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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, wage bills are increasing, increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, digital marketing is dominated by two big players Facebook and Google,
increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, 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 -
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.
Diverse revenue streams
– Dawu Constitution is present in almost all the verticals within the industry. This has provided firm in Hebei Dawu Group: Building the First "Family Business Constitution" in China 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.
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.
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.
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.
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.
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.
High brand equity
– Dawu Constitution has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Dawu Constitution to keep acquiring new customers and building profitable relationship with both the new and loyal 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.
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.
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 -
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.
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.
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.
Increasing silos among functional specialists
– The organizational structure of Dawu Constitution is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Dawu Constitution needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Dawu Constitution to focus more on services rather than just following the product oriented approach.
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.
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.
Skills based hiring
– The stress on hiring functional specialists at Dawu Constitution 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.
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.
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.
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 -
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Dawu Constitution 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. Dawu Constitution 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.
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.
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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Dawu Constitution can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
Creating value in data economy
– The success of analytics program of Dawu Constitution has opened avenues for new revenue streams for the organization in the industry. This can help Dawu Constitution to build a more holistic ecosystem as suggested in the Hebei Dawu Group: Building the First "Family Business Constitution" in China case study. Dawu Constitution can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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 -
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.
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 .
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Dawu Constitution with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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.
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.
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.
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.
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 Dawu Constitution in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Dawu Constitution 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 Hebei Dawu Group: Building the First "Family Business Constitution" in China .
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.