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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization,
wage bills are increasing, increasing government debt because of Covid-19 spendings, 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 -
Ability to recruit top talent
– Filtroil Leahman is one of the leading recruiters in the industry. Managers in the Shenzhen Filtroil: Finding Balance are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
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.
High switching costs
– The high switching costs that Filtroil Leahman 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.
Diverse revenue streams
– Filtroil Leahman is present in almost all the verticals within the industry. This has provided firm in Shenzhen Filtroil: Finding Balance 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.
Superior customer experience
– The customer experience strategy of Filtroil Leahman in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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.
Ability to lead change in Global Business field
– Filtroil Leahman 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 Filtroil Leahman in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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 -
High operating costs
– Compare to the competitors, firm in the HBR case study Shenzhen Filtroil: Finding Balance 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 Filtroil Leahman 's lucrative customers.
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.
Products dominated business model
– Even though Filtroil Leahman 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 - Shenzhen Filtroil: Finding Balance should strive to include more intangible value offerings along with its core products and services.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shenzhen Filtroil: Finding Balance, it seems that the employees of Filtroil Leahman don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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.
High cash cycle compare to competitors
Filtroil Leahman 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shenzhen Filtroil: Finding Balance, is just above the industry average. Filtroil Leahman 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Lynn Isabella, Gerry Yemen suggests that, Filtroil Leahman 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.
Interest costs
– Compare to the competition, Filtroil Leahman 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.
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 -
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 Filtroil Leahman 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, Filtroil Leahman 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, Shenzhen Filtroil: Finding Balance, 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. Filtroil Leahman can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Filtroil Leahman is facing challenges because of the dominance of functional experts in the organization. Shenzhen Filtroil: Finding Balance 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.
Learning at scale
– Online learning technologies has now opened space for Filtroil Leahman 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.
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. Filtroil Leahman can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
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.
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.
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.
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.
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 -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Filtroil Leahman with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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. Filtroil Leahman can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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
– 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.
Shortening product life cycle
– it is one of the major threat that Filtroil Leahman is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Filtroil Leahman has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Filtroil Leahman 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.
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 .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Filtroil Leahman 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
– 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 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 .
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.