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 energy prices, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, 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 -
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.
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.
Low bargaining power of suppliers
– Suppliers of Hisense Jv in the sector have low bargaining power. Hisense-Hitachi Joint Venture (A): Expanding Internationally has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hisense Jv to manage not only supply disruptions but also source products at highly competitive prices.
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.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Hisense Jv digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hisense Jv 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.
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.
Ability to recruit top talent
– Hisense Jv is one of the leading recruiters in the industry. Managers in the Hisense-Hitachi Joint Venture (A): Expanding Internationally are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Hisense Jv 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 Hisense-Hitachi Joint Venture (A): Expanding Internationally - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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.
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.
Analytics focus
– Hisense Jv 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 Paul W. Beamish, Liu Su 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.
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 -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Hisense-Hitachi Joint Venture (A): Expanding Internationally, it seems that the employees of Hisense Jv 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.
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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Paul W. Beamish, Liu Su suggests that, Hisense Jv 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.
Products dominated business model
– Even though Hisense Jv has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Hisense-Hitachi Joint Venture (A): Expanding Internationally should strive to include more intangible value offerings along with its core products and services.
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 Hisense Jv supply chain. Even after few cautionary changes mentioned in the HBR case study - Hisense-Hitachi Joint Venture (A): Expanding Internationally, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hisense Jv vulnerable to further global disruptions in South East Asia.
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.
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.
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.
High cash cycle compare to competitors
Hisense Jv 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Hisense-Hitachi Joint Venture (A): Expanding Internationally, in the dynamic environment Hisense Jv has struggled to respond to the nimble upstart competition. Hisense Jv has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 -
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.
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.
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.
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.
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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hisense Jv 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.
Better consumer reach
– The expansion of the 5G network will help Hisense Jv to increase its market reach. Hisense Jv 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.
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. Hisense Jv can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Hisense Jv 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.
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.
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 Hisense Jv in the consumer business. Now Hisense Jv can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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 -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Hisense-Hitachi Joint Venture (A): Expanding Internationally, Hisense Jv 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 .
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.
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.
Stagnating economy with rate increase
– Hisense Jv 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. Hisense Jv needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.
High dependence on third party suppliers
– Hisense Jv high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
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.
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. Hisense Jv can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.