GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge Description

GOME, founded by Wong Kwongyu, had grown from merely a 100-square-metre store in Beijing in 1987 to the industry leader in electrical and home appliance retailing in China, with 259 traditional stores and 4 digital stores by 2006. Its success stemmed from its low-margin, high-volume strategy, which was complemented by its striving for service quality and innovation. In 2006, GOME faced the new challenge of tuangou, or group purchase. In order to amass bargaining power to demand discounts from retailers, consumers with similar needs in China united through the Internet and showed up en masse at retailers at pre-arranged times and dates. They would put relentless pressure on retailers and would press for greater discounts. This emerging consumer behavior had spread like wildfire in China and retailers had different reactions. Some yielded to the pressure and offered greater discounts, some only entertained tuangou that had been pre-arranged and/or pre-registered, while others refused to give in and maintained a fixed-price policy. It was up to GOME to determine how best it could deal with this new phenomenon.

Case Description GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Strategic Managment Tools Used in Case Study Analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

STEP 1. Problem Identification in GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 3. Industry Specific / Porter Five Forces Analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 4. Evaluating Alternatives / SWOT Analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 6. Recommendations GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

STEP 7. Basis of Recommendations for GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study

Case Analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge is a Harvard Business (HBR) Case Study on Sales & Marketing , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Sales & Marketing, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Sales & Marketing Solutions

In the Texas Business School, GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Step 1 – Problem Identification of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge - Harvard Business School Case Study

The first step to solve HBR GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Gome Tuangou is facing right now. Even though the problem statement is essentially – “Sales & Marketing” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Gome Tuangou, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge.

The external environment analysis of GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study. PESTEL analysis of " GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

To do comprehensive PESTEL analysis of case study – GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Government policies have significant impact on the business environment of any country. The firm in “ GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Gome Tuangou is operating, firms are required to store customer data within the premises of the country. Gome Tuangou needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Gome Tuangou in case study GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Gome Tuangou in case study “ GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Gome Tuangou in case study “ GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Gome Tuangou can compete against other competitors.

Government Scheme & Subsidies Impact on GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Gome Tuangou needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Social Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Technological Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Environmental Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Legal Factors that Impact GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study. PESTEL analysis of " GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: GOME Electrical Appliances Holding Limited: The "Tuangou" Challenge case study solution