Case Study Description of Sino-Ocean Land: Responding to Change
In 2010, Sino-Ocean Land Holdings Limited was a highly successful, large real estate developer based in Beijing, China. Sino-Ocean Land had three main business segments-property development, property investment/management, and other real estate related businesses. From 2005-2009, the company focused on becoming a leading regional developer with a multiproduct offering. That strategy was successful, riding the wave of spectacular growth in the Chinese real estate sector from 1998-2008, following a loosening of Chinese state real estate regulations. Although Sino-Ocean Land had gone public in 2007, its key shareholders were still state owned enterprises. The state maintained significant influence on the company and the real estate market, in general. The case explores the interactions between the company and the state, examining land acquisition, financing, and corporate governance. Following the global financial crisis of 2008, Sino-Ocean Land must devise a new five year strategic plan. CEO Li Ming must grapple with the changing market dynamics and regulatory environment, to decide the best course for the company. Key issues that he must determine are: whether the focus should be local or national; whether to continue with multiproduct offerings, or specialize in one product type; and whether to continue to pursue primarily development, or to shift to property investment and holding.
Authors :: Nicolas P. Retsinas, Jeffrey Hu, Runjiao Xu
Swot Analysis of "Sino-Ocean Land: Responding to Change" written by Nicolas P. Retsinas, Jeffrey Hu, Runjiao Xu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sino Ocean facing as an external strategic factors. Some of the topics covered in Sino-Ocean Land: Responding to Change case study are - Strategic Management Strategies, Business law, Change management, Entrepreneurship, Financial management, Marketing, Policy, Risk management, Strategic planning, Strategy execution and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Sino-Ocean Land: Responding to Change casestudy better are - – central banks are concerned over increasing inflation, increasing commodity prices, technology disruption, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs,
increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Sino-Ocean Land: Responding to Change
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Sino-Ocean Land: Responding to Change case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sino Ocean, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sino Ocean 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 Sino-Ocean Land: Responding to Change can be done for the following purposes –
1. Strategic planning using facts provided in Sino-Ocean Land: Responding to Change case study
2. Improving business portfolio management of Sino Ocean
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sino Ocean
Strengths Sino-Ocean Land: Responding to Change | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sino Ocean in Sino-Ocean Land: Responding to Change Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Sino Ocean 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Sino-Ocean Land: Responding to Change firm has clearly differentiated products in the market place. This has enabled Sino Ocean to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Sino Ocean to invest into research and development (R&D) and innovation.
Innovation driven organization
– Sino Ocean is one of the most innovative firm in sector. Manager in Sino-Ocean Land: Responding to Change Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Sino Ocean 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 Sino-Ocean Land: Responding to Change HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Sino Ocean
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sino Ocean does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Sino Ocean 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.
Superior customer experience
– The customer experience strategy of Sino Ocean in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Sino Ocean has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sino Ocean to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Sino Ocean is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Sino Ocean digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sino Ocean 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.
Effective Research and Development (R&D)
– Sino Ocean 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 Sino-Ocean Land: Responding to Change - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Sino Ocean 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 Nicolas P. Retsinas, Jeffrey Hu, Runjiao Xu 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.
Weaknesses Sino-Ocean Land: Responding to Change | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sino-Ocean Land: Responding to Change are -
Need for greater diversity
– Sino Ocean 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 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 Sino Ocean supply chain. Even after few cautionary changes mentioned in the HBR case study - Sino-Ocean Land: Responding to Change, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sino Ocean vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Sino-Ocean Land: Responding to Change, is just above the industry average. Sino Ocean 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 cash cycle compare to competitors
Sino Ocean 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.
Slow decision making process
– As mentioned earlier in the report, Sino Ocean 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. Sino Ocean 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Sino-Ocean Land: Responding to Change, in the dynamic environment Sino Ocean has struggled to respond to the nimble upstart competition. Sino Ocean 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 Sino Ocean 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.
Lack of clear differentiation of Sino Ocean products
– To increase the profitability and margins on the products, Sino Ocean needs to provide more differentiated products than what it is currently offering in the marketplace.
Workers concerns about automation
– As automation is fast increasing in the segment, Sino Ocean 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.
Products dominated business model
– Even though Sino Ocean 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 - Sino-Ocean Land: Responding to Change should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Nicolas P. Retsinas, Jeffrey Hu, Runjiao Xu suggests that, Sino Ocean 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.
Opportunities Sino-Ocean Land: Responding to Change | 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 Sino-Ocean Land: Responding to Change are -
Developing new processes and practices
– Sino Ocean can develop new processes and procedures in Finance & Accounting 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.
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 Sino Ocean in the consumer business. Now Sino Ocean can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sino Ocean is facing challenges because of the dominance of functional experts in the organization. Sino-Ocean Land: Responding to Change 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.
Building a culture of innovation
– managers at Sino Ocean 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 Finance & Accounting segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sino Ocean 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. Sino Ocean 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.
Learning at scale
– Online learning technologies has now opened space for Sino Ocean 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
– Sino Ocean 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.
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 Sino Ocean 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sino Ocean 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, Sino-Ocean Land: Responding to Change, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sino Ocean in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Sino Ocean has opened avenues for new revenue streams for the organization in the industry. This can help Sino Ocean to build a more holistic ecosystem as suggested in the Sino-Ocean Land: Responding to Change case study. Sino Ocean can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sino Ocean 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.
Loyalty marketing
– Sino Ocean 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.
Threats Sino-Ocean Land: Responding to Change External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Sino-Ocean Land: Responding to Change are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sino Ocean 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 Sino-Ocean Land: Responding to Change .
Consumer confidence and its impact on Sino Ocean 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.
High dependence on third party suppliers
– Sino Ocean 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.
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 Sino Ocean business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Sino Ocean
– 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 Sino Ocean.
Shortening product life cycle
– it is one of the major threat that Sino Ocean is facing in Finance & Accounting 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.
Regulatory challenges
– Sino Ocean needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sino Ocean with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Sino Ocean 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.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sino Ocean in the Finance & Accounting industry. The Finance & Accounting 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.
Environmental challenges
– Sino Ocean 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. Sino Ocean can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Sino-Ocean Land: Responding to Change 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 Sino-Ocean Land: Responding to Change 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 Sino-Ocean Land: Responding to Change 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 Sino-Ocean Land: Responding to Change 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 Sino-Ocean Land: Responding to Change 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 Sino Ocean needs to make to build a sustainable competitive advantage.
