MTR: Strategic Challenge of Entrenching Locally While Expanding Globally SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of MTR: Strategic Challenge of Entrenching Locally While Expanding Globally
The MTR Corporation Limited, the semi-privatised railway company in Hong Kong, was transforming itself from a local transportation company to become a global player. Despite MTR's proven rail-property model in Hong Kong, the company was faced with a new set of economic, cultural, regulatory and operational challenges abroad, particularly in China and Europe where it was expanding into. This case illustrated the growth model of a local company during internationalisation and analysed the trade-offs of different strategic decisions when entering into new markets.
Swot Analysis of "MTR: Strategic Challenge of Entrenching Locally While Expanding Globally" written by Ali Farhoomand, Emily Ho includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Mtr Internationalisation facing as an external strategic factors. Some of the topics covered in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally case study are - Strategic Management Strategies, Globalization, Growth strategy, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the MTR: Strategic Challenge of Entrenching Locally While Expanding Globally casestudy better are - – there is backlash against globalization, challanges to central banks by blockchain based private currencies, wage bills are increasing, geopolitical disruptions, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, technology disruption,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of MTR: Strategic Challenge of Entrenching Locally While Expanding Globally
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Mtr Internationalisation, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Mtr Internationalisation 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally can be done for the following purposes –
1. Strategic planning using facts provided in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally case study
2. Improving business portfolio management of Mtr Internationalisation
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 Mtr Internationalisation
Strengths MTR: Strategic Challenge of Entrenching Locally While Expanding Globally | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Mtr Internationalisation in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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.
Diverse revenue streams
– Mtr Internationalisation is present in almost all the verticals within the industry. This has provided firm in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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.
Effective Research and Development (R&D)
– Mtr Internationalisation 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Mtr Internationalisation has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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.
Cross disciplinary teams
– Horizontal connected teams at the Mtr Internationalisation 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.
Innovation driven organization
– Mtr Internationalisation is one of the most innovative firm in sector. Manager in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Mtr Internationalisation 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 Mtr Internationalisation is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in MTR: Strategic Challenge of Entrenching Locally While Expanding Globally Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Mtr Internationalisation has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Mtr Internationalisation to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Global Business industry
– MTR: Strategic Challenge of Entrenching Locally While Expanding Globally firm has clearly differentiated products in the market place. This has enabled Mtr Internationalisation to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Mtr Internationalisation to invest into research and development (R&D) and innovation.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Mtr Internationalisation digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Mtr Internationalisation 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
– Mtr Internationalisation 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 Ali Farhoomand, Emily Ho 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.
High switching costs
– The high switching costs that Mtr Internationalisation 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MTR: Strategic Challenge of Entrenching Locally While Expanding Globally are -
Products dominated business model
– Even though Mtr Internationalisation 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 - MTR: Strategic Challenge of Entrenching Locally While Expanding Globally should strive to include more intangible value offerings along with its core products and services.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Mtr Internationalisation supply chain. Even after few cautionary changes mentioned in the HBR case study - MTR: Strategic Challenge of Entrenching Locally While Expanding Globally, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Mtr Internationalisation vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As MTR: Strategic Challenge of Entrenching Locally While Expanding Globally HBR case study mentions - Mtr Internationalisation 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Mtr Internationalisation needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 Mtr Internationalisation has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Mtr Internationalisation 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.
Aligning sales with marketing
– It come across in the case study MTR: Strategic Challenge of Entrenching Locally While Expanding Globally that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case MTR: Strategic Challenge of Entrenching Locally While Expanding Globally can leverage the sales team experience to cultivate customer relationships as Mtr Internationalisation is planning to shift buying processes online.
Lack of clear differentiation of Mtr Internationalisation products
– To increase the profitability and margins on the products, Mtr Internationalisation needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Mtr Internationalisation 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 decision making process
– As mentioned earlier in the report, Mtr Internationalisation 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. Mtr Internationalisation 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali Farhoomand, Emily Ho suggests that, Mtr Internationalisation 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally | 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Mtr Internationalisation is facing challenges because of the dominance of functional experts in the organization. MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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.
Better consumer reach
– The expansion of the 5G network will help Mtr Internationalisation to increase its market reach. Mtr Internationalisation 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.
Developing new processes and practices
– Mtr Internationalisation 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.
Manufacturing automation
– Mtr Internationalisation 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Mtr Internationalisation can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Mtr Internationalisation 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Mtr Internationalisation can use these opportunities to build new business models that can help the communities that Mtr Internationalisation operates in. Secondly it can use opportunities from government spending in Global Business sector.
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. Mtr Internationalisation can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Mtr Internationalisation can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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.
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. Mtr Internationalisation 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. Mtr Internationalisation 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.
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. Mtr Internationalisation can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Mtr Internationalisation 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.
Learning at scale
– Online learning technologies has now opened space for Mtr Internationalisation 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.
Threats MTR: Strategic Challenge of Entrenching Locally While Expanding Globally External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study MTR: Strategic Challenge of Entrenching Locally While Expanding Globally are -
Shortening product life cycle
– it is one of the major threat that Mtr Internationalisation is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Mtr Internationalisation 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.
Regulatory challenges
– Mtr Internationalisation 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.
Technology acceleration in Forth Industrial Revolution
– Mtr Internationalisation has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Mtr Internationalisation 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.
Environmental challenges
– Mtr Internationalisation 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. Mtr Internationalisation 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 Mtr Internationalisation.
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. Mtr Internationalisation can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Mtr Internationalisation
– 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 Mtr Internationalisation.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study MTR: Strategic Challenge of Entrenching Locally While Expanding Globally, Mtr Internationalisation 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 .
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. Mtr Internationalisation needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Mtr Internationalisation with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Mtr Internationalisation 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 Mtr Internationalisation 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 MTR: Strategic Challenge of Entrenching Locally While Expanding Globally 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 Mtr Internationalisation needs to make to build a sustainable competitive advantage.