Case Study Description of CapitaLand: Facing the Challenges Ahead
CapitaLand was Singapore's leading property developer. It was formed in 2000 though a merger between DBS Land (the property unit of Singapore's leading bank, DBS) and Pidemco Land, a Singapore government linked company. The Singapore government through Temasek Holdings (one of its sovereign wealth funds) held an equity stake of 40% at end-2011. Liew Mun Leong was the firm's first CEO from 2000 to 2012. CapitaLand decided to expand internationally because it felt that the Singapore market was saturated with limited growth opportunities. CapitaLand's initial focus was on a number of gateway cities, where it aimed to achieve critical mass. This strategy changed quickly with the new focus being on three core markets - Singapore, China and Australia. In expanding into new markets, CapitaLand began by sending out a high quality executive, who understood the firm and the way it operated, from headquarters to start the new unit up. The firm's objective was to transfer operational responsibility to local executives when this was possible. While it had made some progress in this regard, most senior executives - corporate officers and senior executives of business units - were still Singapore nationals.
Authors :: Allen Morrison, Pallivathukkal Cherian Abraham
Swot Analysis of "CapitaLand: Facing the Challenges Ahead" written by Allen Morrison, Pallivathukkal Cherian Abraham includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Capitaland Singapore facing as an external strategic factors. Some of the topics covered in CapitaLand: Facing the Challenges Ahead case study are - Strategic Management Strategies, Growth strategy and Global Business.
Some of the macro environment factors that can be used to understand the CapitaLand: Facing the Challenges Ahead casestudy better are - – increasing commodity prices, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, increasing energy prices, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion,
cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of CapitaLand: Facing the Challenges Ahead
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in CapitaLand: Facing the Challenges Ahead case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Capitaland Singapore, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Capitaland Singapore 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 CapitaLand: Facing the Challenges Ahead can be done for the following purposes –
1. Strategic planning using facts provided in CapitaLand: Facing the Challenges Ahead case study
2. Improving business portfolio management of Capitaland Singapore
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 Capitaland Singapore
Strengths CapitaLand: Facing the Challenges Ahead | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Capitaland Singapore in CapitaLand: Facing the Challenges Ahead Harvard Business Review case study are -
High brand equity
– Capitaland Singapore has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Capitaland Singapore to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the CapitaLand: Facing the Challenges Ahead 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.
Low bargaining power of suppliers
– Suppliers of Capitaland Singapore in the sector have low bargaining power. CapitaLand: Facing the Challenges Ahead has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Capitaland Singapore to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Global Business industry
– CapitaLand: Facing the Challenges Ahead firm has clearly differentiated products in the market place. This has enabled Capitaland Singapore to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Capitaland Singapore to invest into research and development (R&D) and innovation.
Ability to lead change in Global Business field
– Capitaland Singapore 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 Capitaland Singapore in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Capitaland Singapore
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Capitaland Singapore does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Capitaland Singapore 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 Capitaland Singapore is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in CapitaLand: Facing the Challenges Ahead Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Capitaland Singapore is one of the leading recruiters in the industry. Managers in the CapitaLand: Facing the Challenges Ahead are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Capitaland Singapore 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.
Analytics focus
– Capitaland Singapore 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 Allen Morrison, Pallivathukkal Cherian Abraham 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.
Effective Research and Development (R&D)
– Capitaland Singapore 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 CapitaLand: Facing the Challenges Ahead - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Capitaland Singapore 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.
Weaknesses CapitaLand: Facing the Challenges Ahead | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of CapitaLand: Facing the Challenges Ahead are -
Need for greater diversity
– Capitaland Singapore 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 cash cycle compare to competitors
Capitaland Singapore 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 CapitaLand: Facing the Challenges Ahead, is just above the industry average. Capitaland Singapore needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Allen Morrison, Pallivathukkal Cherian Abraham suggests that, Capitaland Singapore 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.
No frontier risks strategy
– After analyzing the HBR case study CapitaLand: Facing the Challenges Ahead, 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.
Products dominated business model
– Even though Capitaland Singapore 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 - CapitaLand: Facing the Challenges Ahead should strive to include more intangible value offerings along with its core products and services.
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 Capitaland Singapore supply chain. Even after few cautionary changes mentioned in the HBR case study - CapitaLand: Facing the Challenges Ahead, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Capitaland Singapore vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study CapitaLand: Facing the Challenges Ahead, in the dynamic environment Capitaland Singapore has struggled to respond to the nimble upstart competition. Capitaland Singapore has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Capitaland Singapore has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Capitaland Singapore even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Interest costs
– Compare to the competition, Capitaland Singapore 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.
Low market penetration in new markets
– Outside its home market of Capitaland Singapore, firm in the HBR case study CapitaLand: Facing the Challenges Ahead needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities CapitaLand: Facing the Challenges Ahead | 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 CapitaLand: Facing the Challenges Ahead are -
Leveraging digital technologies
– Capitaland Singapore 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Capitaland Singapore can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Capitaland Singapore can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Capitaland Singapore 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Capitaland Singapore 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.
Better consumer reach
– The expansion of the 5G network will help Capitaland Singapore to increase its market reach. Capitaland Singapore 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.
Buying journey improvements
– Capitaland Singapore can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. CapitaLand: Facing the Challenges Ahead 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Capitaland Singapore can use these opportunities to build new business models that can help the communities that Capitaland Singapore operates in. Secondly it can use opportunities from government spending in Global Business sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Capitaland Singapore 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, CapitaLand: Facing the Challenges Ahead, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Capitaland Singapore 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.
Developing new processes and practices
– Capitaland Singapore 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Capitaland Singapore 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 Capitaland Singapore to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Capitaland Singapore has opened avenues for new revenue streams for the organization in the industry. This can help Capitaland Singapore to build a more holistic ecosystem as suggested in the CapitaLand: Facing the Challenges Ahead case study. Capitaland Singapore can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Capitaland Singapore is facing challenges because of the dominance of functional experts in the organization. CapitaLand: Facing the Challenges Ahead 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.
Threats CapitaLand: Facing the Challenges Ahead External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study CapitaLand: Facing the Challenges Ahead are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Capitaland Singapore will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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 Capitaland Singapore is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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. Capitaland Singapore can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Capitaland Singapore with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
High dependence on third party suppliers
– Capitaland Singapore 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.
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 Capitaland Singapore in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Capitaland Singapore demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
High 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. Capitaland Singapore needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Capitaland Singapore 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 wage structure of Capitaland Singapore
– 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 Capitaland Singapore.
Environmental challenges
– Capitaland Singapore 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. Capitaland Singapore can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of CapitaLand: Facing the Challenges Ahead 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 CapitaLand: Facing the Challenges Ahead 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 CapitaLand: Facing the Challenges Ahead 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 CapitaLand: Facing the Challenges Ahead 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 CapitaLand: Facing the Challenges Ahead 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 Capitaland Singapore needs to make to build a sustainable competitive advantage.
