The "Chongqing Model" and the Future of China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of The "Chongqing Model" and the Future of China
Since opening to the global economy in 1979, but especially since entering the WTO in 2001, China's economy grew at rates around 10% annually by attracting FDI and promoting exports. After the financial crisis that began in 2008 and depressed demand in the United States and Europe, China's growth began to slow, and vulnerabilities in its economy came to light. It became clear to many in China that the growth strategy that got China from 1978 to the present was unsustainable and that the country needed a new strategy to resolve the country's regional inequalities, stimulate domestic consumption, and create growth less vulnerable to global contractions in demand. At exactly this time, between 2007 and 2012, the provincial municipality of Chongqing in China's mountainous southwest became the fastest growing city in China with GDP growth averaging over 15%. Chongqing's growth was the result of a suite of economic and social policies that had been dubbed the "Chongqing Model," a controversial bundle of reforms that promised public and private sector growth with benefits more equitably shared by all citizens. Yet critics found the model politically suspect and over reliant on state-owned enterprises and debt-driven investment. When the city's preeminent leader was publicly fired following a sensational murder scandal, the region's new leaders-and indeed China's new leaders-had to weigh in on the "Chongqing Model." Would it signal a new path to prosperity for post-WTO China?
Swot Analysis of "The "Chongqing Model" and the Future of China" written by Meg Rithmire includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Chongqing China's facing as an external strategic factors. Some of the topics covered in The "Chongqing Model" and the Future of China case study are - Strategic Management Strategies, Economy, Emerging markets, Government, Marketing and Global Business.
Some of the macro environment factors that can be used to understand the The "Chongqing Model" and the Future of China casestudy better are - – increasing transportation and logistics costs, geopolitical disruptions, increasing energy prices, central banks are concerned over increasing inflation, technology disruption, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of The "Chongqing Model" and the Future of China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The "Chongqing Model" and the Future of China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Chongqing China's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Chongqing China's 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 The "Chongqing Model" and the Future of China can be done for the following purposes –
1. Strategic planning using facts provided in The "Chongqing Model" and the Future of China case study
2. Improving business portfolio management of Chongqing China's
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 Chongqing China's
Strengths The "Chongqing Model" and the Future of China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Chongqing China's in The "Chongqing Model" and the Future of China Harvard Business Review case study are -
Ability to lead change in Global Business field
– Chongqing China's 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 Chongqing China's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Low bargaining power of suppliers
– Suppliers of Chongqing China's in the sector have low bargaining power. The "Chongqing Model" and the Future of China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Chongqing China's to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Chongqing China's 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.
Highly skilled collaborators
– Chongqing China's 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 The "Chongqing Model" and the Future of China HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Chongqing China's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Chongqing China's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Chongqing China's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Chongqing China's 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.
Innovation driven organization
– Chongqing China's is one of the most innovative firm in sector. Manager in The "Chongqing Model" and the Future of China Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Chongqing China's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Chongqing China's 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.
Diverse revenue streams
– Chongqing China's is present in almost all the verticals within the industry. This has provided firm in The "Chongqing Model" and the Future of China 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.
Analytics focus
– Chongqing China's 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 Meg Rithmire 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.
Operational resilience
– The operational resilience strategy in the The "Chongqing Model" and the Future of China 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.
High switching costs
– The high switching costs that Chongqing China's 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.
Weaknesses The "Chongqing Model" and the Future of China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The "Chongqing Model" and the Future of China are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The "Chongqing Model" and the Future of China, in the dynamic environment Chongqing China's has struggled to respond to the nimble upstart competition. Chongqing China's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Chongqing China's is dominated by functional specialists. It is not different from other players in the Global Business segment. Chongqing China's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Chongqing China's to focus more on services rather than just following the product oriented approach.
Interest costs
– Compare to the competition, Chongqing China's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Chongqing China's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The "Chongqing Model" and the Future of China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Chongqing China's 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.
Skills based hiring
– The stress on hiring functional specialists at Chongqing China's 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 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 Chongqing China's supply chain. Even after few cautionary changes mentioned in the HBR case study - The "Chongqing Model" and the Future of China, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Chongqing China's vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The "Chongqing Model" and the Future of China 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 Chongqing China's has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Chongqing China's 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. Chongqing China's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The "Chongqing Model" and the Future of China, is just above the industry average. Chongqing China's 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 operating costs
– Compare to the competitors, firm in the HBR case study The "Chongqing Model" and the Future of China 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 Chongqing China's 's lucrative customers.
Opportunities The "Chongqing Model" and the Future of China | 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 The "Chongqing Model" and the Future of China are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Chongqing China's 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.
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. Chongqing China's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Chongqing China's 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 The "Chongqing Model" and the Future of China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Chongqing China's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Chongqing China's in the consumer business. Now Chongqing China's can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Chongqing China's can use these opportunities to build new business models that can help the communities that Chongqing China's operates in. Secondly it can use opportunities from government spending in Global Business sector.
Loyalty marketing
– Chongqing China's 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.
Developing new processes and practices
– Chongqing China's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Chongqing China's 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.
Learning at scale
– Online learning technologies has now opened space for Chongqing China's 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.
Leveraging digital technologies
– Chongqing China's 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.
Building a culture of innovation
– managers at Chongqing China's 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Chongqing China's 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, The "Chongqing Model" and the Future of China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Chongqing China's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats The "Chongqing Model" and the Future of China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The "Chongqing Model" and the Future of China are -
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.
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 Chongqing China's.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The "Chongqing Model" and the Future of China, Chongqing China's 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Chongqing China's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Chongqing China's in the Global Business sector and impact the bottomline of the organization.
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.
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. Chongqing China's needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Chongqing China's 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.
Environmental challenges
– Chongqing China's 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. Chongqing China's 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, Chongqing China's 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 The "Chongqing Model" and the Future of China .
Technology acceleration in Forth Industrial Revolution
– Chongqing China's has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Chongqing China's 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
– Chongqing China's 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.
Shortening product life cycle
– it is one of the major threat that Chongqing China's 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 The "Chongqing Model" and the Future of China 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 The "Chongqing Model" and the Future of China 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 The "Chongqing Model" and the Future of China 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 The "Chongqing Model" and the Future of China 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 The "Chongqing Model" and the Future of China 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 Chongqing China's needs to make to build a sustainable competitive advantage.