Case Study Description of Leadership Crisis at Steelworks' Xiamen Plant
In April 2010, the chief executive officer (CEO) of Steelworks, a Singapore-based metals company recently acquired by an Indian conglomerate, embarked on a plan to realign the organization's structure and processes across its subsidiaries. However, he had difficulty getting the long-serving general manager of a plant in China to sign off on the current year's audited financial statements. This led to a tense and bizarre confrontation between the CEO and the regional general manager. The restructuring project was taking autonomy from regional unit heads. Was that the problem? Was Steelworks mismanaging its subsidiaries? Had the general manager of the Chinese plant, a Singaporean expatriate, been seconded to China for too long? It was unclear how a member of the senior management team who had been with Steelworks for his entire career could behave this way and jeopardize his position. What could the CEO have done differently? Hwee Hoon Tan is affiliated with Lee Kong Chian School of Business.
Swot Analysis of "Leadership Crisis at Steelworks' Xiamen Plant" written by Hwee Hoon Tan, Flocy Joseph includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Steelworks Plant facing as an external strategic factors. Some of the topics covered in Leadership Crisis at Steelworks' Xiamen Plant case study are - Strategic Management Strategies, International business, Leadership, Manufacturing, Organizational culture and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Leadership Crisis at Steelworks' Xiamen Plant casestudy better are - – increasing commodity prices, increasing household debt because of falling income levels, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, increasing government debt because of Covid-19 spendings, wage bills are increasing,
banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, etc
Introduction to SWOT Analysis of Leadership Crisis at Steelworks' Xiamen Plant
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Leadership Crisis at Steelworks' Xiamen Plant case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Steelworks Plant, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant can be done for the following purposes –
1. Strategic planning using facts provided in Leadership Crisis at Steelworks' Xiamen Plant case study
2. Improving business portfolio management of Steelworks Plant
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 Steelworks Plant
Strengths Leadership Crisis at Steelworks' Xiamen Plant | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Steelworks Plant in Leadership Crisis at Steelworks' Xiamen Plant Harvard Business Review case study are -
Effective Research and Development (R&D)
– Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Steelworks Plant is one of the most innovative firm in sector. Manager in Leadership Crisis at Steelworks' Xiamen Plant Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Steelworks Plant in the sector have low bargaining power. Leadership Crisis at Steelworks' Xiamen Plant has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Steelworks Plant to manage not only supply disruptions but also source products at highly competitive prices.
Ability to recruit top talent
– Steelworks Plant is one of the leading recruiters in the industry. Managers in the Leadership Crisis at Steelworks' Xiamen Plant are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Leadership Crisis at Steelworks' Xiamen Plant 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.
Organizational Resilience of Steelworks Plant
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Steelworks Plant does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Steelworks Plant digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Steelworks Plant 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.
Cross disciplinary teams
– Horizontal connected teams at the Steelworks Plant 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.
Highly skilled collaborators
– Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Steelworks Plant has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Steelworks Plant 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.
Superior customer experience
– The customer experience strategy of Steelworks Plant in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Steelworks Plant has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Steelworks Plant to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Leadership Crisis at Steelworks' Xiamen Plant | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Leadership Crisis at Steelworks' Xiamen Plant are -
High operating costs
– Compare to the competitors, firm in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant 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 Steelworks Plant 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Steelworks Plant has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Hwee Hoon Tan, Flocy Joseph suggests that, Steelworks Plant 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.
Lack of clear differentiation of Steelworks Plant products
– To increase the profitability and margins on the products, Steelworks Plant needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Steelworks Plant 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.
Low market penetration in new markets
– Outside its home market of Steelworks Plant, firm in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Steelworks Plant 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.
Need for greater diversity
– Steelworks Plant 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant, it seems that the employees of Steelworks Plant don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Interest costs
– Compare to the competition, Steelworks Plant 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant, is just above the industry average. Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant | 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 Leadership Crisis at Steelworks' Xiamen Plant are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Steelworks Plant 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.
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. Steelworks Plant can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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. Steelworks Plant can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Steelworks Plant has opened avenues for new revenue streams for the organization in the industry. This can help Steelworks Plant to build a more holistic ecosystem as suggested in the Leadership Crisis at Steelworks' Xiamen Plant case study. Steelworks Plant can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Steelworks Plant 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.
Better consumer reach
– The expansion of the 5G network will help Steelworks Plant to increase its market reach. Steelworks Plant 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.
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 Steelworks Plant 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Steelworks Plant can use these opportunities to build new business models that can help the communities that Steelworks Plant operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Steelworks Plant 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.
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. Steelworks Plant 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. Steelworks Plant 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Steelworks Plant 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, Leadership Crisis at Steelworks' Xiamen Plant, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Steelworks Plant can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Steelworks Plant can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Leadership Crisis at Steelworks' Xiamen Plant 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.
Threats Leadership Crisis at Steelworks' Xiamen Plant External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant are -
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. Steelworks Plant needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant .
Regulatory challenges
– Steelworks Plant 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Steelworks Plant 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.
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.
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 Steelworks Plant
– 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 Steelworks Plant.
Environmental challenges
– Steelworks Plant 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. Steelworks Plant can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 Steelworks Plant business can come under increasing regulations regarding data privacy, data security, 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 Steelworks Plant.
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. Steelworks Plant can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Technology acceleration in Forth Industrial Revolution
– Steelworks Plant has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Steelworks Plant 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.
Consumer confidence and its impact on Steelworks Plant 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.
Weighted SWOT Analysis of Leadership Crisis at Steelworks' Xiamen Plant 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 Leadership Crisis at Steelworks' Xiamen Plant 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 Leadership Crisis at Steelworks' Xiamen Plant 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 Leadership Crisis at Steelworks' Xiamen Plant 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 Leadership Crisis at Steelworks' Xiamen Plant 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 Steelworks Plant needs to make to build a sustainable competitive advantage.
