Case Study Description of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama
Despite widespread news of the incarceration of Gome Electronics' CEO, Huang Guangyu, Bain Capital felt they carefully undertook due diligence before making a significant investment in the company. The venture capital firm was confident that it and the current management could work together to revamp the fortunes of China's leading electronic retailer. However, it did not anticipate the power Huang had behind bars. As the majority shareholder, Huang has managed to manipulate shareholder meetings and current management decisions and structure. Was this typical of an investment in China or did Bain Capital just find itself in a unique situation? What can future managers learn from this situation about corporate governance and ethical rules of business in China?
Swot Analysis of "Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama" written by William C. Kirby, Tracy Yuen Manty includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Huang Gome facing as an external strategic factors. Some of the topics covered in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study are - Strategic Management Strategies, Ethics, Regulation, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama casestudy better are - – digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing government debt because of Covid-19 spendings, increasing energy prices, etc
Introduction to SWOT Analysis of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Huang Gome, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama can be done for the following purposes –
1. Strategic planning using facts provided in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study
2. Improving business portfolio management of Huang Gome
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 Huang Gome
Strengths Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Huang Gome in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama Harvard Business Review case study are -
Innovation driven organization
– Huang Gome is one of the most innovative firm in sector. Manager in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Huang Gome is one of the leading recruiters in the industry. Managers in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Huang Gome 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.
High switching costs
– The high switching costs that Huang Gome 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.
Organizational Resilience of Huang Gome
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Huang Gome does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Huang Gome has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Huang Gome 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.
Training and development
– Huang Gome has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Highly skilled collaborators
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Huang Gome digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Huang Gome 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
– Huang Gome is present in almost all the verticals within the industry. This has provided firm in Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Superior customer experience
– The customer experience strategy of Huang Gome in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are -
No frontier risks strategy
– After analyzing the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, 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.
Increasing silos among functional specialists
– The organizational structure of Huang Gome is dominated by functional specialists. It is not different from other players in the Global Business segment. Huang Gome needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Huang Gome to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Huang Gome 's lucrative customers.
Need for greater diversity
– Huang Gome 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, is just above the industry average. Huang Gome 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.
Capital Spending Reduction
– Even during the low interest decade, Huang Gome has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, it seems that the employees of Huang Gome don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama can leverage the sales team experience to cultivate customer relationships as Huang Gome is planning to shift buying processes online.
Interest costs
– Compare to the competition, Huang Gome 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, William C. Kirby, Tracy Yuen Manty suggests that, Huang Gome 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, Huang Gome is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama | 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama are -
Buying journey improvements
– Huang Gome can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Manufacturing automation
– Huang Gome 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 Huang Gome 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.
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. Huang Gome 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. Huang Gome 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.
Better consumer reach
– The expansion of the 5G network will help Huang Gome to increase its market reach. Huang Gome 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Huang Gome can use these opportunities to build new business models that can help the communities that Huang Gome operates in. Secondly it can use opportunities from government spending in Global Business sector.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Huang Gome 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 Huang Gome 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.
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. Huang Gome can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Huang Gome 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Huang Gome can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Huang Gome 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.
Loyalty marketing
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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. Huang Gome can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Huang Gome 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. Huang Gome 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 Huang Gome business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Huang Gome 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.
Shortening product life cycle
– it is one of the major threat that Huang Gome is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Huang Gome 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.
Increasing wage structure of Huang Gome
– 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 Huang Gome.
High dependence on third party suppliers
– Huang Gome 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.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama .
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. Huang Gome needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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 Huang Gome.
Weighted SWOT Analysis of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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 Huang Gome needs to make to build a sustainable competitive advantage.
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