Taming the Dragon: Cummins in China (Condensed) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Taming the Dragon: Cummins in China (Condensed)
Documents more than 15 years of U.S.-based Cummins, a global leader in diesel and allied technology, and its investment activities in China. Although macro-level indicators seem to suggest the possibility of hitting $1 billion in revenues in China by 2005, several pressing problems put into question Cummins' ability to realize this target. Presents specific situations--related to the respective streamlining and consolidation of several existing joint ventures, distribution and service, and staffing--for which students must develop appropriate action plans. Presents the complexity of managing country-level operations and the role of executive leadership of a country manager.
Authors :: Charles Dhanaraj, Maria Morgan, Jack Li, Jing Li
Swot Analysis of "Taming the Dragon: Cummins in China (Condensed)" written by Charles Dhanaraj, Maria Morgan, Jack Li, Jing Li includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cummins China facing as an external strategic factors. Some of the topics covered in Taming the Dragon: Cummins in China (Condensed) case study are - Strategic Management Strategies, Globalization, Joint ventures, Marketing and Global Business.
Some of the macro environment factors that can be used to understand the Taming the Dragon: Cummins in China (Condensed) casestudy better are - – increasing transportation and logistics costs, there is increasing trade war between United States & China, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies,
challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Taming the Dragon: Cummins in China (Condensed)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Taming the Dragon: Cummins in China (Condensed) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cummins China, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cummins China 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 Taming the Dragon: Cummins in China (Condensed) can be done for the following purposes –
1. Strategic planning using facts provided in Taming the Dragon: Cummins in China (Condensed) case study
2. Improving business portfolio management of Cummins China
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 Cummins China
Strengths Taming the Dragon: Cummins in China (Condensed) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cummins China in Taming the Dragon: Cummins in China (Condensed) Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Taming the Dragon: Cummins in China (Condensed) 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.
Ability to lead change in Global Business field
– Cummins China 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 Cummins China in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cummins China has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cummins China to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Cummins China 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 Taming the Dragon: Cummins in China (Condensed) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Cummins China in the sector have low bargaining power. Taming the Dragon: Cummins in China (Condensed) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cummins China to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Cummins China is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Cummins China is one of the most innovative firm in sector. Manager in Taming the Dragon: Cummins in China (Condensed) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Cummins China 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 Cummins China digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cummins China 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.
Learning organization
- Cummins China 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 Cummins China is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Taming the Dragon: Cummins in China (Condensed) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Cummins China 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 Charles Dhanaraj, Maria Morgan, Jack Li, Jing Li 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.
Organizational Resilience of Cummins China
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Cummins China does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Taming the Dragon: Cummins in China (Condensed) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Taming the Dragon: Cummins in China (Condensed) 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 Cummins China supply chain. Even after few cautionary changes mentioned in the HBR case study - Taming the Dragon: Cummins in China (Condensed), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cummins China vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Cummins China 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Taming the Dragon: Cummins in China (Condensed) 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 Cummins China 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Taming the Dragon: Cummins in China (Condensed), in the dynamic environment Cummins China has struggled to respond to the nimble upstart competition. Cummins China has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
No frontier risks strategy
– After analyzing the HBR case study Taming the Dragon: Cummins in China (Condensed), 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.
Need for greater diversity
– Cummins China 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.
Products dominated business model
– Even though Cummins China 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 - Taming the Dragon: Cummins in China (Condensed) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Taming the Dragon: Cummins in China (Condensed) HBR case study mentions - Cummins China 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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Taming the Dragon: Cummins in China (Condensed) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Cummins China has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Cummins China 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 bargaining power of channel partners
– Because of the regulatory requirements, Charles Dhanaraj, Maria Morgan, Jack Li, Jing Li suggests that, Cummins China 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.
Opportunities Taming the Dragon: Cummins in China (Condensed) | 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 Taming the Dragon: Cummins in China (Condensed) are -
Using analytics as competitive advantage
– Cummins China 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 Taming the Dragon: Cummins in China (Condensed) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cummins China to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Cummins China can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Cummins China 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. Cummins China 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cummins China can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Cummins China 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.
Manufacturing automation
– Cummins China 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cummins China 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 Cummins China to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cummins China 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cummins China is facing challenges because of the dominance of functional experts in the organization. Taming the Dragon: Cummins in China (Condensed) 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cummins China can use these opportunities to build new business models that can help the communities that Cummins China operates in. Secondly it can use opportunities from government spending in Global Business sector.
Leveraging digital technologies
– Cummins China 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cummins China 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.
Developing new processes and practices
– Cummins China 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 Taming the Dragon: Cummins in China (Condensed) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Taming the Dragon: Cummins in China (Condensed) are -
Technology acceleration in Forth Industrial Revolution
– Cummins China has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Cummins China 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.
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 Cummins China business can come under increasing regulations regarding data privacy, data security, etc.
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 Cummins China in the Global Business sector and impact the bottomline 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. Cummins China needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Cummins China is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cummins China 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.
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 Cummins China.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Taming the Dragon: Cummins in China (Condensed), Cummins China may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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. Cummins China 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.
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.
Increasing wage structure of Cummins China
– 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 Cummins China.
Consumer confidence and its impact on Cummins China 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.
Stagnating economy with rate increase
– Cummins China 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.
Weighted SWOT Analysis of Taming the Dragon: Cummins in China (Condensed) 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 Taming the Dragon: Cummins in China (Condensed) 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 Taming the Dragon: Cummins in China (Condensed) 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 Taming the Dragon: Cummins in China (Condensed) 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 Taming the Dragon: Cummins in China (Condensed) 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 Cummins China needs to make to build a sustainable competitive advantage.
