Case Study Description of Leadership Crisis at Steelworks' Xiamen Plant
In April 2010, the chief executive officer (CEO) of Steelworks, a Singapore-based metals company recently acquired by an Indian conglomerate, embarked on a plan to realign the organization's structure and processes across its subsidiaries. However, he had difficulty getting the long-serving general manager of a plant in China to sign off on the current year's audited financial statements. This led to a tense and bizarre confrontation between the CEO and the regional general manager. The restructuring project was taking autonomy from regional unit heads. Was that the problem? Was Steelworks mismanaging its subsidiaries? Had the general manager of the Chinese plant, a Singaporean expatriate, been seconded to China for too long? It was unclear how a member of the senior management team who had been with Steelworks for his entire career could behave this way and jeopardize his position. What could the CEO have done differently? Hwee Hoon Tan is affiliated with Lee Kong Chian School of Business.
Swot Analysis of "Leadership Crisis at Steelworks' Xiamen Plant" written by Hwee Hoon Tan, Flocy Joseph includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Steelworks Plant facing as an external strategic factors. Some of the topics covered in Leadership Crisis at Steelworks' Xiamen Plant case study are - Strategic Management Strategies, International business, Leadership, Manufacturing, Organizational culture and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Leadership Crisis at Steelworks' Xiamen Plant casestudy better are - – there is backlash against globalization, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing transportation and logistics costs, customer relationship management is fast transforming because of increasing concerns over data privacy,
supply chains are disrupted by pandemic , increasing commodity prices, etc
Introduction to SWOT Analysis of Leadership Crisis at Steelworks' Xiamen Plant
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Leadership Crisis at Steelworks' Xiamen Plant case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Steelworks Plant, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Steelworks Plant operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Leadership Crisis at Steelworks' Xiamen Plant can be done for the following purposes –
1. Strategic planning using facts provided in Leadership Crisis at Steelworks' Xiamen Plant case study
2. Improving business portfolio management of Steelworks Plant
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Steelworks Plant
Strengths Leadership Crisis at Steelworks' Xiamen Plant | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Steelworks Plant in Leadership Crisis at Steelworks' Xiamen Plant Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Steelworks Plant digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Steelworks Plant has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Steelworks Plant in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Steelworks Plant 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 Hwee Hoon Tan, Flocy Joseph 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.
Ability to recruit top talent
– Steelworks Plant is one of the leading recruiters in the industry. Managers in the Leadership Crisis at Steelworks' Xiamen Plant are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Steelworks Plant has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Leadership Crisis at Steelworks' Xiamen Plant - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Steelworks Plant are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Steelworks Plant is one of the most innovative firm in sector. Manager in Leadership Crisis at Steelworks' Xiamen Plant Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Steelworks Plant has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Leadership Crisis at Steelworks' Xiamen Plant Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Leadership & Managing People industry
– Leadership Crisis at Steelworks' Xiamen Plant firm has clearly differentiated products in the market place. This has enabled Steelworks Plant to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Steelworks Plant to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Steelworks Plant in the sector have low bargaining power. Leadership Crisis at Steelworks' Xiamen Plant has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Steelworks Plant to manage not only supply disruptions but also source products at highly competitive prices.
High switching costs
– The high switching costs that Steelworks Plant 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.
Ability to lead change in Leadership & Managing People field
– Steelworks Plant 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 Steelworks Plant in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Leadership Crisis at Steelworks' Xiamen Plant | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Leadership Crisis at Steelworks' Xiamen Plant are -
High 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 Steelworks Plant supply chain. Even after few cautionary changes mentioned in the HBR case study - Leadership Crisis at Steelworks' Xiamen Plant, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Steelworks Plant vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Steelworks Plant has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow decision making process
– As mentioned earlier in the report, Steelworks Plant 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. Steelworks Plant 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.
Capital Spending Reduction
– Even during the low interest decade, Steelworks Plant has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Steelworks Plant is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Leadership Crisis at Steelworks' Xiamen Plant can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Hwee Hoon Tan, Flocy Joseph suggests that, Steelworks Plant is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Skills based hiring
– The stress on hiring functional specialists at Steelworks Plant has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Products dominated business model
– Even though Steelworks Plant 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 - Leadership Crisis at Steelworks' Xiamen Plant should strive to include more intangible value offerings along with its core products and services.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Leadership Crisis at Steelworks' Xiamen Plant 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 Steelworks Plant has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Steelworks Plant, firm in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Steelworks Plant 's lucrative customers.
Opportunities Leadership Crisis at Steelworks' Xiamen Plant | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Leadership Crisis at Steelworks' Xiamen Plant are -
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Steelworks Plant to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Steelworks Plant can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Leadership Crisis at Steelworks' Xiamen Plant, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Steelworks Plant 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.
Using analytics as competitive advantage
– Steelworks Plant 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 Leadership Crisis at Steelworks' Xiamen Plant - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Steelworks Plant 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 Steelworks Plant in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Buying journey improvements
– Steelworks Plant can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Leadership Crisis at Steelworks' Xiamen Plant suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
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 Steelworks Plant in the consumer business. Now Steelworks Plant 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. Steelworks Plant can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Steelworks Plant can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Steelworks Plant can use these opportunities to build new business models that can help the communities that Steelworks Plant operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Steelworks Plant 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 Steelworks Plant to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Steelworks Plant 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.
Creating value in data economy
– The success of analytics program of Steelworks Plant has opened avenues for new revenue streams for the organization in the industry. This can help Steelworks Plant to build a more holistic ecosystem as suggested in the Leadership Crisis at Steelworks' Xiamen Plant case study. Steelworks Plant can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Steelworks Plant 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.
Threats Leadership Crisis at Steelworks' Xiamen Plant External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Steelworks Plant with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Steelworks Plant in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Steelworks Plant has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Steelworks Plant needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Steelworks Plant.
Environmental challenges
– Steelworks Plant needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Steelworks Plant can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Steelworks Plant can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Leadership Crisis at Steelworks' Xiamen Plant .
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Steelworks Plant in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Steelworks Plant demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
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. Steelworks Plant 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.
High dependence on third party suppliers
– Steelworks Plant 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.
Stagnating economy with rate increase
– Steelworks Plant 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.
Shortening product life cycle
– it is one of the major threat that Steelworks Plant is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Leadership Crisis at Steelworks' Xiamen Plant Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Leadership Crisis at Steelworks' Xiamen Plant needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Leadership Crisis at Steelworks' Xiamen Plant is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Leadership Crisis at Steelworks' Xiamen Plant is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Leadership Crisis at Steelworks' Xiamen Plant is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Steelworks Plant needs to make to build a sustainable competitive advantage.