new revenue streams for the organization in the industry. This can help Jiuding Pe to build a more holistic ecosystem as suggested in the Jiuding Capital: Private Equity Firm with Chinese Characteristics case study. Jiuding Pe can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jiuding Pe is facing challenges because of the dominance of functional experts in the organization. Jiuding Capital: Private Equity Firm with Chinese Characteristics 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jiuding Pe in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jiuding Pe 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 Jiuding Pe to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Jiuding Pe can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Jiuding Capital: Private Equity Firm with Chinese Characteristics 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.
Learning at scale
– Online learning technologies has now opened space for Jiuding Pe 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Jiuding Capital: Private Equity Firm with Chinese Characteristics are -
Environmental challenges
– Jiuding Pe 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. Jiuding Pe can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
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 Jiuding Pe in the Finance & Accounting sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jiuding Pe in the Finance & Accounting industry. The Finance & Accounting 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.
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. Jiuding Pe 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.
Regulatory challenges
– Jiuding Pe 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 Finance & Accounting industry regulations.
Shortening product life cycle
– it is one of the major threat that Jiuding Pe is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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.
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 Jiuding Pe business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Jiuding Pe 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.
Consumer confidence and its impact on Jiuding Pe 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.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jiuding Pe can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Stagnating economy with rate increase
– Jiuding Pe 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.
Weighted SWOT Analysis of Jiuding Capital: Private Equity Firm with Chinese Characteristics 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics 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 Jiuding Capital: Private Equity Firm with Chinese Characteristics 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 Jiuding Pe needs to make to build a sustainable competitive advantage.
