15FEN: Finding the Blue Ocean in China's Fresh Food SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of 15FEN: Finding the Blue Ocean in China's Fresh Food
15fen (15a??) was the name Henry He (e??e??e??) gave his first business venture - a neighborhood store (c??a??a??) in Guangdong province, China, which promised home delivery of a grocer order within 15 minutes. His inaugural slogan was, "Staple Food & Seasoning, Everything At Your Doorstep in 15 Minutes". A first time entrepreneur, he was imbued with optimism towards internet retailing, and convinced that home delivery within 15 minutes was an unbeatable proposition. In no time, he learned the realities of the grocery business - low margin and hard labor - carrying bags of rice and tins of cooking oil from door to door. Back in 2012, China's internet retailing was dominated by Consumer Electronics, Apparel and Footwear and Consumer Appliances. Fresh Food was tipped to be the next big driver for e-commerce. Headlines such as "Fresh Food e-commerce will be the next blue ocean" were commonplace in the media, and they captured the imagination of aspiring entrepreneurs like Henry He. He was determined to ride this e-retailing wave to create his blue ocean in Fresh Food. But first, he must learn how to swim.
Swot Analysis of "15FEN: Finding the Blue Ocean in China's Fresh Food" written by Kevin Zhou, Josephine Lau includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fresh 15fen facing as an external strategic factors. Some of the topics covered in 15FEN: Finding the Blue Ocean in China's Fresh Food case study are - Strategic Management Strategies, Marketing, Operations management and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the 15FEN: Finding the Blue Ocean in China's Fresh Food casestudy better are - – increasing transportation and logistics costs, supply chains are disrupted by pandemic , technology disruption, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, geopolitical disruptions, cloud computing is disrupting traditional business models,
challanges to central banks by blockchain based private currencies, increasing energy prices, etc
Introduction to SWOT Analysis of 15FEN: Finding the Blue Ocean in China's Fresh Food
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in 15FEN: Finding the Blue Ocean in China's Fresh Food case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fresh 15fen, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fresh 15fen 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 15FEN: Finding the Blue Ocean in China's Fresh Food can be done for the following purposes –
1. Strategic planning using facts provided in 15FEN: Finding the Blue Ocean in China's Fresh Food case study
2. Improving business portfolio management of Fresh 15fen
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 Fresh 15fen
Strengths 15FEN: Finding the Blue Ocean in China's Fresh Food | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fresh 15fen in 15FEN: Finding the Blue Ocean in China's Fresh Food Harvard Business Review case study are -
Training and development
– Fresh 15fen has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in 15FEN: Finding the Blue Ocean in China's Fresh Food 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.
Organizational Resilience of Fresh 15fen
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fresh 15fen does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Leadership & Managing People field
– Fresh 15fen 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 Fresh 15fen in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the 15FEN: Finding the Blue Ocean in China's Fresh Food 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 Fresh 15fen in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Fresh 15fen is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Fresh 15fen has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fresh 15fen 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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Fresh 15fen digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fresh 15fen has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Fresh 15fen has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fresh 15fen to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Fresh 15fen 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 Fresh 15fen 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
– Fresh 15fen is present in almost all the verticals within the industry. This has provided firm in 15FEN: Finding the Blue Ocean in China's Fresh Food 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.
Weaknesses 15FEN: Finding the Blue Ocean in China's Fresh Food | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of 15FEN: Finding the Blue Ocean in China's Fresh Food are -
Slow decision making process
– As mentioned earlier in the report, Fresh 15fen 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. Fresh 15fen 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.
High cash cycle compare to competitors
Fresh 15fen 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 operating costs
– Compare to the competitors, firm in the HBR case study 15FEN: Finding the Blue Ocean in China's Fresh Food 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 Fresh 15fen 's lucrative customers.
Low market penetration in new markets
– Outside its home market of Fresh 15fen, firm in the HBR case study 15FEN: Finding the Blue Ocean in China's Fresh Food needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study 15FEN: Finding the Blue Ocean in China's Fresh Food, is just above the industry average. Fresh 15fen 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Kevin Zhou, Josephine Lau suggests that, Fresh 15fen 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, Fresh 15fen is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study 15FEN: Finding the Blue Ocean in China's Fresh Food can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study 15FEN: Finding the Blue Ocean in China's Fresh Food, in the dynamic environment Fresh 15fen has struggled to respond to the nimble upstart competition. Fresh 15fen has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Fresh 15fen 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 - 15FEN: Finding the Blue Ocean in China's Fresh Food should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the 15FEN: Finding the Blue Ocean in China's Fresh Food 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 Fresh 15fen has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Fresh 15fen 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.
Opportunities 15FEN: Finding the Blue Ocean in China's Fresh Food | 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 15FEN: Finding the Blue Ocean in China's Fresh Food are -
Building a culture of innovation
– managers at Fresh 15fen 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fresh 15fen can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Fresh 15fen 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 15FEN: Finding the Blue Ocean in China's Fresh Food - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fresh 15fen to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Fresh 15fen 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fresh 15fen can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Fresh 15fen is facing challenges because of the dominance of functional experts in the organization. 15FEN: Finding the Blue Ocean in China's Fresh Food 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fresh 15fen 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 Fresh 15fen to hire the very best people irrespective of their geographical location.
Leveraging digital technologies
– Fresh 15fen 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.
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 Fresh 15fen in the consumer business. Now Fresh 15fen can target international markets with far fewer capital restrictions requirements than the existing system.
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. Fresh 15fen can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Fresh 15fen 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.
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. Fresh 15fen 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. Fresh 15fen 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fresh 15fen 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.
Threats 15FEN: Finding the Blue Ocean in China's Fresh Food External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study 15FEN: Finding the Blue Ocean in China's Fresh Food are -
Technology acceleration in Forth Industrial Revolution
– Fresh 15fen has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Fresh 15fen 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.
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 Fresh 15fen business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study 15FEN: Finding the Blue Ocean in China's Fresh Food, Fresh 15fen 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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fresh 15fen with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Fresh 15fen needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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
– Fresh 15fen 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. Fresh 15fen can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fresh 15fen 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 15FEN: Finding the Blue Ocean in China's Fresh Food .
Regulatory challenges
– Fresh 15fen 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.
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. Fresh 15fen 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.
Stagnating economy with rate increase
– Fresh 15fen 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.
Consumer confidence and its impact on Fresh 15fen 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.
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. Fresh 15fen can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of 15FEN: Finding the Blue Ocean in China's Fresh Food 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 15FEN: Finding the Blue Ocean in China's Fresh Food 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 15FEN: Finding the Blue Ocean in China's Fresh Food 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 15FEN: Finding the Blue Ocean in China's Fresh Food 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 15FEN: Finding the Blue Ocean in China's Fresh Food 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 Fresh 15fen needs to make to build a sustainable competitive advantage.