Acquisition and Consolidation: The Evolution of Tsingtao Brewery SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Acquisition and Consolidation: The Evolution of Tsingtao Brewery
China's rapid economic development since the late 1990s makes it one of the most appealing places for international investors. Te Chinese beer industry has tempted nearly every big multinational brewery looking to boost sales away from the relatively saturated markets in the developed countries. At such a contextual time, Anheuser-Busch and SABMiller, the world's top two breweries, involved in a fierce acquisition war for the Chinese fourth-largest brewery and the dominant brewery in the North-eastern region, Harbin Brewery. At the same time the China's largest brewer, Tsingtao, is reorganizing its business after several years of growth through acquisition. How can the company optimize its portfolio of brands and consolidate without loosing ground in the rapidly growing Chinese beer market?
Swot Analysis of "Acquisition and Consolidation: The Evolution of Tsingtao Brewery" written by Dongya Li, Zhigang Tao includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Brewery Tsingtao facing as an external strategic factors. Some of the topics covered in Acquisition and Consolidation: The Evolution of Tsingtao Brewery case study are - Strategic Management Strategies, Marketing, Mergers & acquisitions and Global Business.
Some of the macro environment factors that can be used to understand the Acquisition and Consolidation: The Evolution of Tsingtao Brewery casestudy better are - – there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, cloud computing is disrupting traditional business models,
talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Acquisition and Consolidation: The Evolution of Tsingtao Brewery
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Acquisition and Consolidation: The Evolution of Tsingtao Brewery case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Brewery Tsingtao, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Brewery Tsingtao 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery can be done for the following purposes –
1. Strategic planning using facts provided in Acquisition and Consolidation: The Evolution of Tsingtao Brewery case study
2. Improving business portfolio management of Brewery Tsingtao
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 Brewery Tsingtao
Strengths Acquisition and Consolidation: The Evolution of Tsingtao Brewery | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Brewery Tsingtao in Acquisition and Consolidation: The Evolution of Tsingtao Brewery Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Brewery Tsingtao 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.
Highly skilled collaborators
– Brewery Tsingtao 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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.
Ability to lead change in Global Business field
– Brewery Tsingtao 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 Brewery Tsingtao in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Brewery Tsingtao in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Brewery Tsingtao 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 Brewery Tsingtao is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Acquisition and Consolidation: The Evolution of Tsingtao Brewery Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Global Business industry
– Acquisition and Consolidation: The Evolution of Tsingtao Brewery firm has clearly differentiated products in the market place. This has enabled Brewery Tsingtao to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Brewery Tsingtao to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Brewery Tsingtao 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 Brewery Tsingtao
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Brewery Tsingtao does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Brewery Tsingtao is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Brewery Tsingtao is one of the most innovative firm in sector. Manager in Acquisition and Consolidation: The Evolution of Tsingtao Brewery Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Brewery Tsingtao digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Brewery Tsingtao 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.
Weaknesses Acquisition and Consolidation: The Evolution of Tsingtao Brewery | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Acquisition and Consolidation: The Evolution of Tsingtao Brewery are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery, is just above the industry average. Brewery Tsingtao 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.
Interest costs
– Compare to the competition, Brewery Tsingtao 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 operating costs
– Compare to the competitors, firm in the HBR case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Brewery Tsingtao 's lucrative customers.
High cash cycle compare to competitors
Brewery Tsingtao has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Brewery Tsingtao 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 - Acquisition and Consolidation: The Evolution of Tsingtao Brewery should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery, it seems that the employees of Brewery Tsingtao 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.
Lack of clear differentiation of Brewery Tsingtao products
– To increase the profitability and margins on the products, Brewery Tsingtao 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery, in the dynamic environment Brewery Tsingtao has struggled to respond to the nimble upstart competition. Brewery Tsingtao has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– It come across in the case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery can leverage the sales team experience to cultivate customer relationships as Brewery Tsingtao is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Brewery Tsingtao has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Brewery Tsingtao 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.
Opportunities Acquisition and Consolidation: The Evolution of Tsingtao Brewery | 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery are -
Using analytics as competitive advantage
– Brewery Tsingtao has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Brewery Tsingtao to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Brewery Tsingtao has opened avenues for new revenue streams for the organization in the industry. This can help Brewery Tsingtao to build a more holistic ecosystem as suggested in the Acquisition and Consolidation: The Evolution of Tsingtao Brewery case study. Brewery Tsingtao can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Brewery Tsingtao 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Brewery Tsingtao 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.
Loyalty marketing
– Brewery Tsingtao 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Brewery Tsingtao 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
– Brewery Tsingtao 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Brewery Tsingtao 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 Brewery Tsingtao to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Brewery Tsingtao can use these opportunities to build new business models that can help the communities that Brewery Tsingtao operates in. Secondly it can use opportunities from government spending in Global Business sector.
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 Brewery Tsingtao in the consumer business. Now Brewery Tsingtao can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Brewery Tsingtao can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Brewery Tsingtao 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, Acquisition and Consolidation: The Evolution of Tsingtao Brewery, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Brewery Tsingtao 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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. Brewery Tsingtao can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Brewery Tsingtao in the Global Business sector and impact the bottomline of the organization.
Consumer confidence and its impact on Brewery Tsingtao 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.
High dependence on third party suppliers
– Brewery Tsingtao 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.
Technology acceleration in Forth Industrial Revolution
– Brewery Tsingtao has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Brewery Tsingtao 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Brewery Tsingtao with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Brewery Tsingtao 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. Brewery Tsingtao can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Brewery Tsingtao 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.
Stagnating economy with rate increase
– Brewery Tsingtao 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.
Shortening product life cycle
– it is one of the major threat that Brewery Tsingtao is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery, Brewery Tsingtao 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 .
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 Brewery Tsingtao business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Acquisition and Consolidation: The Evolution of Tsingtao Brewery 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 Brewery Tsingtao needs to make to build a sustainable competitive advantage.
