Wanxiang Group: A Chinese Company's Global Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Wanxiang Group: A Chinese Company's Global Strategy
With an almost forty-year history as a business in China, the Wanxiang Group has navigated through the significantly different political and economic changes in China to succeed as a global leader in the auto parts industry, and to develop into a broad business conglomerate. Beginning in 1994, when it first began its operations in the United States, Wanxiang started to expand its role as a parts supplier into a discerning acquirer of distressed companies in the U.S. While it saw acquisition as an exciting means for growth, company strategy at its Hangzhou, China headquarters also included vertical integration with a goal of developing a full-on electric car. Were these two goals divergent or complementary: mutually supportive or exclusive?
Authors :: F. Warren McFarlan, Regina Abrami, William C. Kirby, Tracy Yuen Manty
Swot Analysis of "Wanxiang Group: A Chinese Company's Global Strategy" written by F. Warren McFarlan, Regina Abrami, William C. Kirby, Tracy Yuen Manty includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Wanxiang China facing as an external strategic factors. Some of the topics covered in Wanxiang Group: A Chinese Company's Global Strategy case study are - Strategic Management Strategies, Global strategy, Globalization and Global Business.
Some of the macro environment factors that can be used to understand the Wanxiang Group: A Chinese Company's Global Strategy casestudy better are - – wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, there is backlash against globalization, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Wanxiang Group: A Chinese Company's Global Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Wanxiang Group: A Chinese Company's Global Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Wanxiang China, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Wanxiang 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 Wanxiang Group: A Chinese Company's Global Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Wanxiang Group: A Chinese Company's Global Strategy case study
2. Improving business portfolio management of Wanxiang 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 Wanxiang China
Strengths Wanxiang Group: A Chinese Company's Global Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Wanxiang China in Wanxiang Group: A Chinese Company's Global Strategy Harvard Business Review case study are -
Ability to lead change in Global Business field
– Wanxiang 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 Wanxiang China in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Wanxiang 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.
Training and development
– Wanxiang China has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Wanxiang Group: A Chinese Company's Global Strategy 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.
Diverse revenue streams
– Wanxiang China is present in almost all the verticals within the industry. This has provided firm in Wanxiang Group: A Chinese Company's Global Strategy 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.
High brand equity
– Wanxiang China has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Wanxiang China to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Wanxiang China is one of the leading recruiters in the industry. Managers in the Wanxiang Group: A Chinese Company's Global Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Wanxiang China is one of the most innovative firm in sector. Manager in Wanxiang Group: A Chinese Company's Global Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Organizational Resilience of Wanxiang China
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Wanxiang China does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Global Business industry
– Wanxiang Group: A Chinese Company's Global Strategy firm has clearly differentiated products in the market place. This has enabled Wanxiang China to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Wanxiang China to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Wanxiang 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 Wanxiang Group: A Chinese Company's Global Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Wanxiang 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.
Successful track record of launching new products
– Wanxiang China has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Wanxiang China 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.
Weaknesses Wanxiang Group: A Chinese Company's Global Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Wanxiang Group: A Chinese Company's Global Strategy are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Wanxiang China is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Wanxiang Group: A Chinese Company's Global Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Wanxiang China 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang China has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Wanxiang Group: A Chinese Company's Global Strategy, 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.
Slow decision making process
– As mentioned earlier in the report, Wanxiang China 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. Wanxiang China 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Wanxiang Group: A Chinese Company's Global Strategy, is just above the industry average. Wanxiang China 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang China 's lucrative customers.
Need for greater diversity
– Wanxiang 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.
Low market penetration in new markets
– Outside its home market of Wanxiang China, firm in the HBR case study Wanxiang Group: A Chinese Company's Global Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Aligning sales with marketing
– It come across in the case study Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang Group: A Chinese Company's Global Strategy can leverage the sales team experience to cultivate customer relationships as Wanxiang China is planning to shift buying processes online.
Interest costs
– Compare to the competition, Wanxiang 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.
Opportunities Wanxiang Group: A Chinese Company's Global Strategy | 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 Wanxiang Group: A Chinese Company's Global Strategy are -
Better consumer reach
– The expansion of the 5G network will help Wanxiang China to increase its market reach. Wanxiang China 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Wanxiang 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.
Manufacturing automation
– Wanxiang 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.
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 Wanxiang China 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Wanxiang China in the consumer business. Now Wanxiang China can target international markets with far fewer capital restrictions requirements than the existing system.
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. Wanxiang 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. Wanxiang 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.
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. Wanxiang China can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Wanxiang China 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, Wanxiang Group: A Chinese Company's Global Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Wanxiang 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Wanxiang China can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Wanxiang China can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Wanxiang 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 Wanxiang China to hire the very best people irrespective of their geographical location.
Developing new processes and practices
– Wanxiang 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 Wanxiang Group: A Chinese Company's Global Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Wanxiang Group: A Chinese Company's Global Strategy are -
Stagnating economy with rate increase
– Wanxiang 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.
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. Wanxiang 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 acceleration in Forth Industrial Revolution
– Wanxiang China has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Wanxiang 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.
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. Wanxiang China can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Wanxiang 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Wanxiang Group: A Chinese Company's Global Strategy, Wanxiang 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 .
High dependence on third party suppliers
– Wanxiang China 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 wage structure of Wanxiang 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 Wanxiang China.
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 Wanxiang China.
Environmental challenges
– Wanxiang China 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. Wanxiang China can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Consumer confidence and its impact on Wanxiang 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.
Shortening product life cycle
– it is one of the major threat that Wanxiang China is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Wanxiang China needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang Group: A Chinese Company's Global Strategy 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 Wanxiang China needs to make to build a sustainable competitive advantage.
