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 - – central banks are concerned over increasing inflation, technology disruption, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, increasing government debt because of Covid-19 spendings, increasing commodity prices,
increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, 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 -
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.
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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Hebei Dawu Group: Building the First "Family Business Constitution" in China firm has clearly differentiated products in the market place. This has enabled Dawu Constitution to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Dawu Constitution to invest into research and development (R&D) and innovation.
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.
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.
Effective Research and Development (R&D)
– Dawu Constitution 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
Analytics focus
– Dawu Constitution 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 Yuping Du 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 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.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Dawu Constitution digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Dawu Constitution 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 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.
Organizational Resilience of Dawu Constitution
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Dawu Constitution does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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 -
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.
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.
Slow to strategic competitive environment developments
– As Hebei Dawu Group: Building the First "Family Business Constitution" in China HBR case study mentions - Dawu Constitution 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.
Products dominated business model
– Even though Dawu Constitution 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 - Hebei Dawu Group: Building the First "Family Business Constitution" in China should strive to include more intangible value offerings along with its core products and services.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hebei Dawu Group: Building the First "Family Business Constitution" in China, in the dynamic environment Dawu Constitution has struggled to respond to the nimble upstart competition. Dawu Constitution has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Dawu Constitution supply chain. Even after few cautionary changes mentioned in the HBR case study - Hebei Dawu Group: Building the First "Family Business Constitution" in China, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Dawu Constitution vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Hebei Dawu Group: Building the First "Family Business Constitution" in China, it seems that the employees of Dawu Constitution 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.
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.
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.
High cash cycle compare to competitors
Dawu Constitution 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.
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 -
Better consumer reach
– The expansion of the 5G network will help Dawu Constitution to increase its market reach. Dawu Constitution 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.
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.
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.
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.
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.
Buying journey improvements
– Dawu Constitution can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hebei Dawu Group: Building the First "Family Business Constitution" in China 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Dawu Constitution 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 Dawu Constitution to hire the very best people irrespective of their geographical location.
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.
Leveraging digital technologies
– Dawu Constitution 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Dawu Constitution can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Dawu Constitution in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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.
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.
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 -
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.
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. Dawu Constitution 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.
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.
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.
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 .
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.
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.
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.
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.
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.
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. Dawu Constitution needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
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.
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.
