Case Study Description of Shenzhen Filtroil: Finding Balance
Jeremy Leahman, president of Filtroil, Inc., and Albert Randolph, founder of the firm, had partnered with a supplier in China to ramp up the manufacture of their China-based filtration system and start a new zinc alloy venture. They opened a new factory in Dongwan that was a merger between Shenzhen Filtroil and their supplier, Liu Li-whose own factory was on the verge of bankruptcy. Liu would own 10% of the merged factory and Shenzhen Filtroil would own the rest and acquire all of the necessary equipment. The two businesses filter and zinc would operate under the same roof. One year later Leahman was on a plane headed for China to hash out problems with Liu, who had demanded a monthly raise for himself and his wife, a new company car, and an increase in profit sharing. He had also threatened to delay product shipment to the United States if his conditions were left unmet. Qian Kai Nam (Qian) and Shea Kai Young (Thomas), who ran Shenzhen Filtroil and were in on the zinc partnership, believed that Liu's behavior put the entire business relationship at risk. The case reveals options Leahman could take to manage the situation. The case is suitable for use in organizational behavior, human resource management, and strategy classes at the MBA and executive education levels. The material can be used to exemplify the challenges of changing a U.S.-based company into a global competitor.
Swot Analysis of "Shenzhen Filtroil: Finding Balance" written by Lynn Isabella, Gerry Yemen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Filtroil Leahman facing as an external strategic factors. Some of the topics covered in Shenzhen Filtroil: Finding Balance case study are - Strategic Management Strategies, Conflict, Cross-cultural management, Difficult conversations, Leadership and Global Business.
Some of the macro environment factors that can be used to understand the Shenzhen Filtroil: Finding Balance casestudy better are - – supply chains are disrupted by pandemic , increasing transportation and logistics costs, there is backlash against globalization, technology disruption, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices,
increasing commodity prices, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Shenzhen Filtroil: Finding Balance
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shenzhen Filtroil: Finding Balance case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Filtroil Leahman, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Filtroil Leahman 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 Shenzhen Filtroil: Finding Balance can be done for the following purposes –
1. Strategic planning using facts provided in Shenzhen Filtroil: Finding Balance case study
2. Improving business portfolio management of Filtroil Leahman
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 Filtroil Leahman
Strengths Shenzhen Filtroil: Finding Balance | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Filtroil Leahman in Shenzhen Filtroil: Finding Balance Harvard Business Review case study are -
Training and development
– Filtroil Leahman has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Shenzhen Filtroil: Finding Balance 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.
Sustainable margins compare to other players in Global Business industry
– Shenzhen Filtroil: Finding Balance firm has clearly differentiated products in the market place. This has enabled Filtroil Leahman to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Filtroil Leahman to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Filtroil Leahman has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Filtroil Leahman 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.
Effective Research and Development (R&D)
– Filtroil Leahman 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 Shenzhen Filtroil: Finding Balance - 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
– Filtroil Leahman 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 Lynn Isabella, Gerry Yemen 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.
Organizational Resilience of Filtroil Leahman
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Filtroil Leahman does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Filtroil Leahman 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.
Innovation driven organization
– Filtroil Leahman is one of the most innovative firm in sector. Manager in Shenzhen Filtroil: Finding Balance Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Filtroil Leahman 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 Filtroil Leahman is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shenzhen Filtroil: Finding Balance Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Shenzhen Filtroil: Finding Balance 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.
Highly skilled collaborators
– Filtroil Leahman 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 Shenzhen Filtroil: Finding Balance HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Filtroil Leahman in the sector have low bargaining power. Shenzhen Filtroil: Finding Balance has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Filtroil Leahman to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Shenzhen Filtroil: Finding Balance | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shenzhen Filtroil: Finding Balance are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Filtroil Leahman is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Shenzhen Filtroil: Finding Balance can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As Shenzhen Filtroil: Finding Balance HBR case study mentions - Filtroil Leahman 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.
Lack of clear differentiation of Filtroil Leahman products
– To increase the profitability and margins on the products, Filtroil Leahman needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Shenzhen Filtroil: Finding Balance, in the dynamic environment Filtroil Leahman has struggled to respond to the nimble upstart competition. Filtroil Leahman has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shenzhen Filtroil: Finding Balance 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 Filtroil Leahman has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Filtroil Leahman, firm in the HBR case study Shenzhen Filtroil: Finding Balance needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Filtroil Leahman 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Filtroil Leahman 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.
Increasing silos among functional specialists
– The organizational structure of Filtroil Leahman is dominated by functional specialists. It is not different from other players in the Global Business segment. Filtroil Leahman needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Filtroil Leahman to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Filtroil Leahman 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.
No frontier risks strategy
– After analyzing the HBR case study Shenzhen Filtroil: Finding Balance, 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.
Opportunities Shenzhen Filtroil: Finding Balance | 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 Shenzhen Filtroil: Finding Balance are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Filtroil Leahman can use these opportunities to build new business models that can help the communities that Filtroil Leahman operates in. Secondly it can use opportunities from government spending in Global Business sector.
Loyalty marketing
– Filtroil Leahman 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
– Filtroil Leahman 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.
Manufacturing automation
– Filtroil Leahman 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.
Using analytics as competitive advantage
– Filtroil Leahman 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 Shenzhen Filtroil: Finding Balance - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Filtroil Leahman to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Filtroil Leahman 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Filtroil Leahman 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 Filtroil Leahman to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Filtroil Leahman 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.
Buying journey improvements
– Filtroil Leahman can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shenzhen Filtroil: Finding Balance suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Filtroil Leahman can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Filtroil Leahman in the consumer business. Now Filtroil Leahman can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Filtroil Leahman 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.
Creating value in data economy
– The success of analytics program of Filtroil Leahman has opened avenues for new revenue streams for the organization in the industry. This can help Filtroil Leahman to build a more holistic ecosystem as suggested in the Shenzhen Filtroil: Finding Balance case study. Filtroil Leahman can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Shenzhen Filtroil: Finding Balance External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shenzhen Filtroil: Finding Balance are -
Consumer confidence and its impact on Filtroil Leahman 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.
Regulatory challenges
– Filtroil Leahman 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 Global Business industry regulations.
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.
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 Filtroil Leahman business can come under increasing regulations regarding data privacy, data security, etc.
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 Filtroil Leahman.
High dependence on third party suppliers
– Filtroil Leahman 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.
Environmental challenges
– Filtroil Leahman 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. Filtroil Leahman 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, Filtroil Leahman 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 Shenzhen Filtroil: Finding Balance .
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. Filtroil Leahman 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
– Filtroil Leahman 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.
Increasing wage structure of Filtroil Leahman
– 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 Filtroil Leahman.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shenzhen Filtroil: Finding Balance, Filtroil Leahman 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 .
Weighted SWOT Analysis of Shenzhen Filtroil: Finding Balance 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 Shenzhen Filtroil: Finding Balance 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 Shenzhen Filtroil: Finding Balance 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 Shenzhen Filtroil: Finding Balance 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 Shenzhen Filtroil: Finding Balance 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 Filtroil Leahman needs to make to build a sustainable competitive advantage.
