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 - – increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, increasing energy prices, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, technology disruption, 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 -
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.
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.
Ability to recruit top talent
– Suntech Holdings is one of the leading recruiters in the industry. Managers in the Suntech Power Holdings (A): the Pre-IPO Years are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Global Business industry
– Suntech Power Holdings (A): the Pre-IPO Years firm has clearly differentiated products in the market place. This has enabled Suntech Holdings to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Suntech Holdings to invest into research and development (R&D) and innovation.
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.
Organizational Resilience of Suntech Holdings
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Suntech Holdings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Suntech Holdings digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Suntech Holdings 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.
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.
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.
Effective Research and Development (R&D)
– Suntech Holdings 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 Suntech Power Holdings (A): the Pre-IPO Years - 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
– Suntech Holdings is present in almost all the verticals within the industry. This has provided firm in Suntech Power Holdings (A): the Pre-IPO Years 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 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 -
High bargaining power of channel partners
– Because of the regulatory requirements, George Foster, Antonio Davila, Ning Jia suggests that, Suntech Holdings 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 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.
Products dominated business model
– Even though Suntech Holdings 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 - Suntech Power Holdings (A): the Pre-IPO Years should strive to include more intangible value offerings along with its core products and services.
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.
Interest costs
– Compare to the competition, Suntech Holdings 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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Suntech Holdings is dominated by functional specialists. It is not different from other players in the Global Business segment. Suntech Holdings needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Suntech Holdings to focus more on services rather than just following the product oriented approach.
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.
Aligning sales with marketing
– It come across in the case study Suntech Power Holdings (A): the Pre-IPO Years 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 Suntech Power Holdings (A): the Pre-IPO Years can leverage the sales team experience to cultivate customer relationships as Suntech Holdings is planning to shift buying processes online.
Slow decision making process
– As mentioned earlier in the report, Suntech Holdings 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. Suntech Holdings 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.
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 -
Leveraging digital technologies
– Suntech Holdings 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.
Creating value in data economy
– The success of analytics program of Suntech Holdings has opened avenues for new revenue streams for the organization in the industry. This can help Suntech Holdings to build a more holistic ecosystem as suggested in the Suntech Power Holdings (A): the Pre-IPO Years case study. Suntech Holdings can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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.
Building a culture of innovation
– managers at Suntech Holdings 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.
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. Suntech Holdings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, 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.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Suntech Holdings can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Suntech Holdings can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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 Suntech Holdings in the consumer business. Now Suntech Holdings can target international markets with far fewer capital restrictions requirements than the existing system.
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 -
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.
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.
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.
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.
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 .
Consumer confidence and its impact on Suntech Holdings 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Suntech Holdings 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 Suntech Power Holdings (A): the Pre-IPO Years .
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.
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.
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.
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.
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.
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.
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.
