SAP: Establishing a Research Centre in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of SAP: Establishing a Research Centre in China
Leading technology companies from around the world are entering China to establish research centres, leverage China's unique situation of rapid growth and large manufacturing base, and scooping up talent from China's leading universities. SAP, the world's largest application software company, recently entered China to establish one of its exclusive technology research centres, SAP Research. While this division has been successful at its headquarters in Germany, the Chinese labor market and business environment remain difficult for foreign multinationals to navigate. Foreign companies often experience challenges ranging from difficulty finding innovators in a competitive talent pool to dealing with turnover of employees that have an aggressive focus on compensation. There is concern that locating in Shanghai, far away from the innovative hotbed of universities and other technology research centres that have set up shop in Beijing, was the wrong choice for SAP in China. What would be necessary to win the war for high-profile PhDs in the competitive Chinese labor market? What would be required for SAP Research China to be an integral contributor in SAP's worldwide innovation network? This case illustrates the opportunities and challenges of research and development ("R&D") globalization and familiarizes students with the unique challenges of R&D strategy, new-market entry strategies, human resource management, innovation, clustering and intellectual property protection in rapidly developing countries. In particular, this case is relevant to studies in R&D globalization, business in China and talent management.
Authors :: Kuldeep Kumar, Maya Kumar, Markus Alsleben
Swot Analysis of "SAP: Establishing a Research Centre in China" written by Kuldeep Kumar, Maya Kumar, Markus Alsleben includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sap Research facing as an external strategic factors. Some of the topics covered in SAP: Establishing a Research Centre in China case study are - Strategic Management Strategies, Intellectual property, Marketing, Operations management, Research & development, Talent management, Technology and Global Business.
Some of the macro environment factors that can be used to understand the SAP: Establishing a Research Centre in China casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, there is backlash against globalization,
cloud computing is disrupting traditional business models, technology disruption, etc
Introduction to SWOT Analysis of SAP: Establishing a Research Centre in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in SAP: Establishing a Research Centre in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sap Research, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sap Research 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 SAP: Establishing a Research Centre in China can be done for the following purposes –
1. Strategic planning using facts provided in SAP: Establishing a Research Centre in China case study
2. Improving business portfolio management of Sap Research
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 Sap Research
Strengths SAP: Establishing a Research Centre in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sap Research in SAP: Establishing a Research Centre in China Harvard Business Review case study are -
Diverse revenue streams
– Sap Research is present in almost all the verticals within the industry. This has provided firm in SAP: Establishing a Research Centre in China 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.
Organizational Resilience of Sap Research
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sap Research does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Sap Research digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sap Research 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.
Ability to lead change in Global Business field
– Sap Research 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 Sap Research in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Sap Research 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.
Training and development
– Sap Research has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in SAP: Establishing a Research Centre in China Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Sap Research 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 SAP: Establishing a Research Centre in China - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Sap Research has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sap Research has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Sap Research in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Sap Research is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Sap Research is one of the leading recruiters in the industry. Managers in the SAP: Establishing a Research Centre in China are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Sap Research 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 Kuldeep Kumar, Maya Kumar, Markus Alsleben 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.
Weaknesses SAP: Establishing a Research Centre in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of SAP: Establishing a Research Centre in China are -
Increasing silos among functional specialists
– The organizational structure of Sap Research is dominated by functional specialists. It is not different from other players in the Global Business segment. Sap Research needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sap Research to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study SAP: Establishing a Research Centre in China 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 SAP: Establishing a Research Centre in China can leverage the sales team experience to cultivate customer relationships as Sap Research is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study SAP: Establishing a Research Centre in China, in the dynamic environment Sap Research has struggled to respond to the nimble upstart competition. Sap Research has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Sap Research 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.
Skills based hiring
– The stress on hiring functional specialists at Sap Research 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.
Low market penetration in new markets
– Outside its home market of Sap Research, firm in the HBR case study SAP: Establishing a Research Centre in China needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study SAP: Establishing a Research Centre in China 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 Sap Research 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Kuldeep Kumar, Maya Kumar, Markus Alsleben suggests that, Sap Research is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sap Research is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study SAP: Establishing a Research Centre in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the SAP: Establishing a Research Centre in China 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 Sap Research has relatively successful track record of launching new products.
Products dominated business model
– Even though Sap Research 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 - SAP: Establishing a Research Centre in China should strive to include more intangible value offerings along with its core products and services.
Opportunities SAP: Establishing a Research Centre in China | 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 SAP: Establishing a Research Centre in China are -
Buying journey improvements
– Sap Research can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. SAP: Establishing a Research Centre in China 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.
Leveraging digital technologies
– Sap Research 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.
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. Sap Research 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. Sap Research 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sap Research 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sap Research 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, SAP: Establishing a Research Centre in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Sap Research 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.
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. Sap Research can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Sap Research 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.
Manufacturing automation
– Sap Research 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.
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. Sap Research can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sap Research can use these opportunities to build new business models that can help the communities that Sap Research operates in. Secondly it can use opportunities from government spending in Global Business sector.
Using analytics as competitive advantage
– Sap Research 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 SAP: Establishing a Research Centre in China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sap Research to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Sap Research 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.
Threats SAP: Establishing a Research Centre in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study SAP: Establishing a Research Centre in China are -
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. Sap Research can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sap Research with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Sap Research 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.
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.
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. Sap Research needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Regulatory challenges
– Sap Research 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.
Shortening product life cycle
– it is one of the major threat that Sap Research is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Sap Research
– 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 Sap Research.
Consumer confidence and its impact on Sap Research 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.
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. Sap Research will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Sap Research business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Sap Research 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. Sap Research can take advantage of this fund but it will also bring new competitors in the Global Business industry.
High dependence on third party suppliers
– Sap Research 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.
Weighted SWOT Analysis of SAP: Establishing a Research Centre in China 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 SAP: Establishing a Research Centre in China 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 SAP: Establishing a Research Centre in China 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 SAP: Establishing a Research Centre in China 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 SAP: Establishing a Research Centre in China 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 Sap Research needs to make to build a sustainable competitive advantage.
