Baosteel Group: Governance with Chinese Characteristics SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Baosteel Group: Governance with Chinese Characteristics
The new outsider-dominated board of directors of China's state-owned Baosteel Group must decide whether to modify the Group's structure. With the completion of a pending acquisition, the Group will control four publicly listed steel-producing subsidiaries, and board members are concerned about competition among the subsidiaries and about the subsidiaries' public shareholders. Selected by the Chinese government as the first company to take part in a pilot project on corporate governance in state-owned enterprises, Baosteel and its board are under intense scrutiny by Chinese and overseas investors in the listed subsidiaries as well as by China's political leadership and the media. The case provides background on Baosteel, China's SOE reform, the Chinese government's pilot project on corporate governance, and the functioning of Baosteel's newly constituted board of directors.
Swot Analysis of "Baosteel Group: Governance with Chinese Characteristics" written by Lynn Sharp Paine, G.A. Donovan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Baosteel Subsidiaries facing as an external strategic factors. Some of the topics covered in Baosteel Group: Governance with Chinese Characteristics case study are - Strategic Management Strategies, Emerging markets, Government, Mergers & acquisitions and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Baosteel Group: Governance with Chinese Characteristics casestudy better are - – increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, there is backlash against globalization, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing commodity prices, supply chains are disrupted by pandemic ,
geopolitical disruptions, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Baosteel Group: Governance with Chinese Characteristics
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Baosteel Group: Governance with Chinese Characteristics case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Baosteel Subsidiaries, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Baosteel Subsidiaries 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 Baosteel Group: Governance with Chinese Characteristics can be done for the following purposes –
1. Strategic planning using facts provided in Baosteel Group: Governance with Chinese Characteristics case study
2. Improving business portfolio management of Baosteel Subsidiaries
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 Baosteel Subsidiaries
Strengths Baosteel Group: Governance with Chinese Characteristics | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Baosteel Subsidiaries in Baosteel Group: Governance with Chinese Characteristics Harvard Business Review case study are -
Successful track record of launching new products
– Baosteel Subsidiaries has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Baosteel Subsidiaries 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.
Ability to lead change in Leadership & Managing People field
– Baosteel Subsidiaries 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 Baosteel Subsidiaries in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Baosteel Subsidiaries has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Baosteel Group: Governance with Chinese Characteristics HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Baosteel Subsidiaries digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Baosteel Subsidiaries 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.
Training and development
– Baosteel Subsidiaries has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Baosteel Group: Governance with Chinese Characteristics 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.
Ability to recruit top talent
– Baosteel Subsidiaries is one of the leading recruiters in the industry. Managers in the Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Subsidiaries in the sector have low bargaining power. Baosteel Group: Governance with Chinese Characteristics has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Baosteel Subsidiaries to manage not only supply disruptions but also source products at highly competitive prices.
Learning organization
- Baosteel Subsidiaries 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 Baosteel Subsidiaries is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Baosteel Group: Governance with Chinese Characteristics Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Baosteel Subsidiaries is one of the most innovative firm in sector. Manager in Baosteel Group: Governance with Chinese Characteristics Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Leadership & Managing People industry
– Baosteel Group: Governance with Chinese Characteristics firm has clearly differentiated products in the market place. This has enabled Baosteel Subsidiaries to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Baosteel Subsidiaries to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Baosteel Group: Governance with Chinese Characteristics 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.
Effective Research and Development (R&D)
– Baosteel Subsidiaries 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 Baosteel Group: Governance with Chinese Characteristics - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Baosteel Group: Governance with Chinese Characteristics | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Baosteel Group: Governance with Chinese Characteristics are -
High bargaining power of channel partners
– Because of the regulatory requirements, Lynn Sharp Paine, G.A. Donovan suggests that, Baosteel Subsidiaries 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.
Slow decision making process
– As mentioned earlier in the report, Baosteel Subsidiaries 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. Baosteel Subsidiaries 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Baosteel Group: Governance with Chinese Characteristics, is just above the industry average. Baosteel Subsidiaries 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Baosteel Group: Governance with Chinese Characteristics, in the dynamic environment Baosteel Subsidiaries has struggled to respond to the nimble upstart competition. Baosteel Subsidiaries has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Baosteel Subsidiaries supply chain. Even after few cautionary changes mentioned in the HBR case study - Baosteel Group: Governance with Chinese Characteristics, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Baosteel Subsidiaries vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study Baosteel Group: Governance with Chinese Characteristics, 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.
Increasing silos among functional specialists
– The organizational structure of Baosteel Subsidiaries is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Baosteel Subsidiaries needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Baosteel Subsidiaries to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Baosteel Subsidiaries 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.
Skills based hiring
– The stress on hiring functional specialists at Baosteel Subsidiaries 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.
Low market penetration in new markets
– Outside its home market of Baosteel Subsidiaries, firm in the HBR case study Baosteel Group: Governance with Chinese Characteristics needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Baosteel Group: Governance with Chinese Characteristics HBR case study mentions - Baosteel Subsidiaries 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.
Opportunities Baosteel Group: Governance with Chinese Characteristics | 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 Baosteel Group: Governance with Chinese Characteristics are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Baosteel Subsidiaries 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.
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. Baosteel Subsidiaries can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Baosteel Subsidiaries can use these opportunities to build new business models that can help the communities that Baosteel Subsidiaries 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, Baosteel Subsidiaries is facing challenges because of the dominance of functional experts in the organization. Baosteel Group: Governance with Chinese Characteristics 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.
Learning at scale
– Online learning technologies has now opened space for Baosteel Subsidiaries 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.
Manufacturing automation
– Baosteel Subsidiaries 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.
Better consumer reach
– The expansion of the 5G network will help Baosteel Subsidiaries to increase its market reach. Baosteel Subsidiaries 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.
Developing new processes and practices
– Baosteel Subsidiaries 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.
Loyalty marketing
– Baosteel Subsidiaries 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.
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. Baosteel Subsidiaries 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. Baosteel Subsidiaries 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Baosteel Subsidiaries 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 Baosteel Subsidiaries to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Baosteel Subsidiaries can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Baosteel Group: Governance with Chinese Characteristics 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.
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 Baosteel Subsidiaries 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.
Threats Baosteel Group: Governance with Chinese Characteristics External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Baosteel Group: Governance with Chinese Characteristics are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Baosteel Subsidiaries 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 Baosteel Group: Governance with Chinese Characteristics .
High dependence on third party suppliers
– Baosteel Subsidiaries 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.
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. Baosteel Subsidiaries 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.
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 Baosteel Subsidiaries business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Baosteel Subsidiaries in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
Shortening product life cycle
– it is one of the major threat that Baosteel Subsidiaries is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Baosteel Subsidiaries has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Baosteel Subsidiaries 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.
Regulatory challenges
– Baosteel Subsidiaries 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.
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 Baosteel Subsidiaries.
Consumer confidence and its impact on Baosteel Subsidiaries 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Baosteel Group: Governance with Chinese Characteristics, Baosteel Subsidiaries 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 .
Weighted SWOT Analysis of Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Subsidiaries needs to make to build a sustainable competitive advantage.