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 - – customer relationship management is fast transforming because of increasing concerns over data privacy, supply chains are disrupted by pandemic , technology disruption, cloud computing is disrupting traditional business models, increasing commodity prices, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs,
digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, 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 -
Strong track record of project management
– Toex Toex'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.
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.
Ability to recruit top talent
– Toex Toex's is one of the leading recruiters in the industry. Managers in the Shanghai Toex Trading Co.: The Going Global Challenge are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
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.
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.
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.
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.
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.
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.
Learning organization
- Toex Toex's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Toex Toex's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shanghai Toex Trading Co.: The Going Global Challenge Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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 -
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.
High operating costs
– Compare to the competitors, firm in the HBR case study Shanghai Toex Trading Co.: The Going Global Challenge 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 Toex Toex's 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Toex Toex'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. Toex Toex'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.
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.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Toex Toex's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Toex Toex's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Shanghai Toex Trading Co.: The Going Global Challenge HBR case study mentions - Toex Toex'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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shanghai Toex Trading Co.: The Going Global Challenge, it seems that the employees of Toex Toex's 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.
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.
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 -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Toex Toex's can use these opportunities to build new business models that can help the communities that Toex Toex's operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Toex Toex's is facing challenges because of the dominance of functional experts in the organization. Shanghai Toex Trading Co.: The Going Global Challenge 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.
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.
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.
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.
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.
Buying journey improvements
– Toex Toex's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shanghai Toex Trading Co.: The Going Global Challenge 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.
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.
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.
Manufacturing automation
– Toex Toex's can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Toex Toex'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, Shanghai Toex Trading Co.: The Going Global Challenge, 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
– 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.
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 -
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.
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 Toex Toex's business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Toex Toex'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, Toex Toex'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.
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.
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.
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.
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.
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.
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.
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 .
Increasing wage structure of Toex Toex'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 Toex Toex's.
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.
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.
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.
