Meli Marine, a container shipping company, is facing an important strategic decision after an interesting acquisition opportunity presents itself. Founded in 1974 by the Chang Family, the Singapore-based company has carved out a niche in the intra-Asia transport market. After years of success, eroding business conditions caused a financial crisis and a new CEO, David Tian, was brought in. Tian created a successful strategic change effort that resulted in a more stable but slower-growth company. More than ten years later, Meli Marine has a rare and affordable opportunity to acquire the larger shipping vessels it needs to move into a global market. Tian and his board must decide to whether to expand the franchise into Asian-North American shipping lanes, as key competitors have done, or continue with its current conservative business model.
Swot Analysis of "Meli Marine" written by Richard G. Hamermesh, Sunru Yong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Meli Tian facing as an external strategic factors. Some of the topics covered in Meli Marine case study are - Strategic Management Strategies, Competitive strategy, Manufacturing, Supply chain and Global Business.
Some of the macro environment factors that can be used to understand the Meli Marine casestudy better are - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
increasing commodity prices, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Meli Marine case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Meli Tian, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Meli Tian 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 Meli Marine can be done for the following purposes –
1. Strategic planning using facts provided in Meli Marine case study
2. Improving business portfolio management of Meli Tian
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 Meli Tian
Strengths Meli Marine | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Meli Tian in Meli Marine Harvard Business Review case study are -
Ability to lead change in Global Business field
– Meli Tian 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 Meli Tian in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Meli Tian has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Meli Marine 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.
High brand equity
– Meli Tian has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Meli Tian to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Meli Tian is one of the leading recruiters in the industry. Managers in the Meli Marine are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Meli Marine 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.
Learning organization
- Meli Tian 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 Meli Tian is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Meli Marine Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Meli Tian
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Meli Tian does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Meli Tian in the sector have low bargaining power. Meli Marine has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Meli Tian to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Meli Tian 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Meli Tian digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Meli Tian 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.
Sustainable margins compare to other players in Global Business industry
– Meli Marine firm has clearly differentiated products in the market place. This has enabled Meli Tian to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Meli Tian to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Meli Tian 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 Meli Marine HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Meli Marine | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Meli Marine are -
Products dominated business model
– Even though Meli Tian 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 - Meli Marine should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Meli Marine 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 Meli Tian 's lucrative customers.
No frontier risks strategy
– After analyzing the HBR case study Meli Marine, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Meli Tian 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.
High cash cycle compare to competitors
Meli Tian 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.
Need for greater diversity
– Meli Tian 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 bargaining power of channel partners
– Because of the regulatory requirements, Richard G. Hamermesh, Sunru Yong suggests that, Meli Tian 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.
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 Meli Tian supply chain. Even after few cautionary changes mentioned in the HBR case study - Meli Marine, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Meli Tian vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Meli Tian is dominated by functional specialists. It is not different from other players in the Global Business segment. Meli Tian needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Meli Tian to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Meli Marine 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 Meli Tian has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Meli Tian, firm in the HBR case study Meli Marine needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Meli Marine | 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 Meli Marine are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Meli Tian 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, Meli Marine, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Meli Tian to increase its market reach. Meli Tian will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 Meli Tian 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.
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 Meli Tian in the consumer business. Now Meli Tian can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Meli Tian 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.
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. Meli Tian can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Meli Tian 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Meli Tian is facing challenges because of the dominance of functional experts in the organization. Meli Marine 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Meli Tian can use these opportunities to build new business models that can help the communities that Meli Tian operates in. Secondly it can use opportunities from government spending in Global Business sector.
Learning at scale
– Online learning technologies has now opened space for Meli Tian 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Meli Tian 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Meli Tian can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Meli Tian 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.
Threats Meli Marine External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Meli Marine are -
Environmental challenges
– Meli Tian 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. Meli Tian can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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. Meli Tian needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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. Meli Tian can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Meli Tian in the Global Business sector and impact the bottomline 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 Meli Tian.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Meli Tian with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Meli Tian is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Meli Marine, Meli Tian 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 .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Meli Tian 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 Meli Marine .
Increasing wage structure of Meli Tian
– 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 Meli Tian.
Consumer confidence and its impact on Meli Tian 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Meli Tian 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.
Technology acceleration in Forth Industrial Revolution
– Meli Tian has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Meli Tian 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.
Weighted SWOT Analysis of Meli Marine 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 Meli Marine 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 Meli Marine 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 Meli Marine 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 Meli Marine 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 Meli Tian needs to make to build a sustainable competitive advantage.
