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 - – challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion,
talent flight as more people leaving formal jobs, central banks are concerned over increasing inflation, 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 -
Low bargaining power of suppliers
– Suppliers of Huang Gome in the sector have low bargaining power. Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Huang Gome to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Huang Gome 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 William C. Kirby, Tracy Yuen Manty 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.
Ability to lead change in Global Business field
– Huang Gome 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 Huang Gome in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
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.
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.
High brand equity
– Huang Gome has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Huang Gome to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
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.
Effective Research and Development (R&D)
– Huang Gome 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 Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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 -
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.
Products dominated business model
– Even though Huang Gome has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Huang Gome 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.
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.
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.
Slow to strategic competitive environment developments
– As Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama HBR case study mentions - Huang Gome takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, in the dynamic environment Huang Gome has struggled to respond to the nimble upstart competition. Huang Gome has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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.
Low market penetration in new markets
– Outside its home market of Huang Gome, firm in the HBR case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 -
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.
Creating value in data economy
– The success of analytics program of Huang Gome has opened avenues for new revenue streams for the organization in the industry. This can help Huang Gome to build a more holistic ecosystem as suggested in the Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama case study. Huang Gome can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Huang Gome 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.
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.
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 Huang Gome in the consumer business. Now Huang Gome can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Huang Gome 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.
Building a culture of innovation
– managers at Huang Gome 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Huang Gome is facing challenges because of the dominance of functional experts in the organization. Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Huang Gome 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, Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Huang Gome 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 Huang Gome to hire the very best people irrespective of their geographical location.
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.
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 -
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.
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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama, Huang Gome 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 .
Technology acceleration in Forth Industrial Revolution
– Huang Gome has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Huang Gome 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.
Stagnating economy with rate increase
– Huang Gome 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 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.
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.
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.
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.
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 .
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 Huang Gome in the Global Business sector and impact the bottomline of the organization.
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.
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.
Feel free to connect with us if you need business research.
You can download Excel Template of Case Study Solution & Analysis of Boardroom Battle Behind Bars: Gome Electrical Appliances Holdings -- A Corporate Governance Drama