Suntech Power Holdings (A): the Pre-IPO Years SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Suntech Power Holdings (A): the Pre-IPO Years
The (A) case follows Dr. Zhengrong Shi, Founder, Chairman and CEO of Suntech Power Holdings, on his journey to create a global solar PV company headquartered in China. It covers his background and inspiration for the idea, his dealings with the local Chinese government authorities, the company's business strategies, competitive landscape, and performance to date. The case concludes with the founder contemplating future options for his company, including the possibility of taking the company public on the New York Stock Exchange. The (B) case follows the company in the post-IPO years, providing an update on strategy, financial performance, and the competitive landscape.
Authors :: George Foster, Antonio Davila, Ning Jia
Swot Analysis of "Suntech Power Holdings (A): the Pre-IPO Years" written by George Foster, Antonio Davila, Ning Jia includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Suntech Holdings facing as an external strategic factors. Some of the topics covered in Suntech Power Holdings (A): the Pre-IPO Years case study are - Strategic Management Strategies, Strategy and Global Business.
Some of the macro environment factors that can be used to understand the Suntech Power Holdings (A): the Pre-IPO Years casestudy better are - – central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, geopolitical disruptions, etc
Introduction to SWOT Analysis of Suntech Power Holdings (A): the Pre-IPO Years
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Suntech Power Holdings (A): the Pre-IPO Years case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Suntech Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Suntech Holdings 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 Suntech Power Holdings (A): the Pre-IPO Years can be done for the following purposes –
1. Strategic planning using facts provided in Suntech Power Holdings (A): the Pre-IPO Years case study
2. Improving business portfolio management of Suntech Holdings
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 Suntech Holdings
Strengths Suntech Power Holdings (A): the Pre-IPO Years | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Suntech Holdings in Suntech Power Holdings (A): the Pre-IPO Years Harvard Business Review case study are -
Successful track record of launching new products
– Suntech Holdings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Suntech Holdings 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.
Cross disciplinary teams
– Horizontal connected teams at the Suntech Holdings 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
- Suntech Holdings 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 Suntech Holdings is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Suntech Power Holdings (A): the Pre-IPO Years Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Suntech Holdings 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 George Foster, Antonio Davila, Ning Jia 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 Suntech Holdings 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.
Innovation driven organization
– Suntech Holdings is one of the most innovative firm in sector. Manager in Suntech Power Holdings (A): the Pre-IPO Years Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Suntech Holdings has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Suntech Power Holdings (A): the Pre-IPO Years 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.
Ability to lead change in Global Business field
– Suntech Holdings 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 Suntech Holdings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Suntech Holdings in the sector have low bargaining power. Suntech Power Holdings (A): the Pre-IPO Years has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Suntech Holdings to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Suntech Holdings 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 Suntech Power Holdings (A): the Pre-IPO Years HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Suntech Holdings has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Suntech Holdings to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Suntech Holdings in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Suntech Power Holdings (A): the Pre-IPO Years | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Suntech Power Holdings (A): the Pre-IPO Years are -
Need for greater diversity
– Suntech Holdings 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Suntech Holdings 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.
Slow to strategic competitive environment developments
– As Suntech Power Holdings (A): the Pre-IPO Years HBR case study mentions - Suntech Holdings 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 operating costs
– Compare to the competitors, firm in the HBR case study Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Holdings 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Suntech Holdings 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.
Lack of clear differentiation of Suntech Holdings products
– To increase the profitability and margins on the products, Suntech Holdings needs to provide more differentiated products than what it is currently offering in the marketplace.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Suntech Power Holdings (A): the Pre-IPO Years, is just above the industry average. Suntech Holdings 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Suntech Power Holdings (A): the Pre-IPO Years HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Suntech Holdings has relatively successful track record of launching new products.
High cash cycle compare to competitors
Suntech Holdings 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Suntech Holdings is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Suntech Power Holdings (A): the Pre-IPO Years can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Suntech Holdings supply chain. Even after few cautionary changes mentioned in the HBR case study - Suntech Power Holdings (A): the Pre-IPO Years, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Suntech Holdings vulnerable to further global disruptions in South East Asia.
Opportunities Suntech Power Holdings (A): the Pre-IPO Years | 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 Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Holdings 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Suntech Holdings 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, Suntech Power Holdings (A): the Pre-IPO Years, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Suntech Holdings to increase its market reach. Suntech Holdings 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.
Buying journey improvements
– Suntech Holdings can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Suntech Power Holdings (A): the Pre-IPO Years 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Suntech Holdings is facing challenges because of the dominance of functional experts in the organization. Suntech Power Holdings (A): the Pre-IPO Years 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Suntech Holdings 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Suntech Holdings 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Suntech Holdings 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 Suntech Holdings to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Suntech Holdings 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.
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. Suntech Holdings can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Suntech Holdings 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Suntech Holdings can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Suntech Holdings 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 Suntech Power Holdings (A): the Pre-IPO Years External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Suntech Power Holdings (A): the Pre-IPO Years are -
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 Suntech Holdings.
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. Suntech Holdings can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Suntech Holdings business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Suntech Holdings 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. Suntech Holdings can take advantage of this fund but it will also bring new competitors in the Global Business 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 Suntech Holdings in the Global Business sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Suntech Holdings 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.
Shortening product life cycle
– it is one of the major threat that Suntech Holdings is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Suntech Holdings 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.
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.
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. Suntech Holdings 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.
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. Suntech Holdings needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Suntech Power Holdings (A): the Pre-IPO Years, Suntech Holdings 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 .
Regulatory challenges
– Suntech Holdings 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.
Weighted SWOT Analysis of Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Holdings needs to make to build a sustainable competitive advantage.