Case Study Description of Navigating China's Changing Economy: Strategies for Private Firms
Despite China's rapid economic growth and the role private firms have played in it, many such companies have experienced numerous problems. At the root of many of these problems is the lack of well-established ground rules for commerce and the absence of institutions that support and legitimize private enterprise. Moreover, reforms in the Peoples Republic of China in the late 1970s transferred much of the government's role in economic decision-making to the provincial and local level. The result for private firms is vulnerability to arbitrary and capricious interventions, intrusions, and orders. This study of 12 private firms illustrates these problems and shows how such firms make use of guanxi to manage these challenges. The different forms of guanxi include coopting strategies, such as offering shares to local officials, hiring people from within the government who already have connections, or hiring former village elders. Another strategy takes the form of trust-building in dealings with suppliers and distributors and in giving small favors, such as holding regular banquets for local officials. Finally, the firms studied here have assiduously engaged in charitable giving at the local level, making donations to construct educational facilities and community centers and to aid families affected by floods. These strategies reflect the reality that private firms' transactions in China are not based on pure market or pure planning, but on influence.
Authors :: David Ahlstrom, Garry D. Bruton, Steven S.Y. Lui
Swot Analysis of "Navigating China's Changing Economy: Strategies for Private Firms" written by David Ahlstrom, Garry D. Bruton, Steven S.Y. Lui includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Firms Private facing as an external strategic factors. Some of the topics covered in Navigating China's Changing Economy: Strategies for Private Firms case study are - Strategic Management Strategies, Government and Global Business.
Some of the macro environment factors that can be used to understand the Navigating China's Changing Economy: Strategies for Private Firms casestudy better are - – wage bills are increasing, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%,
competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Navigating China's Changing Economy: Strategies for Private Firms
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Navigating China's Changing Economy: Strategies for Private Firms case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Firms Private, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Firms Private 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 Navigating China's Changing Economy: Strategies for Private Firms can be done for the following purposes –
1. Strategic planning using facts provided in Navigating China's Changing Economy: Strategies for Private Firms case study
2. Improving business portfolio management of Firms Private
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 Firms Private
Strengths Navigating China's Changing Economy: Strategies for Private Firms | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Firms Private in Navigating China's Changing Economy: Strategies for Private Firms Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Navigating China's Changing Economy: Strategies for Private Firms 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.
Training and development
– Firms Private has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Navigating China's Changing Economy: Strategies for Private Firms 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.
Innovation driven organization
– Firms Private is one of the most innovative firm in sector. Manager in Navigating China's Changing Economy: Strategies for Private Firms 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 Firms Private
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Firms Private 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 Firms Private digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Firms Private 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.
Diverse revenue streams
– Firms Private is present in almost all the verticals within the industry. This has provided firm in Navigating China's Changing Economy: Strategies for Private Firms 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.
Cross disciplinary teams
– Horizontal connected teams at the Firms Private 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.
Sustainable margins compare to other players in Global Business industry
– Navigating China's Changing Economy: Strategies for Private Firms firm has clearly differentiated products in the market place. This has enabled Firms Private to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Firms Private to invest into research and development (R&D) and innovation.
Analytics focus
– Firms Private 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 David Ahlstrom, Garry D. Bruton, Steven S.Y. Lui 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.
Effective Research and Development (R&D)
– Firms Private 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 Navigating China's Changing Economy: Strategies for Private Firms - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Firms Private 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 Firms Private is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Navigating China's Changing Economy: Strategies for Private Firms Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Ability to lead change in Global Business field
– Firms Private 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 Firms Private in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Navigating China's Changing Economy: Strategies for Private Firms | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Navigating China's Changing Economy: Strategies for Private Firms are -
Workers concerns about automation
– As automation is fast increasing in the segment, Firms Private 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.
No frontier risks strategy
– After analyzing the HBR case study Navigating China's Changing Economy: Strategies for Private Firms, 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.
Interest costs
– Compare to the competition, Firms Private 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.
Need for greater diversity
– Firms Private 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.
Lack of clear differentiation of Firms Private products
– To increase the profitability and margins on the products, Firms Private needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Navigating China's Changing Economy: Strategies for Private Firms, in the dynamic environment Firms Private has struggled to respond to the nimble upstart competition. Firms Private has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow decision making process
– As mentioned earlier in the report, Firms Private 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. Firms Private 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, David Ahlstrom, Garry D. Bruton, Steven S.Y. Lui suggests that, Firms Private 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.
Aligning sales with marketing
– It come across in the case study Navigating China's Changing Economy: Strategies for Private Firms 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 Navigating China's Changing Economy: Strategies for Private Firms can leverage the sales team experience to cultivate customer relationships as Firms Private is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Firms Private 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Firms Private is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Navigating China's Changing Economy: Strategies for Private Firms can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Navigating China's Changing Economy: Strategies for Private Firms | 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 Navigating China's Changing Economy: Strategies for Private Firms are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Firms Private 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.
Learning at scale
– Online learning technologies has now opened space for Firms Private 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.
Creating value in data economy
– The success of analytics program of Firms Private has opened avenues for new revenue streams for the organization in the industry. This can help Firms Private to build a more holistic ecosystem as suggested in the Navigating China's Changing Economy: Strategies for Private Firms case study. Firms Private can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Firms Private 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 Firms Private 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 Firms Private to hire the very best people irrespective of their geographical location.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Firms Private is facing challenges because of the dominance of functional experts in the organization. Navigating China's Changing Economy: Strategies for Private Firms 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Firms Private 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.
Manufacturing automation
– Firms Private 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.
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 Firms Private in the consumer business. Now Firms Private can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Firms Private 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.
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 Firms Private 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.
Leveraging digital technologies
– Firms Private 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. Firms Private 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. Firms Private 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.
Threats Navigating China's Changing Economy: Strategies for Private Firms External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Navigating China's Changing Economy: Strategies for Private Firms are -
Consumer confidence and its impact on Firms Private 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Firms Private with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Firms Private in the Global Business sector and impact the bottomline of the organization.
Environmental challenges
– Firms Private 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. Firms Private 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 Firms Private business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Navigating China's Changing Economy: Strategies for Private Firms, Firms Private 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 .
Stagnating economy with rate increase
– Firms Private 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.
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 Firms Private.
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. Firms Private can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Firms Private 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 Navigating China's Changing Economy: Strategies for Private Firms .
Regulatory challenges
– Firms Private 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 disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing wage structure of Firms Private
– 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 Firms Private.
Weighted SWOT Analysis of Navigating China's Changing Economy: Strategies for Private Firms 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 Navigating China's Changing Economy: Strategies for Private Firms 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 Navigating China's Changing Economy: Strategies for Private Firms 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 Navigating China's Changing Economy: Strategies for Private Firms 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 Navigating China's Changing Economy: Strategies for Private Firms 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 Firms Private needs to make to build a sustainable competitive advantage.