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 transportation and logistics costs, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings,
supply chains are disrupted by pandemic , technology disruption, 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 -
Superior customer experience
– The customer experience strategy of Baosteel Subsidiaries in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Baosteel Subsidiaries 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 Lynn Sharp Paine, G.A. Donovan 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
– 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.
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.
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.
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.
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.
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.
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.
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.
Strong track record of project management
– Baosteel Subsidiaries is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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 dependence on star products
– The top 2 products and services of the firm as mentioned in the Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Subsidiaries has relatively successful track record of launching new products.
Need for greater diversity
– Baosteel Subsidiaries has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Baosteel Group: Governance with Chinese Characteristics 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 Baosteel Subsidiaries 's lucrative customers.
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.
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.
Lack of clear differentiation of Baosteel Subsidiaries products
– To increase the profitability and margins on the products, Baosteel Subsidiaries needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Products dominated business model
– Even though Baosteel Subsidiaries 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 - Baosteel Group: Governance with Chinese Characteristics should strive to include more intangible value offerings along with its core products and services.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Baosteel Subsidiaries is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Baosteel Group: Governance with Chinese Characteristics can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Baosteel Subsidiaries 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.
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 -
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.
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.
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. Baosteel Subsidiaries can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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.
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.
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Baosteel Subsidiaries can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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.
Building a culture of innovation
– managers at Baosteel Subsidiaries 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Baosteel Subsidiaries 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, Baosteel Group: Governance with Chinese Characteristics, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Leveraging digital technologies
– Baosteel Subsidiaries 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 Baosteel Subsidiaries 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.
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 -
Environmental challenges
– Baosteel Subsidiaries 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. Baosteel Subsidiaries can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Baosteel Subsidiaries 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.
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.
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 .
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 .
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. Baosteel Subsidiaries can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
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.
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.
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.
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.
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.
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.