Hebei Dawu Group: Building the First "Family Business Constitution" in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Hebei Dawu Group: Building the First "Family Business Constitution" in China
This case examines the "Family Business Constitution" created by Dawu Group's founder, Sun Dawu. It was the only such system in China to date. The system made it possible for the group to survive near-fatal challenges. The case starts with challenges Sun Dawu encountered: a salary-rise request from a recently elected board member; some managers' doubts about the constitution system; and the suspicion of external experts and journalists of the group's elections. The case examines the history of Dawu Group, the "Family Business Constitution" system and the approach Sun Dawu took to address the succession issue. One of the issues the family business owner faced was whether it was possible to solve the internal challenges and external doubts about family business succession and governance and, if so, how.Objectives: 1) To illustrate how a Chinese family business owner has sought a proper corporate governance and management mechanism 2) To help students understand the hybrid institutional infrastructures of the "Family Business Constitution" and the challenges during the implementation, especially the cross-generational succession issue in the specific Chinese context 3) This case is suitable for core and elective courses in business management, strategy, sustainability, corporate governance and human resource management, and elective courses in family business management, Chinese business management and entrepreneurship.
Swot Analysis of "Hebei Dawu Group: Building the First "Family Business Constitution" in China" written by Yuping Du includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Dawu Constitution facing as an external strategic factors. Some of the topics covered in Hebei Dawu Group: Building the First "Family Business Constitution" in China case study are - Strategic Management Strategies, Crisis management, Decision making, Growth strategy, Human resource management, Sustainability and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Hebei Dawu Group: Building the First "Family Business Constitution" in China casestudy better are - – technology disruption, there is backlash against globalization, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , wage bills are increasing, etc
Introduction to SWOT Analysis of Hebei Dawu Group: Building the First "Family Business Constitution" in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hebei Dawu Group: Building the First "Family Business Constitution" in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Dawu Constitution, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Dawu Constitution 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China can be done for the following purposes –
1. Strategic planning using facts provided in Hebei Dawu Group: Building the First "Family Business Constitution" in China case study
2. Improving business portfolio management of Dawu Constitution
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Dawu Constitution
Strengths Hebei Dawu Group: Building the First "Family Business Constitution" in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Dawu Constitution in Hebei Dawu Group: Building the First "Family Business Constitution" in China Harvard Business Review case study are -
Innovation driven organization
– Dawu Constitution is one of the most innovative firm in sector. Manager in Hebei Dawu Group: Building the First "Family Business Constitution" in China Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Dawu Constitution 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.
Ability to lead change in Innovation & Entrepreneurship field
– Dawu Constitution 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 Dawu Constitution in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Dawu Constitution 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Dawu Constitution is one of the leading recruiters in the industry. Managers in the Hebei Dawu Group: Building the First "Family Business Constitution" in China are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management
– Dawu Constitution is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Superior customer experience
– The customer experience strategy of Dawu Constitution in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Dawu Constitution has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Hebei Dawu Group: Building the First "Family Business Constitution" in China 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.
Successful track record of launching new products
– Dawu Constitution has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Dawu Constitution 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.
Operational resilience
– The operational resilience strategy in the Hebei Dawu Group: Building the First "Family Business Constitution" in China 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.
Cross disciplinary teams
– Horizontal connected teams at the Dawu Constitution 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.
Low bargaining power of suppliers
– Suppliers of Dawu Constitution in the sector have low bargaining power. Hebei Dawu Group: Building the First "Family Business Constitution" in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Dawu Constitution to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Hebei Dawu Group: Building the First "Family Business Constitution" in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hebei Dawu Group: Building the First "Family Business Constitution" in China are -
Interest costs
– Compare to the competition, Dawu Constitution 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.
No frontier risks strategy
– After analyzing the HBR case study Hebei Dawu Group: Building the First "Family Business Constitution" in China, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Dawu Constitution 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.
Capital Spending Reduction
– Even during the low interest decade, Dawu Constitution 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.
Slow decision making process
– As mentioned earlier in the report, Dawu Constitution 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. Dawu Constitution even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hebei Dawu Group: Building the First "Family Business Constitution" in China, is just above the industry average. Dawu Constitution 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.
Need for greater diversity
– Dawu Constitution 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.
Aligning sales with marketing
– It come across in the case study Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China can leverage the sales team experience to cultivate customer relationships as Dawu Constitution is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Dawu Constitution 's lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Dawu Constitution is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hebei Dawu Group: Building the First "Family Business Constitution" in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Dawu Constitution has relatively successful track record of launching new products.
Opportunities Hebei Dawu Group: Building the First "Family Business Constitution" in China | 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China are -
Loyalty marketing
– Dawu Constitution 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.
Developing new processes and practices
– Dawu Constitution can develop new processes and procedures in Innovation & Entrepreneurship 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Dawu Constitution 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, Hebei Dawu Group: Building the First "Family Business Constitution" in China, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Building a culture of innovation
– managers at Dawu Constitution 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 Innovation & Entrepreneurship segment.
Manufacturing automation
– Dawu Constitution can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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 Dawu Constitution in the consumer business. Now Dawu Constitution can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Dawu Constitution can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Dawu Constitution is facing challenges because of the dominance of functional experts in the organization. Hebei Dawu Group: Building the First "Family Business Constitution" in China 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.
Using analytics as competitive advantage
– Dawu Constitution 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Dawu Constitution to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Dawu Constitution can use these opportunities to build new business models that can help the communities that Dawu Constitution operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
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 Dawu Constitution 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Dawu Constitution 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 Dawu Constitution 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.
Threats Hebei Dawu Group: Building the First "Family Business Constitution" in China External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hebei Dawu Group: Building the First "Family Business Constitution" in China are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Dawu Constitution in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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 Dawu Constitution is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Dawu Constitution 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.
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 Dawu Constitution.
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.
Stagnating economy with rate increase
– Dawu Constitution 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.
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 Dawu Constitution business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Dawu Constitution
– 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 Dawu Constitution.
High dependence on third party suppliers
– Dawu Constitution 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 acceleration in Forth Industrial Revolution
– Dawu Constitution has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Dawu Constitution needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
Environmental challenges
– Dawu Constitution 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. Dawu Constitution can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Hebei Dawu Group: Building the First "Family Business Constitution" in China, Dawu Constitution may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Dawu Constitution can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China 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 Dawu Constitution needs to make to build a sustainable competitive advantage.
