East of Africa (and West of China): Chinese Business in Africa SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of East of Africa (and West of China): Chinese Business in Africa
Trade between China and Africa was estimated to have quadrupled between 2000 and 2008, with China becoming Africa's third-largest trading partner and second-largest export destination. Trade relationships between China and Africa were mainly concentrated in three areas: primary resources from Africa to China; cheap manufactured goods and FDI from China to Africa, including new investment opportunities such as land acquisition; and outsourcing of farm production, particularly of staples and biofuels. It was estimated that by 2009, 1 million Chinese farmers were working in Africa. Africa had large extensions of fertile land available, although the lack of infrastructure (not only for farming activities themselves but also for transport) and political factors such as land ownership, corruption and governance were serious issues. This case discusses China's growing businesses with Africa and the risks that these can entail, particularly for Chinese state-owned enterprises.
Swot Analysis of "East of Africa (and West of China): Chinese Business in Africa" written by Marcus Schuetz, Carola Ramon-Berjano includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Africa China facing as an external strategic factors. Some of the topics covered in East of Africa (and West of China): Chinese Business in Africa case study are - Strategic Management Strategies, National competitiveness, Operations management and Global Business.
Some of the macro environment factors that can be used to understand the East of Africa (and West of China): Chinese Business in Africa casestudy better are - – geopolitical disruptions, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, technology disruption, increasing commodity prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of East of Africa (and West of China): Chinese Business in Africa
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in East of Africa (and West of China): Chinese Business in Africa case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Africa China, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Africa China 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 East of Africa (and West of China): Chinese Business in Africa can be done for the following purposes –
1. Strategic planning using facts provided in East of Africa (and West of China): Chinese Business in Africa case study
2. Improving business portfolio management of Africa China
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 Africa China
Strengths East of Africa (and West of China): Chinese Business in Africa | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Africa China in East of Africa (and West of China): Chinese Business in Africa Harvard Business Review case study are -
Effective Research and Development (R&D)
– Africa China 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 East of Africa (and West of China): Chinese Business in Africa - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Africa China
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Africa China does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Africa China 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.
High switching costs
– The high switching costs that Africa China 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.
Diverse revenue streams
– Africa China is present in almost all the verticals within the industry. This has provided firm in East of Africa (and West of China): Chinese Business in Africa 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.
Low bargaining power of suppliers
– Suppliers of Africa China in the sector have low bargaining power. East of Africa (and West of China): Chinese Business in Africa has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Africa China to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Africa China is one of the most innovative firm in sector. Manager in East of Africa (and West of China): Chinese Business in Africa Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Global Business industry
– East of Africa (and West of China): Chinese Business in Africa firm has clearly differentiated products in the market place. This has enabled Africa China to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Africa China to invest into research and development (R&D) and innovation.
Training and development
– Africa China has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in East of Africa (and West of China): Chinese Business in Africa Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Operational resilience
– The operational resilience strategy in the East of Africa (and West of China): Chinese Business in Africa 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.
Strong track record of project management
– Africa China is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Highly skilled collaborators
– Africa China 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 East of Africa (and West of China): Chinese Business in Africa HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses East of Africa (and West of China): Chinese Business in Africa | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of East of Africa (and West of China): Chinese Business in Africa are -
Need for greater diversity
– Africa China 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 East of Africa (and West of China): Chinese Business in Africa 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 Africa China 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Africa China 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study East of Africa (and West of China): Chinese Business in Africa, is just above the industry average. Africa China 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 bargaining power of channel partners
– Because of the regulatory requirements, Marcus Schuetz, Carola Ramon-Berjano suggests that, Africa China 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.
Capital Spending Reduction
– Even during the low interest decade, Africa China 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.
Slow to strategic competitive environment developments
– As East of Africa (and West of China): Chinese Business in Africa HBR case study mentions - Africa China 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.
Products dominated business model
– Even though Africa China 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 - East of Africa (and West of China): Chinese Business in Africa should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Africa China 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.
No frontier risks strategy
– After analyzing the HBR case study East of Africa (and West of China): Chinese Business in Africa, it seems that company is thinking about the frontier risks that can impact Global Business 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.
Increasing silos among functional specialists
– The organizational structure of Africa China is dominated by functional specialists. It is not different from other players in the Global Business segment. Africa China needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Africa China to focus more on services rather than just following the product oriented approach.
Opportunities East of Africa (and West of China): Chinese Business in Africa | 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 East of Africa (and West of China): Chinese Business in Africa are -
Developing new processes and practices
– Africa China 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.
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 Africa China 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Africa China 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.
Buying journey improvements
– Africa China can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. East of Africa (and West of China): Chinese Business in Africa 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.
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 Africa China in the consumer business. Now Africa China can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Africa China 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 Africa China has opened avenues for new revenue streams for the organization in the industry. This can help Africa China to build a more holistic ecosystem as suggested in the East of Africa (and West of China): Chinese Business in Africa case study. Africa China 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 Africa China to increase its market reach. Africa China 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Africa China can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Africa China 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 East of Africa (and West of China): Chinese Business in Africa - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Africa China to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Africa China 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, East of Africa (and West of China): Chinese Business in Africa, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Africa China can use these opportunities to build new business models that can help the communities that Africa China operates in. Secondly it can use opportunities from government spending in Global Business sector.
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. Africa China can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats East of Africa (and West of China): Chinese Business in Africa External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study East of Africa (and West of China): Chinese Business in Africa are -
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 Africa China 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 East of Africa (and West of China): Chinese Business in Africa, Africa China 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 .
High dependence on third party suppliers
– Africa China 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.
Stagnating economy with rate increase
– Africa China 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Africa China 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.
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 Africa China business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Africa China is facing in Global Business 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.
Environmental challenges
– Africa China 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. Africa China can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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.
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. Africa China 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Africa China with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Africa China.
Weighted SWOT Analysis of East of Africa (and West of China): Chinese Business in Africa 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 East of Africa (and West of China): Chinese Business in Africa 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 East of Africa (and West of China): Chinese Business in Africa 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 East of Africa (and West of China): Chinese Business in Africa 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 East of Africa (and West of China): Chinese Business in Africa 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 Africa China needs to make to build a sustainable competitive advantage.