Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B)
Danfoss is one of Denmark's largest family firms, producing components for a wide range of industrial control activity. Spanning the period 1996-2004, the case begins by looking at Danfoss' globalisation strategy, then focuses on its specific experience and learning in China, before returning to the wider challenges that globalisation in China poses for Danfoss as a whole. The focus is on the Refrigeration & Controls (RC) division, the key Danfoss division to enter China.
Swot Analysis of "Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B)" written by Natasha Lee-Evans, Jonathan Story includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Danfoss Rc facing as an external strategic factors. Some of the topics covered in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) case study are - Strategic Management Strategies, Economics, Financial management, Globalization, Government, Manufacturing, Strategy and Global Business.
Some of the macro environment factors that can be used to understand the Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) casestudy better are - – there is backlash against globalization, wage bills are increasing, increasing energy prices, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, geopolitical disruptions,
increasing household debt because of falling income levels, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Danfoss Rc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) can be done for the following purposes –
1. Strategic planning using facts provided in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) case study
2. Improving business portfolio management of Danfoss Rc
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 Danfoss Rc
Strengths Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Danfoss Rc in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) Harvard Business Review case study are -
Ability to lead change in Global Business field
– Danfoss Rc 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 Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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.
Analytics focus
– Danfoss Rc 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 Natasha Lee-Evans, Jonathan Story 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.
Diverse revenue streams
– Danfoss Rc is present in almost all the verticals within the industry. This has provided firm in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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.
Sustainable margins compare to other players in Global Business industry
– Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) firm has clearly differentiated products in the market place. This has enabled Danfoss Rc to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Danfoss Rc to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Danfoss Rc 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Danfoss Rc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Danfoss Rc 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
– Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Danfoss Rc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Danfoss Rc in the sector have low bargaining power. Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Danfoss Rc to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Danfoss Rc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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.
Weaknesses Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B), is just above the industry average. Danfoss Rc needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss Rc 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) can leverage the sales team experience to cultivate customer relationships as Danfoss Rc is planning to shift buying processes online.
Interest costs
– Compare to the competition, Danfoss Rc 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 bargaining power of channel partners
– Because of the regulatory requirements, Natasha Lee-Evans, Jonathan Story suggests that, Danfoss Rc 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.
Need for greater diversity
– Danfoss Rc has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Increasing silos among functional specialists
– The organizational structure of Danfoss Rc is dominated by functional specialists. It is not different from other players in the Global Business segment. Danfoss Rc needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Danfoss Rc to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Danfoss Rc 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.
No frontier risks strategy
– After analyzing the HBR case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B), 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss Rc has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Danfoss Rc 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.
Opportunities Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) | 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Danfoss Rc 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, Danfoss Rc is facing challenges because of the dominance of functional experts in the organization. Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Danfoss Rc 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 Danfoss Rc to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Danfoss Rc can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Danfoss Rc to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Danfoss Rc 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, Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Danfoss Rc to increase its market reach. Danfoss Rc 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.
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 Danfoss Rc 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.
Building a culture of innovation
– managers at Danfoss Rc 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.
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. Danfoss Rc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Danfoss Rc 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.
Learning at scale
– Online learning technologies has now opened space for Danfoss Rc 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.
Developing new processes and practices
– Danfoss Rc 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B), Danfoss Rc 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 .
Environmental challenges
– Danfoss Rc 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. Danfoss Rc can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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 Danfoss Rc business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Danfoss Rc 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Danfoss Rc can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) .
Stagnating economy with rate increase
– Danfoss Rc 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Danfoss Rc 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 Danfoss Rc in the Global Business sector and impact the bottomline of the organization.
Increasing wage structure of Danfoss Rc
– 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 Danfoss Rc.
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. Danfoss Rc needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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. Danfoss Rc 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.
Shortening product life cycle
– it is one of the major threat that Danfoss Rc is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Danfoss Rc.
Weighted SWOT Analysis of Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss RC in China: Going Global, Big Challenges, Condensed Version (A) & (B) 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 Danfoss Rc needs to make to build a sustainable competitive advantage.