Case Study Description of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama
Despite widespread news of the incarceration of Gome Electronics' CEO, Huang Guangyu, Bain Capital felt they carefully undertook due diligence before making a significant investment in the company. The venture capital firm was confident that it and the current management could work together to revamp the fortunes of China's leading electronic retailer. However, it did not anticipate the power Huang had behind bars. As the majority shareholder, Huang has managed to manipulate shareholder meetings and current management decisions and structure. Was this typical of an investment in China or did Bain Capital just find itself in a unique situation? What can future managers learn from this situation about corporate governance and ethical rules of business in China?
Swot Analysis of "Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama" written by William C. Kirby, Tracy Yuen Manty includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Huang Gome facing as an external strategic factors. Some of the topics covered in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study are - Strategic Management Strategies, Ethics, Regulation, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, increasing commodity prices, increasing government debt because of Covid-19 spendings, increasing energy prices, geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huang Gome, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama can be done for the following purposes –
1. Strategic planning using facts provided in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study
2. Improving business portfolio management of Huang Gome
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 Huang Gome
Strengths Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huang Gome in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama Harvard Business Review case study are -
High switching costs
– The high switching costs that Huang Gome 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.
Learning organization
- Huang Gome 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 Huang Gome is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Huang Gome 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 Huang Gome in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Huang Gome has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Huang Gome to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Huang Gome is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Huang Gome digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Huang Gome 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.
Analytics focus
– Huang Gome 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 William C. Kirby, Tracy Yuen Manty 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.
Training and development
– Huang Gome has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Effective Research and Development (R&D)
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Huang Gome is one of the leading recruiters in the industry. Managers in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are -
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 Huang Gome supply chain. Even after few cautionary changes mentioned in the HBR case study - Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Huang Gome vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, William C. Kirby, Tracy Yuen Manty suggests that, Huang Gome 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Huang Gome is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Huang Gome 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.
No frontier risks strategy
– After analyzing the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, 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.
Lack of clear differentiation of Huang Gome products
– To increase the profitability and margins on the products, Huang Gome needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring
– The stress on hiring functional specialists at Huang Gome 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.
Capital Spending Reduction
– Even during the low interest decade, Huang Gome 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.
Slow decision making process
– As mentioned earlier in the report, Huang Gome 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. Huang Gome 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.
Low market penetration in new markets
– Outside its home market of Huang Gome, firm in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, in the dynamic environment Huang Gome has struggled to respond to the nimble upstart competition. Huang Gome has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are -
Learning at scale
– Online learning technologies has now opened space for Huang Gome 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.
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. Huang Gome 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. Huang Gome 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.
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. Huang Gome can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Huang Gome can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Huang Gome 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.
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 Huang Gome in the consumer business. Now Huang Gome can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Huang Gome 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.
Developing new processes and practices
– Huang Gome 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.
Using analytics as competitive advantage
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Huang Gome to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Huang Gome has opened avenues for new revenue streams for the organization in the industry. This can help Huang Gome to build a more holistic ecosystem as suggested in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study. Huang Gome can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Better consumer reach
– The expansion of the 5G network will help Huang Gome to increase its market reach. Huang Gome 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.
Manufacturing automation
– Huang Gome 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Huang Gome 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, Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are -
Consumer confidence and its impact on Huang Gome 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.
Technology acceleration in Forth Industrial Revolution
– Huang Gome has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Huang Gome 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huang Gome 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 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 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. Huang Gome needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Regulatory challenges
– Huang Gome 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.
Environmental challenges
– Huang Gome 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. Huang Gome can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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 Huang Gome.
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. Huang Gome 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.
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 Huang Gome business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Huang Gome can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Huang Gome
– 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 Huang Gome.
Weighted SWOT Analysis of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Huang Gome needs to make to build a sustainable competitive advantage.
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