Huo's Group: A Professional Manager in a Family Firm in China SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Huo's Group: A Professional Manager in a Family Firm in China
In February 2012, a human resources appointment attracted wide attention from China's domestic lubricating oil industry. The iconic general manager of Shell Tongyi (Beijing) Petroleum Chemical Co., Ltd. officially took the position as the chief executive officer (CEO) of Huo's Group, thus returning to work for his former boss, the founder of the former Tongyi Lubricating Oil. Before the merger between Tongyi and Shell in 2006, the private entrepreneur and the professional manager had jointly created the well-known Tongyi Lubricating Oil and were renowned as "perfect partners" by many in the business media. In 2012, their hope was to achieve glory again on this wider business platform - Huo's Group. Was this likely?
Authors :: Wang Ting, Paul W. Beamish, Liman Zhou, Luo Jingjing
Swot Analysis of "Huo's Group: A Professional Manager in a Family Firm in China" written by Wang Ting, Paul W. Beamish, Liman Zhou, Luo Jingjing includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Tongyi Huo's facing as an external strategic factors. Some of the topics covered in Huo's Group: A Professional Manager in a Family Firm in China case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Huo's Group: A Professional Manager in a Family Firm in China casestudy better are - – there is backlash against globalization, increasing transportation and logistics costs, wage bills are increasing, increasing commodity prices, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Huo's Group: A Professional Manager in a Family Firm in China
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Huo's Group: A Professional Manager in a Family Firm in China case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Tongyi Huo's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Tongyi Huo's 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 Huo's Group: A Professional Manager in a Family Firm in China can be done for the following purposes –
1. Strategic planning using facts provided in Huo's Group: A Professional Manager in a Family Firm in China case study
2. Improving business portfolio management of Tongyi Huo's
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 Tongyi Huo's
Strengths Huo's Group: A Professional Manager in a Family Firm in China | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Tongyi Huo's in Huo's Group: A Professional Manager in a Family Firm in China Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Tongyi Huo's in the sector have low bargaining power. Huo's Group: A Professional Manager in a Family Firm in China has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Tongyi Huo's to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Tongyi Huo's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Huo's Group: A Professional Manager in a Family Firm 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.
Innovation driven organization
– Tongyi Huo's is one of the most innovative firm in sector. Manager in Huo's Group: A Professional Manager in a Family Firm 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 brand equity
– Tongyi Huo's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Tongyi Huo's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Tongyi Huo's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Tongyi Huo's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Tongyi Huo's 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.
Analytics focus
– Tongyi Huo's 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 Wang Ting, Paul W. Beamish, Liman Zhou, Luo Jingjing 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.
Learning organization
- Tongyi Huo's 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 Tongyi Huo's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Huo's Group: A Professional Manager in a Family Firm in China Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Tongyi Huo's 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.
Cross disciplinary teams
– Horizontal connected teams at the Tongyi Huo's 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.
Ability to recruit top talent
– Tongyi Huo's is one of the leading recruiters in the industry. Managers in the Huo's Group: A Professional Manager in a Family Firm 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Huo's Group: A Professional Manager in a Family Firm in China firm has clearly differentiated products in the market place. This has enabled Tongyi Huo's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Tongyi Huo's to invest into research and development (R&D) and innovation.
Weaknesses Huo's Group: A Professional Manager in a Family Firm in China | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Huo's Group: A Professional Manager in a Family Firm in China are -
Lack of clear differentiation of Tongyi Huo's products
– To increase the profitability and margins on the products, Tongyi Huo's needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Tongyi Huo's, firm in the HBR case study Huo's Group: A Professional Manager in a Family Firm in China needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Huo's Group: A Professional Manager in a Family Firm in China HBR case study mentions - Tongyi Huo's 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Huo's Group: A Professional Manager in a Family Firm in China, is just above the industry average. Tongyi Huo's 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
– Tongyi Huo's 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.
Capital Spending Reduction
– Even during the low interest decade, Tongyi Huo's 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 star products
– The top 2 products and services of the firm as mentioned in the Huo's Group: A Professional Manager in a Family Firm 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 Tongyi Huo's has relatively successful track record of launching new products.
Products dominated business model
– Even though Tongyi Huo's 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 - Huo's Group: A Professional Manager in a Family Firm in China should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Tongyi Huo's 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Tongyi Huo's 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.
Skills based hiring
– The stress on hiring functional specialists at Tongyi Huo's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Opportunities Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm in China are -
Loyalty marketing
– Tongyi Huo's 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.
Manufacturing automation
– Tongyi Huo's 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Tongyi Huo's 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 Tongyi Huo's to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Tongyi Huo's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Tongyi Huo's 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, Huo's Group: A Professional Manager in a Family Firm 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 Tongyi Huo's 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 Leadership & Managing People segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Tongyi Huo's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Tongyi Huo's has opened avenues for new revenue streams for the organization in the industry. This can help Tongyi Huo's to build a more holistic ecosystem as suggested in the Huo's Group: A Professional Manager in a Family Firm in China case study. Tongyi Huo's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Tongyi Huo's 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.
Buying journey improvements
– Tongyi Huo's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Huo's Group: A Professional Manager in a Family Firm 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.
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 Tongyi Huo's 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.
Developing new processes and practices
– Tongyi Huo's 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Tongyi Huo's can use these opportunities to build new business models that can help the communities that Tongyi Huo's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Threats Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm in China are -
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. Tongyi Huo's 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 Tongyi Huo's business can come under increasing regulations regarding data privacy, data security, etc.
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.
Increasing wage structure of Tongyi Huo's
– 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 Tongyi Huo's.
Regulatory challenges
– Tongyi Huo's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Stagnating economy with rate increase
– Tongyi Huo's 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Huo's Group: A Professional Manager in a Family Firm in China, Tongyi Huo's 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 .
Consumer confidence and its impact on Tongyi Huo's 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.
Shortening product life cycle
– it is one of the major threat that Tongyi Huo's is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Tongyi Huo's 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
– Tongyi Huo's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Tongyi Huo's needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Tongyi Huo's in the Leadership & Managing People industry. The Leadership & Managing People 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. Tongyi Huo's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm 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 Huo's Group: A Professional Manager in a Family Firm 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 Tongyi Huo's needs to make to build a sustainable competitive advantage.
