KongZhong: Growth in a Dynamic Environment SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of KongZhong: Growth in a Dynamic Environment
Chronicles the initial formation and growth of KongZhong, one of China's leading players in the wireless value added service (WVAS) market. By 2007, KongZhong's founders face the 'perfect storm,' given the highly dynamic nature of the WVAS industry coupled with the Chinese government's choosing of the WVAS industry to implement significant regulatory changes. Highlights issues regarding the underlying dynamics of China's entrepreneurial environment, and extrinsic variables affecting entrepreneurship within rapidly evolving industries and markets. After providing background information on the founder's prior startup and China's WVAS market, proceeds to describe the company's fast growth, initial public offering (IPO), cultural dynamics and differences, government lobbying initiatives, and early-2007 strategic dilemmas.
Swot Analysis of "KongZhong: Growth in a Dynamic Environment" written by Chuck Holloway, Patrick Arippol includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wvas Kongzhong facing as an external strategic factors. Some of the topics covered in KongZhong: Growth in a Dynamic Environment case study are - Strategic Management Strategies, Internet, IPO, Joint ventures, Leading teams, Policy, Strategic planning and Global Business.
Some of the macro environment factors that can be used to understand the KongZhong: Growth in a Dynamic Environment casestudy better are - – challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , increasing commodity prices, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, there is backlash against globalization,
increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of KongZhong: Growth in a Dynamic Environment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in KongZhong: Growth in a Dynamic Environment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wvas Kongzhong, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wvas Kongzhong 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 KongZhong: Growth in a Dynamic Environment can be done for the following purposes –
1. Strategic planning using facts provided in KongZhong: Growth in a Dynamic Environment case study
2. Improving business portfolio management of Wvas Kongzhong
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 Wvas Kongzhong
Strengths KongZhong: Growth in a Dynamic Environment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wvas Kongzhong in KongZhong: Growth in a Dynamic Environment Harvard Business Review case study are -
Sustainable margins compare to other players in Global Business industry
– KongZhong: Growth in a Dynamic Environment firm has clearly differentiated products in the market place. This has enabled Wvas Kongzhong to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Wvas Kongzhong to invest into research and development (R&D) and innovation.
Analytics focus
– Wvas Kongzhong 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 Chuck Holloway, Patrick Arippol 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.
Cross disciplinary teams
– Horizontal connected teams at the Wvas Kongzhong 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.
Organizational Resilience of Wvas Kongzhong
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wvas Kongzhong does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Wvas Kongzhong 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 KongZhong: Growth in a Dynamic Environment - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Wvas Kongzhong has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Wvas Kongzhong digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Wvas Kongzhong 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.
Highly skilled collaborators
– Wvas Kongzhong 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 KongZhong: Growth in a Dynamic Environment HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Wvas Kongzhong 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 Wvas Kongzhong is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in KongZhong: Growth in a Dynamic Environment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to recruit top talent
– Wvas Kongzhong is one of the leading recruiters in the industry. Managers in the KongZhong: Growth in a Dynamic Environment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Ability to lead change in Global Business field
– Wvas Kongzhong 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 Wvas Kongzhong in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the KongZhong: Growth in a Dynamic Environment 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.
Weaknesses KongZhong: Growth in a Dynamic Environment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of KongZhong: Growth in a Dynamic Environment are -
High bargaining power of channel partners
– Because of the regulatory requirements, Chuck Holloway, Patrick Arippol suggests that, Wvas Kongzhong 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study KongZhong: Growth in a Dynamic Environment, in the dynamic environment Wvas Kongzhong has struggled to respond to the nimble upstart competition. Wvas Kongzhong has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Wvas Kongzhong 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.
High operating costs
– Compare to the competitors, firm in the HBR case study KongZhong: Growth in a Dynamic Environment 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 Wvas Kongzhong 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study KongZhong: Growth in a Dynamic Environment, is just above the industry average. Wvas Kongzhong 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.
Interest costs
– Compare to the competition, Wvas Kongzhong 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.
No frontier risks strategy
– After analyzing the HBR case study KongZhong: Growth in a Dynamic Environment, 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.
Low market penetration in new markets
– Outside its home market of Wvas Kongzhong, firm in the HBR case study KongZhong: Growth in a Dynamic Environment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Lack of clear differentiation of Wvas Kongzhong products
– To increase the profitability and margins on the products, Wvas Kongzhong needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Wvas Kongzhong is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study KongZhong: Growth in a Dynamic Environment can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Wvas Kongzhong 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. Wvas Kongzhong 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.
Opportunities KongZhong: Growth in a Dynamic Environment | 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 KongZhong: Growth in a Dynamic Environment are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wvas Kongzhong 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.
Loyalty marketing
– Wvas Kongzhong 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.
Manufacturing automation
– Wvas Kongzhong 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, Wvas Kongzhong is facing challenges because of the dominance of functional experts in the organization. KongZhong: Growth in a Dynamic Environment 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.
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. Wvas Kongzhong can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Wvas Kongzhong 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wvas Kongzhong can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wvas Kongzhong 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, KongZhong: Growth in a Dynamic Environment, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Wvas Kongzhong 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.
Creating value in data economy
– The success of analytics program of Wvas Kongzhong has opened avenues for new revenue streams for the organization in the industry. This can help Wvas Kongzhong to build a more holistic ecosystem as suggested in the KongZhong: Growth in a Dynamic Environment case study. Wvas Kongzhong can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Wvas Kongzhong can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wvas Kongzhong 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.
Developing new processes and practices
– Wvas Kongzhong 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.
Threats KongZhong: Growth in a Dynamic Environment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study KongZhong: Growth in a Dynamic Environment are -
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 Wvas Kongzhong business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wvas Kongzhong 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.
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 Wvas Kongzhong in the Global Business sector and impact the bottomline of the organization.
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.
Consumer confidence and its impact on Wvas Kongzhong 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.
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. Wvas Kongzhong can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Wvas Kongzhong is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Wvas Kongzhong 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.
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 Wvas Kongzhong.
Technology acceleration in Forth Industrial Revolution
– Wvas Kongzhong has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Wvas Kongzhong 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.
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. Wvas Kongzhong 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.
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. Wvas Kongzhong needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Environmental challenges
– Wvas Kongzhong 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. Wvas Kongzhong can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Weighted SWOT Analysis of KongZhong: Growth in a Dynamic Environment 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 KongZhong: Growth in a Dynamic Environment 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 KongZhong: Growth in a Dynamic Environment 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 KongZhong: Growth in a Dynamic Environment 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 KongZhong: Growth in a Dynamic Environment 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 Wvas Kongzhong needs to make to build a sustainable competitive advantage.