Case Study Description of Hisense-Hitachi Joint Venture (A): Expanding Internationally
In June 2014, Hisense of China and Hitachi of Japan were considering whether their 11-year-old joint venture (JV) should once again assume responsibility for its international sales. After developing a solid central air-conditioner market share in China, in 2009, the JV began to sell in various overseas regions but struggled. In April 2012, the partners agreed to have a Hisense subsidiary (the HIMC) assume full responsibility for selling the JV's products overseas. However, over the next two years, HIMC's performance in selling the JV's products overseas was unsatisfactory. In response, the partners began to discuss whether they should have the JV sell its own products again overseas. Of immediate interest was the Southeast Asian market.
Swot Analysis of "Hisense-Hitachi Joint Venture (A): Expanding Internationally" written by Paul W. Beamish, Liu Su includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hisense Jv facing as an external strategic factors. Some of the topics covered in Hisense-Hitachi Joint Venture (A): Expanding Internationally case study are - Strategic Management Strategies, Joint ventures, Manufacturing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Hisense-Hitachi Joint Venture (A): Expanding Internationally casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, technology disruption, increasing energy prices, increasing household debt because of falling income levels, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
talent flight as more people leaving formal jobs, wage bills are increasing, etc
Introduction to SWOT Analysis of Hisense-Hitachi Joint Venture (A): Expanding Internationally
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hisense-Hitachi Joint Venture (A): Expanding Internationally case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hisense Jv, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hisense Jv 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally can be done for the following purposes –
1. Strategic planning using facts provided in Hisense-Hitachi Joint Venture (A): Expanding Internationally case study
2. Improving business portfolio management of Hisense Jv
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 Hisense Jv
Strengths Hisense-Hitachi Joint Venture (A): Expanding Internationally | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hisense Jv in Hisense-Hitachi Joint Venture (A): Expanding Internationally Harvard Business Review case study are -
Diverse revenue streams
– Hisense Jv is present in almost all the verticals within the industry. This has provided firm in Hisense-Hitachi Joint Venture (A): Expanding Internationally 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.
Organizational Resilience of Hisense Jv
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hisense Jv does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Leadership & Managing People industry
– Hisense-Hitachi Joint Venture (A): Expanding Internationally firm has clearly differentiated products in the market place. This has enabled Hisense Jv to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Hisense Jv to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Hisense Jv 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.
Ability to lead change in Leadership & Managing People field
– Hisense Jv 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 Hisense Jv in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Hisense Jv 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 Hisense Jv is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hisense-Hitachi Joint Venture (A): Expanding Internationally Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Hisense Jv 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.
Successful track record of launching new products
– Hisense Jv has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hisense Jv 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 Hisense Jv in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Hisense-Hitachi Joint Venture (A): Expanding Internationally 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.
High brand equity
– Hisense Jv has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hisense Jv to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Innovation driven organization
– Hisense Jv is one of the most innovative firm in sector. Manager in Hisense-Hitachi Joint Venture (A): Expanding Internationally Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Hisense-Hitachi Joint Venture (A): Expanding Internationally | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hisense-Hitachi Joint Venture (A): Expanding Internationally are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense Jv has relatively successful track record of launching new products.
Lack of clear differentiation of Hisense Jv products
– To increase the profitability and margins on the products, Hisense Jv needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Hisense Jv, firm in the HBR case study Hisense-Hitachi Joint Venture (A): Expanding Internationally needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Hisense Jv 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.
Aligning sales with marketing
– It come across in the case study Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally can leverage the sales team experience to cultivate customer relationships as Hisense Jv is planning to shift buying processes online.
High operating costs
– Compare to the competitors, firm in the HBR case study Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense Jv 's lucrative customers.
Slow to strategic competitive environment developments
– As Hisense-Hitachi Joint Venture (A): Expanding Internationally HBR case study mentions - Hisense Jv 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.
Slow decision making process
– As mentioned earlier in the report, Hisense Jv 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. Hisense Jv 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.
Interest costs
– Compare to the competition, Hisense Jv 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.
Skills based hiring
– The stress on hiring functional specialists at Hisense Jv 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.
No frontier risks strategy
– After analyzing the HBR case study Hisense-Hitachi Joint Venture (A): Expanding Internationally, 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.
Opportunities Hisense-Hitachi Joint Venture (A): Expanding Internationally | 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally are -
Building a culture of innovation
– managers at Hisense Jv 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.
Buying journey improvements
– Hisense Jv can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Hisense-Hitachi Joint Venture (A): Expanding Internationally 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.
Using analytics as competitive advantage
– Hisense Jv 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hisense Jv to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Hisense Jv 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.
Learning at scale
– Online learning technologies has now opened space for Hisense Jv 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hisense Jv 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, Hisense-Hitachi Joint Venture (A): Expanding Internationally, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hisense Jv can use these opportunities to build new business models that can help the communities that Hisense Jv operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Creating value in data economy
– The success of analytics program of Hisense Jv has opened avenues for new revenue streams for the organization in the industry. This can help Hisense Jv to build a more holistic ecosystem as suggested in the Hisense-Hitachi Joint Venture (A): Expanding Internationally case study. Hisense Jv can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hisense Jv 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. Hisense Jv can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Hisense Jv 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.
Developing new processes and practices
– Hisense Jv 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hisense Jv 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 Hisense Jv to hire the very best people irrespective of their geographical location.
Threats Hisense-Hitachi Joint Venture (A): Expanding Internationally External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hisense-Hitachi Joint Venture (A): Expanding Internationally are -
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 Hisense Jv business can come under increasing regulations regarding data privacy, data security, etc.
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. Hisense Jv needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hisense Jv with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Hisense Jv 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.
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 Hisense Jv.
Technology acceleration in Forth Industrial Revolution
– Hisense Jv has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Hisense Jv 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.
Environmental challenges
– Hisense Jv 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. Hisense Jv 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, Hisense Jv 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hisense Jv 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 Hisense Jv is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Hisense Jv 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.
Regulatory challenges
– Hisense Jv 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.
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.
Weighted SWOT Analysis of Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally 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 Hisense Jv needs to make to build a sustainable competitive advantage.