PetroChina: International Corporate Governance with Chinese Characteristics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of PetroChina: International Corporate Governance with Chinese Characteristics
PetroChina, the largest oil and gas company in China, was made a showcase for sound corporate governance in China's state-owned enterprises (SOEs). Its initial public offering (IPO) was part of the government's plan to lay the groundwork for other large capital-starved SOEs on the global capital market. In spite of the restructuring efforts, some analysts felt that the company was not yet close to where it needed to be in terms of international governance standards. In analyzing China's political and economic background and PetroChina's governance model, this case demonstrates that the corporate governance system in China offers limited protection for minority shareholders.
Swot Analysis of "PetroChina: International Corporate Governance with Chinese Characteristics" written by John Child, Sang Xu, Mary Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Governance Petrochina facing as an external strategic factors. Some of the topics covered in PetroChina: International Corporate Governance with Chinese Characteristics case study are - Strategic Management Strategies, Government and Global Business.
Some of the macro environment factors that can be used to understand the PetroChina: International Corporate Governance with Chinese Characteristics casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, geopolitical disruptions, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic ,
central banks are concerned over increasing inflation, wage bills are increasing, etc
Introduction to SWOT Analysis of PetroChina: International Corporate Governance with Chinese Characteristics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PetroChina: International Corporate Governance with Chinese Characteristics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Governance Petrochina, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Governance Petrochina 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 PetroChina: International Corporate Governance with Chinese Characteristics can be done for the following purposes –
1. Strategic planning using facts provided in PetroChina: International Corporate Governance with Chinese Characteristics case study
2. Improving business portfolio management of Governance Petrochina
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 Governance Petrochina
Strengths PetroChina: International Corporate Governance with Chinese Characteristics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Governance Petrochina in PetroChina: International Corporate Governance with Chinese Characteristics Harvard Business Review case study are -
High brand equity
– Governance Petrochina has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Governance Petrochina to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Governance Petrochina 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 Governance Petrochina is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PetroChina: International Corporate Governance with Chinese Characteristics Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Governance Petrochina 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 Governance Petrochina in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Governance Petrochina 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 PetroChina: International Corporate Governance with Chinese Characteristics HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Governance Petrochina 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 PetroChina: International Corporate Governance with Chinese Characteristics - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Governance Petrochina has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Governance Petrochina 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.
Diverse revenue streams
– Governance Petrochina is present in almost all the verticals within the industry. This has provided firm in PetroChina: International Corporate Governance with Chinese Characteristics 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.
Operational resilience
– The operational resilience strategy in the PetroChina: International Corporate Governance with Chinese Characteristics 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Governance Petrochina digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Governance Petrochina 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.
Ability to recruit top talent
– Governance Petrochina is one of the leading recruiters in the industry. Managers in the PetroChina: International Corporate Governance with Chinese Characteristics are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Governance Petrochina 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.
Low bargaining power of suppliers
– Suppliers of Governance Petrochina in the sector have low bargaining power. PetroChina: International Corporate Governance with Chinese Characteristics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Governance Petrochina to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses PetroChina: International Corporate Governance with Chinese Characteristics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PetroChina: International Corporate Governance with Chinese Characteristics are -
Need for greater diversity
– Governance Petrochina 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.
Low market penetration in new markets
– Outside its home market of Governance Petrochina, firm in the HBR case study PetroChina: International Corporate Governance with Chinese Characteristics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Governance Petrochina 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the PetroChina: International Corporate Governance with Chinese Characteristics 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 Governance Petrochina has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PetroChina: International Corporate Governance with Chinese Characteristics, is just above the industry average. Governance Petrochina 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PetroChina: International Corporate Governance with Chinese Characteristics, in the dynamic environment Governance Petrochina has struggled to respond to the nimble upstart competition. Governance Petrochina has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Governance Petrochina 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.
High bargaining power of channel partners
– Because of the regulatory requirements, John Child, Sang Xu, Mary Ho suggests that, Governance Petrochina 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.
No frontier risks strategy
– After analyzing the HBR case study PetroChina: International Corporate Governance with Chinese Characteristics, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PetroChina: International Corporate Governance with Chinese Characteristics, it seems that the employees of Governance Petrochina don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study PetroChina: International Corporate Governance with Chinese Characteristics 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 PetroChina: International Corporate Governance with Chinese Characteristics can leverage the sales team experience to cultivate customer relationships as Governance Petrochina is planning to shift buying processes online.
Opportunities PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance with Chinese Characteristics are -
Leveraging digital technologies
– Governance Petrochina 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.
Learning at scale
– Online learning technologies has now opened space for Governance Petrochina 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Governance Petrochina 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 Governance Petrochina 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 Governance Petrochina to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Governance Petrochina can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Governance Petrochina has opened avenues for new revenue streams for the organization in the industry. This can help Governance Petrochina to build a more holistic ecosystem as suggested in the PetroChina: International Corporate Governance with Chinese Characteristics case study. Governance Petrochina can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Governance Petrochina 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 PetroChina: International Corporate Governance with Chinese Characteristics - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Governance Petrochina to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Governance Petrochina is facing challenges because of the dominance of functional experts in the organization. PetroChina: International Corporate Governance 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.
Manufacturing automation
– Governance Petrochina 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.
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 Governance Petrochina 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.
Better consumer reach
– The expansion of the 5G network will help Governance Petrochina to increase its market reach. Governance Petrochina 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.
Loyalty marketing
– Governance Petrochina 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.
Building a culture of innovation
– managers at Governance Petrochina 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.
Threats PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance with Chinese Characteristics are -
Consumer confidence and its impact on Governance Petrochina 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.
Shortening product life cycle
– it is one of the major threat that Governance Petrochina is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Governance Petrochina 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. Governance Petrochina can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Governance Petrochina 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 PetroChina: International Corporate Governance with Chinese Characteristics .
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. Governance Petrochina needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Governance Petrochina with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology acceleration in Forth Industrial Revolution
– Governance Petrochina has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Governance Petrochina needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Governance Petrochina 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.
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. Governance Petrochina 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.
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 Governance Petrochina business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Governance Petrochina 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.
Weighted SWOT Analysis of PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance 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 PetroChina: International Corporate Governance 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 Governance Petrochina needs to make to build a sustainable competitive advantage.
