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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, technology disruption, wage bills are increasing, increasing commodity prices, supply chains are disrupted by pandemic , geopolitical disruptions,
increasing government debt because of Covid-19 spendings, increasing energy prices, 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 -
Effective Research and Development (R&D)
– Tongyi Huo's 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 Huo's Group: A Professional Manager in a Family Firm 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.
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.
Operational resilience
– The operational resilience strategy in the Huo's Group: A Professional Manager in a Family Firm 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.
Ability to lead change in Leadership & Managing People field
– Tongyi Huo's 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 Tongyi Huo's 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
– 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.
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.
Organizational Resilience of Tongyi Huo's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Tongyi Huo's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Tongyi Huo's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Huo's Group: A Professional Manager in a Family Firm in China HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Tongyi Huo's is present in almost all the verticals within the industry. This has provided firm in Huo's Group: A Professional Manager in a Family Firm 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.
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.
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.
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.
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 -
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.
High cash cycle compare to competitors
Tongyi Huo's 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Wang Ting, Paul W. Beamish, Liman Zhou, Luo Jingjing suggests that, Tongyi Huo's 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Tongyi Huo's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Huo's Group: A Professional Manager in a Family Firm in China can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Huo's Group: A Professional Manager in a Family Firm 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 Tongyi Huo's 's lucrative customers.
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.
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 Tongyi Huo's supply chain. Even after few cautionary changes mentioned in the HBR case study - Huo's Group: A Professional Manager in a Family Firm 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 Tongyi Huo's vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Tongyi Huo's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Tongyi Huo's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Huo's Group: A Professional Manager in a Family Firm in China, in the dynamic environment Tongyi Huo's has struggled to respond to the nimble upstart competition. Tongyi Huo's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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.
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 -
Using analytics as competitive advantage
– Tongyi Huo's 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 Huo's Group: A Professional Manager in a Family Firm in China - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Tongyi Huo's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Learning at scale
– Online learning technologies has now opened space for Tongyi Huo's 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Tongyi Huo's is facing challenges because of the dominance of functional experts in the organization. Huo's Group: A Professional Manager in a Family Firm 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Tongyi Huo's 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
– 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.
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.
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 Tongyi Huo's in the consumer business. Now Tongyi Huo's can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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 -
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.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Tongyi Huo's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 .
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.
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 Tongyi Huo's in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
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.
Environmental challenges
– Tongyi Huo's 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. Tongyi Huo's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Tongyi Huo's 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 Huo's Group: A Professional Manager in a Family Firm in China .
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.