Shanghai Toex Trading Co.: The Going Global Challenge SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Shanghai Toex Trading Co.: The Going Global Challenge
Shanghai Toex Trading Co., Ltd. (TOEX) was a Chinese pet grooming equipment maker. In 2014, after years of operating internationally solely through third-party distribution channels, TOEX opened a new sales and logistics centre in Dallas, Texas to boost TOEX's business in the United States. The new centre was also meant to be a model for future expansions to other countries. With more than a decade of industry experience, TOEX's founder believed that succeeding in the United States was critically important for the company's future. However, he was not sure how to execute a successful international growth strategy and how to best leverage the new U.S. logistics centre.
Authors :: Xiaorong Chen, Andreas Schotter, Wei LV
Swot Analysis of "Shanghai Toex Trading Co.: The Going Global Challenge" written by Xiaorong Chen, Andreas Schotter, Wei LV includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Toex Toex's facing as an external strategic factors. Some of the topics covered in Shanghai Toex Trading Co.: The Going Global Challenge case study are - Strategic Management Strategies, Entrepreneurship, Manufacturing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Shanghai Toex Trading Co.: The Going Global Challenge casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, geopolitical disruptions,
wage bills are increasing, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Shanghai Toex Trading Co.: The Going Global Challenge
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shanghai Toex Trading Co.: The Going Global Challenge case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toex Toex's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toex Toex'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 Shanghai Toex Trading Co.: The Going Global Challenge can be done for the following purposes –
1. Strategic planning using facts provided in Shanghai Toex Trading Co.: The Going Global Challenge case study
2. Improving business portfolio management of Toex Toex'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 Toex Toex's
Strengths Shanghai Toex Trading Co.: The Going Global Challenge | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toex Toex's in Shanghai Toex Trading Co.: The Going Global Challenge Harvard Business Review case study are -
Organizational Resilience of Toex Toex's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Toex Toex's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Toex Toex'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.
Analytics focus
– Toex Toex'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 Xiaorong Chen, Andreas Schotter, Wei LV 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.
Low bargaining power of suppliers
– Suppliers of Toex Toex's in the sector have low bargaining power. Shanghai Toex Trading Co.: The Going Global Challenge has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toex Toex's to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Toex Toex's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Toex Toex'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 Shanghai Toex Trading Co.: The Going Global Challenge - 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
– Toex Toex's is one of the most innovative firm in sector. Manager in Shanghai Toex Trading Co.: The Going Global Challenge Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Toex Toex'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 brand equity
– Toex Toex's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toex Toex's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy in the Shanghai Toex Trading Co.: The Going Global Challenge 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.
Successful track record of launching new products
– Toex Toex's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Toex Toex's 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.
Diverse revenue streams
– Toex Toex's is present in almost all the verticals within the industry. This has provided firm in Shanghai Toex Trading Co.: The Going Global Challenge 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 Shanghai Toex Trading Co.: The Going Global Challenge | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shanghai Toex Trading Co.: The Going Global Challenge are -
High bargaining power of channel partners
– Because of the regulatory requirements, Xiaorong Chen, Andreas Schotter, Wei LV suggests that, Toex Toex'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.
No frontier risks strategy
– After analyzing the HBR case study Shanghai Toex Trading Co.: The Going Global Challenge, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Shanghai Toex Trading Co.: The Going Global Challenge 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 Toex Toex's has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Toex Toex's is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Toex Toex's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toex Toex's to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Shanghai Toex Trading Co.: The Going Global Challenge that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Shanghai Toex Trading Co.: The Going Global Challenge can leverage the sales team experience to cultivate customer relationships as Toex Toex's is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Toex Toex'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 cash cycle compare to competitors
Toex Toex'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 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 Toex Toex's supply chain. Even after few cautionary changes mentioned in the HBR case study - Shanghai Toex Trading Co.: The Going Global Challenge, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toex Toex's vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Shanghai Toex Trading Co.: The Going Global Challenge, is just above the industry average. Toex Toex'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.
Lack of clear differentiation of Toex Toex's products
– To increase the profitability and margins on the products, Toex Toex's needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Toex Toex'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.
Opportunities Shanghai Toex Trading Co.: The Going Global Challenge | 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 Shanghai Toex Trading Co.: The Going Global Challenge are -
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. Toex Toex's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Toex Toex's to increase its market reach. Toex Toex's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Toex Toex'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
– Toex Toex'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.
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 Toex Toex's in the consumer business. Now Toex Toex's can target international markets with far fewer capital restrictions requirements than the existing system.
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. Toex Toex's 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. Toex Toex's 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.
Loyalty marketing
– Toex Toex'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.
Developing new processes and practices
– Toex Toex'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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Toex Toex's 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Toex Toex's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Toex Toex's has opened avenues for new revenue streams for the organization in the industry. This can help Toex Toex's to build a more holistic ecosystem as suggested in the Shanghai Toex Trading Co.: The Going Global Challenge case study. Toex Toex's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toex Toex'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 Toex Toex's to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Toex Toex'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 Shanghai Toex Trading Co.: The Going Global Challenge - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Toex Toex's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Shanghai Toex Trading Co.: The Going Global Challenge External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shanghai Toex Trading Co.: The Going Global Challenge are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shanghai Toex Trading Co.: The Going Global Challenge, Toex Toex'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 .
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 Toex Toex's.
Consumer confidence and its impact on Toex Toex'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.
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.
Stagnating economy with rate increase
– Toex Toex'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.
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. Toex Toex's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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. Toex Toex'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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toex Toex'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.
Shortening product life cycle
– it is one of the major threat that Toex Toex's is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Toex Toex's in the Leadership & Managing People sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toex Toex'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 Shanghai Toex Trading Co.: The Going Global Challenge .
Environmental challenges
– Toex Toex'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. Toex Toex's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Toex Toex's 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 Shanghai Toex Trading Co.: The Going Global Challenge 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 Shanghai Toex Trading Co.: The Going Global Challenge 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 Shanghai Toex Trading Co.: The Going Global Challenge 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 Shanghai Toex Trading Co.: The Going Global Challenge 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 Shanghai Toex Trading Co.: The Going Global Challenge 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 Toex Toex's needs to make to build a sustainable competitive advantage.