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 - – increasing energy prices, cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion,
banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, 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 -
Operational resilience
– The operational resilience strategy in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
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.
Organizational Resilience of Huang Gome
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Huang Gome does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Huang Gome is one of the most innovative firm in sector. Manager in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
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.
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.
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.
Sustainable margins compare to other players in Global Business industry
– Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama firm has clearly differentiated products in the market place. This has enabled Huang Gome to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Huang Gome to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Huang Gome is present in almost all the verticals within the industry. This has provided firm in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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.
Low bargaining power of suppliers
– Suppliers of Huang Gome in the sector have low bargaining power. Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Huang Gome to manage not only supply disruptions but also source products at highly competitive prices.
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.
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 -
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.
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.
Increasing silos among functional specialists
– The organizational structure of Huang Gome is dominated by functional specialists. It is not different from other players in the Global Business segment. Huang Gome needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Huang Gome to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, it seems that the employees of Huang Gome don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Slow to strategic competitive environment developments
– As Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama HBR case study mentions - Huang Gome takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Huang Gome 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.
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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, is just above the industry average. Huang Gome 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 operating costs
– Compare to the competitors, firm in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Huang Gome 's lucrative customers.
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.
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 -
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.
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 Huang Gome 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.
Buying journey improvements
– Huang Gome can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
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.
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.
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.
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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Huang Gome can use these opportunities to build new business models that can help the communities that Huang Gome operates in. Secondly it can use opportunities from government spending in Global Business sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Huang Gome 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.
Leveraging digital technologies
– Huang Gome 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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Huang Gome 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huang Gome 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 Huang Gome to hire the very best people irrespective of their geographical location.
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 -
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.
High dependence on third party suppliers
– Huang Gome 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.
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.
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.
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.
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 .
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.
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.
Shortening product life cycle
– it is one of the major threat that Huang Gome is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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 Huang Gome in the Global Business sector and impact the bottomline of the organization.
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.
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.
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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