China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition
The Chinese operations of Alcatel, a global communications solution provider based in France, were faced with strong local competition and a difficult market. It remained unclear how Alcatel would be able to recover growth in the Chinese market. Initiatives were underway to increase focus on services over equipment, to increase Chinese research and development presence, and to merge with U.S. competitor Lucent.
Authors :: Laura Alfaro, Rafael Di Tella, Ingrid Vogel
Swot Analysis of "China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition" written by Laura Alfaro, Rafael Di Tella, Ingrid Vogel includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Alcatel Float facing as an external strategic factors. Some of the topics covered in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition case study are - Strategic Management Strategies, Currency, Economics and Global Business.
Some of the macro environment factors that can be used to understand the China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition casestudy better are - – there is backlash against globalization, increasing commodity prices, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions, wage bills are increasing, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Alcatel Float, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition can be done for the following purposes –
1. Strategic planning using facts provided in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition case study
2. Improving business portfolio management of Alcatel Float
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 Alcatel Float
Strengths China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Alcatel Float in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition Harvard Business Review case study are -
Effective Research and Development (R&D)
– Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Alcatel Float 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 Alcatel Float in the sector have low bargaining power. China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Alcatel Float to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Alcatel Float 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 Laura Alfaro, Rafael Di Tella, Ingrid Vogel 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.
Training and development
– Alcatel Float has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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.
Innovation driven organization
– Alcatel Float is one of the most innovative firm in sector. Manager in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Diverse revenue streams
– Alcatel Float is present in almost all the verticals within the industry. This has provided firm in China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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.
Highly skilled collaborators
– Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Alcatel Float digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Alcatel Float 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 lead change in Global Business field
– Alcatel Float 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 Alcatel Float in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Alcatel Float in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Global Business industry
– China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition firm has clearly differentiated products in the market place. This has enabled Alcatel Float to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Alcatel Float to invest into research and development (R&D) and innovation.
Weaknesses China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition are -
Interest costs
– Compare to the competition, Alcatel Float 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.
Need for greater diversity
– Alcatel Float 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 Alcatel Float has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Alcatel Float, firm in the HBR case study China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Alcatel Float supply chain. Even after few cautionary changes mentioned in the HBR case study - China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Alcatel Float vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition can leverage the sales team experience to cultivate customer relationships as Alcatel Float is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition, is just above the industry average. Alcatel Float 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.
Slow to strategic competitive environment developments
– As China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition HBR case study mentions - Alcatel Float 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Alcatel Float is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Alcatel Float needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Opportunities China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition | 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition are -
Using analytics as competitive advantage
– Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Alcatel Float to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Alcatel Float has opened avenues for new revenue streams for the organization in the industry. This can help Alcatel Float to build a more holistic ecosystem as suggested in the China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition case study. Alcatel Float 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 Alcatel Float to increase its market reach. Alcatel Float 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 Alcatel Float can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Manufacturing automation
– Alcatel Float 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Alcatel Float is facing challenges because of the dominance of functional experts in the organization. China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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.
Developing new processes and practices
– Alcatel Float 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Alcatel Float 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, China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Alcatel Float 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.
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. Alcatel Float can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Alcatel Float 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. Alcatel Float 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Alcatel Float 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.
Learning at scale
– Online learning technologies has now opened space for Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition are -
Shortening product life cycle
– it is one of the major threat that Alcatel Float is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Alcatel Float can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Alcatel Float with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition, Alcatel Float 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 .
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 Alcatel Float in the Global Business sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Alcatel Float 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.
Stagnating economy with rate increase
– Alcatel Float 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.
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. Alcatel Float 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 Alcatel Float business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Alcatel Float 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition .
Increasing wage structure of Alcatel Float
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Alcatel Float.
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.
Consumer confidence and its impact on Alcatel Float 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.
Weighted SWOT Analysis of China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 China: To Float or Not to Float? (F): Alcatel and Strong Chinese Competition 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 Alcatel Float needs to make to build a sustainable competitive advantage.