Case Study Description of Kelon (A): China's Corporate Dragon
Kelon was founded in the small, rural town of Rongqi in the Guangdong Province in 1984. In a six-year span, Kelon became China's largest refrigerator maker. In the 1990s it faced fierce competition from other Chinese firms as well as from multinational corporations. Kelon prospered under competition and has successfully taken market share from large multinationals. This case examines the factors contributing to the rise of Kelon.
Swot Analysis of "Kelon (A): China's Corporate Dragon" written by Yasheng Huang, David Lane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Kelon Rongqi facing as an external strategic factors. Some of the topics covered in Kelon (A): China's Corporate Dragon case study are - Strategic Management Strategies, Global strategy, Globalization and Global Business.
Some of the macro environment factors that can be used to understand the Kelon (A): China's Corporate Dragon casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , geopolitical disruptions, etc
Introduction to SWOT Analysis of Kelon (A): China's Corporate Dragon
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kelon (A): China's Corporate Dragon case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kelon Rongqi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kelon Rongqi 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 Kelon (A): China's Corporate Dragon can be done for the following purposes –
1. Strategic planning using facts provided in Kelon (A): China's Corporate Dragon case study
2. Improving business portfolio management of Kelon Rongqi
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 Kelon Rongqi
Strengths Kelon (A): China's Corporate Dragon | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kelon Rongqi in Kelon (A): China's Corporate Dragon Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Kelon Rongqi 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.
Strong track record of project management
– Kelon Rongqi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High switching costs
– The high switching costs that Kelon Rongqi 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.
Innovation driven organization
– Kelon Rongqi is one of the most innovative firm in sector. Manager in Kelon (A): China's Corporate Dragon Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Kelon Rongqi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Kelon Rongqi 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.
Organizational Resilience of Kelon Rongqi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Kelon Rongqi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Global Business field
– Kelon Rongqi 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 Kelon Rongqi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Kelon Rongqi 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 Kelon Rongqi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kelon (A): China's Corporate Dragon Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Kelon Rongqi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kelon (A): China's Corporate Dragon 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.
Ability to recruit top talent
– Kelon Rongqi is one of the leading recruiters in the industry. Managers in the Kelon (A): China's Corporate Dragon are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Global Business industry
– Kelon (A): China's Corporate Dragon firm has clearly differentiated products in the market place. This has enabled Kelon Rongqi to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Kelon Rongqi to invest into research and development (R&D) and innovation.
High brand equity
– Kelon Rongqi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Kelon Rongqi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Kelon (A): China's Corporate Dragon | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kelon (A): China's Corporate Dragon are -
High operating costs
– Compare to the competitors, firm in the HBR case study Kelon (A): China's Corporate Dragon 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 Kelon Rongqi 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Yasheng Huang, David Lane suggests that, Kelon Rongqi 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 star products
– The top 2 products and services of the firm as mentioned in the Kelon (A): China's Corporate Dragon 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 Kelon Rongqi has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Kelon Rongqi 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.
Lack of clear differentiation of Kelon Rongqi products
– To increase the profitability and margins on the products, Kelon Rongqi needs to provide more differentiated products than what it is currently offering in the marketplace.
Capital Spending Reduction
– Even during the low interest decade, Kelon Rongqi has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Kelon Rongqi 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kelon Rongqi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kelon (A): China's Corporate Dragon can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Kelon Rongqi is dominated by functional specialists. It is not different from other players in the Global Business segment. Kelon Rongqi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kelon Rongqi to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Kelon (A): China's Corporate Dragon, 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Kelon (A): China's Corporate Dragon, it seems that the employees of Kelon Rongqi 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.
Opportunities Kelon (A): China's Corporate Dragon | 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 Kelon (A): China's Corporate Dragon are -
Learning at scale
– Online learning technologies has now opened space for Kelon Rongqi 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kelon Rongqi can use these opportunities to build new business models that can help the communities that Kelon Rongqi operates in. Secondly it can use opportunities from government spending in Global Business sector.
Developing new processes and practices
– Kelon Rongqi 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
– Kelon Rongqi 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Kelon Rongqi is facing challenges because of the dominance of functional experts in the organization. Kelon (A): China's Corporate Dragon 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.
Using analytics as competitive advantage
– Kelon Rongqi 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 Kelon (A): China's Corporate Dragon - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Kelon Rongqi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Kelon Rongqi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Kelon (A): China's Corporate Dragon 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.
Loyalty marketing
– Kelon Rongqi 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.
Better consumer reach
– The expansion of the 5G network will help Kelon Rongqi to increase its market reach. Kelon Rongqi 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.
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 Kelon Rongqi in the consumer business. Now Kelon Rongqi can target international markets with far fewer capital restrictions requirements than the existing system.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kelon Rongqi in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Kelon Rongqi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Kelon Rongqi 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.
Threats Kelon (A): China's Corporate Dragon External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kelon (A): China's Corporate Dragon are -
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. Kelon Rongqi 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. Kelon Rongqi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Kelon Rongqi has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Kelon Rongqi 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Kelon Rongqi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Kelon Rongqi 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kelon (A): China's Corporate Dragon, Kelon Rongqi 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kelon Rongqi 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Kelon Rongqi 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 Kelon (A): China's Corporate Dragon .
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 Kelon Rongqi in the Global Business sector and impact the bottomline of the organization.
Increasing wage structure of Kelon Rongqi
– 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 Kelon Rongqi.
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.
Shortening product life cycle
– it is one of the major threat that Kelon Rongqi is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Kelon Rongqi 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. Kelon Rongqi can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of Kelon (A): China's Corporate Dragon 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 Kelon (A): China's Corporate Dragon 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 Kelon (A): China's Corporate Dragon 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 Kelon (A): China's Corporate Dragon 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 Kelon (A): China's Corporate Dragon 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 Kelon Rongqi needs to make to build a sustainable competitive advantage.
