The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China
To deliver 5-6 major new Chinese joint ventures annually, Hong Kong China Gas executives began extracting cross-border negotiating lessons from their 80 existing Chinese JVs. Chairman Alfred Chan and CEO Peter Wong knew that HKGC's growth strategy required significant mainland expansion through negotiating joint-ventures to run gas and water distribution systems in diverse urban and rural locations throughout mainland China--often in the face of entrenched local interests who could have blocking power. Discussions with HKGC's negotiation teams revealed an increasingly sophisticated negotiating approach from target identification and party mapping, to "social mapping" and building guanxi, to creative deal design and tactics, in order to most effectively work out issues of equity, management control, territory, and exclusivity.
Authors :: James K. Sebenius, Michael Shih-ta Chen, Medha Samant
Swot Analysis of "The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China" written by James K. Sebenius, Michael Shih-ta Chen, Medha Samant includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hkgc's Negotiating facing as an external strategic factors. Some of the topics covered in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China case study are - Strategic Management Strategies, Joint ventures, Negotiations and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, wage bills are increasing, technology disruption, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hkgc's Negotiating, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hkgc's Negotiating 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China can be done for the following purposes –
1. Strategic planning using facts provided in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China case study
2. Improving business portfolio management of Hkgc's Negotiating
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hkgc's Negotiating
Strengths The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hkgc's Negotiating in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China Harvard Business Review case study are -
Ability to lead change in Leadership & Managing People field
– Hkgc's Negotiating 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 Hkgc's Negotiating in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Leadership & Managing People industry
– The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China firm has clearly differentiated products in the market place. This has enabled Hkgc's Negotiating to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Hkgc's Negotiating to invest into research and development (R&D) and innovation.
Training and development
– Hkgc's Negotiating has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Superior customer experience
– The customer experience strategy of Hkgc's Negotiating in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Hkgc's Negotiating 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
High switching costs
– The high switching costs that Hkgc's Negotiating 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.
Diverse revenue streams
– Hkgc's Negotiating is present in almost all the verticals within the industry. This has provided firm in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Learning organization
- Hkgc's Negotiating 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 Hkgc's Negotiating is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Hkgc's Negotiating is one of the most innovative firm in sector. Manager in The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Strong track record of project management
– Hkgc's Negotiating is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Hkgc's Negotiating in the sector have low bargaining power. The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hkgc's Negotiating to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China are -
Skills based hiring
– The stress on hiring functional specialists at Hkgc's Negotiating 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.
Need for greater diversity
– Hkgc's Negotiating 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.
Increasing silos among functional specialists
– The organizational structure of Hkgc's Negotiating is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Hkgc's Negotiating needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hkgc's Negotiating to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, James K. Sebenius, Michael Shih-ta Chen, Medha Samant suggests that, Hkgc's Negotiating is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 Hkgc's Negotiating 's lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China, in the dynamic environment Hkgc's Negotiating has struggled to respond to the nimble upstart competition. Hkgc's Negotiating 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China can leverage the sales team experience to cultivate customer relationships as Hkgc's Negotiating is planning to shift buying processes online.
Interest costs
– Compare to the competition, Hkgc's Negotiating 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.
Slow to strategic competitive environment developments
– As The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China HBR case study mentions - Hkgc's Negotiating 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.
Capital Spending Reduction
– Even during the low interest decade, Hkgc's Negotiating 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.
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 Hkgc's Negotiating supply chain. Even after few cautionary changes mentioned in the HBR case study - The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 Hkgc's Negotiating vulnerable to further global disruptions in South East Asia.
Opportunities The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hkgc's Negotiating 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 Hkgc's Negotiating to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Hkgc's Negotiating to increase its market reach. Hkgc's Negotiating 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.
Learning at scale
– Online learning technologies has now opened space for Hkgc's Negotiating 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hkgc's Negotiating can use these opportunities to build new business models that can help the communities that Hkgc's Negotiating operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hkgc's Negotiating is facing challenges because of the dominance of functional experts in the organization. The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Buying journey improvements
– Hkgc's Negotiating can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Manufacturing automation
– Hkgc's Negotiating can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hkgc's Negotiating 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, The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hkgc's Negotiating in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Leveraging digital technologies
– Hkgc's Negotiating 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Hkgc's Negotiating 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. Hkgc's Negotiating 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.
Developing new processes and practices
– Hkgc's Negotiating can develop new processes and procedures in Leadership & Managing People 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.
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 Hkgc's Negotiating 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.
Threats The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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. Hkgc's Negotiating needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China, Hkgc's Negotiating may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hkgc's Negotiating 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures in China .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hkgc's Negotiating with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Hkgc's Negotiating 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. Hkgc's Negotiating can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Consumer confidence and its impact on Hkgc's Negotiating 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.
Increasing wage structure of Hkgc's Negotiating
– 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 Hkgc's Negotiating.
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 Hkgc's Negotiating in the Leadership & Managing People sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hkgc's Negotiating can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Shortening product life cycle
– it is one of the major threat that Hkgc's Negotiating is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Hkgc's Negotiating.
Weighted SWOT Analysis of The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 The Hong Kong & China Gas Company Ltd.: Negotiating Joint Ventures 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 Hkgc's Negotiating needs to make to build a sustainable competitive advantage.
