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Harvard Case - Huanxin: Pivoting to Shared Strollers?

"Huanxin: Pivoting to Shared Strollers?" Harvard business case study is written by Dongsheng Zhou, Liyang Ruan. It deals with the challenges in the field of Strategy. The case study is 7 page(s) long and it was first published on : Jun 29, 2021

At Fern Fort University, we recommend Huanxin pursue a strategic pivot towards a shared stroller business model, leveraging its existing manufacturing capabilities and brand recognition to enter a rapidly growing market. This approach incorporates elements of disruptive innovation, business model innovation, and strategic alliances to create a sustainable competitive advantage in the evolving mobility landscape.

2. Background

Huanxin, a leading manufacturer of baby strollers in China, faces a challenging market environment. The traditional stroller market is saturated, with fierce competition from domestic and international players. Huanxin's growth has stagnated, and its reliance on a single product line leaves it vulnerable to market fluctuations.

The case study introduces the concept of shared strollers as a potential growth opportunity. This emerging trend addresses the needs of urban families seeking convenient and cost-effective mobility solutions for their children. Huanxin, with its established manufacturing infrastructure and brand reputation, is well-positioned to capitalize on this trend.

3. Analysis of the Case Study

To analyze Huanxin's situation, we can utilize a combination of frameworks:

  • Porter's Five Forces: The stroller industry exhibits high competitive rivalry due to numerous players, low switching costs, and price sensitivity among consumers. Threat of new entrants is moderate, with barriers to entry such as manufacturing expertise and brand building. Bargaining power of buyers is high due to ample choices and price transparency. Bargaining power of suppliers is moderate, as raw materials are readily available. Threat of substitutes is low, as strollers offer a unique function.

  • SWOT Analysis:

    • Strengths: Established manufacturing capabilities, strong brand recognition in China, potential for cost leadership, access to a vast domestic market.
    • Weaknesses: Limited product portfolio, dependence on a single market, lack of experience in shared mobility services.
    • Opportunities: Growing demand for shared mobility solutions, increasing urbanization in China, potential for international expansion.
    • Threats: Competition from established players in the shared mobility space, regulatory uncertainties surrounding shared stroller services, potential for technological disruptions.
  • Value Chain Analysis: Huanxin's core competencies lie in its manufacturing processes and product development. The company can leverage these strengths to develop and produce high-quality, durable strollers for the shared mobility market. However, it needs to strengthen its capabilities in marketing, information systems, and customer service to effectively operate a shared stroller platform.

  • Business Model Innovation: Huanxin can adopt a subscription-based business model for its shared strollers, offering flexible rental options to customers. This model generates recurring revenue and allows for better utilization of assets. Huanxin can also explore strategic alliances with local businesses, such as hotels, restaurants, and shopping malls, to establish convenient pick-up and drop-off points for shared strollers.

4. Recommendations

Huanxin should pursue a strategic pivot towards a shared stroller business model through the following steps:

  1. Product Development: Design and manufacture a dedicated line of shared strollers that are robust, easy to clean, and equipped with features like GPS tracking and safety locks.
  2. Platform Development: Create a user-friendly mobile application for booking, payment, and tracking strollers. Integrate the app with existing payment systems and local transportation networks.
  3. Strategic Alliances: Partner with local businesses and organizations to establish strategic locations for stroller pick-up and drop-off. Explore collaborations with ride-hailing platforms or existing shared mobility providers.
  4. Marketing and Promotion: Utilize digital marketing channels, social media, and influencer campaigns to raise awareness about the shared stroller service. Partner with local communities and parenting groups to promote the benefits of shared mobility.
  5. Data Analytics: Implement data analytics tools to monitor stroller usage patterns, identify popular locations, and optimize pricing and availability.
  6. Regulatory Compliance: Proactively engage with local authorities to ensure compliance with regulations related to shared mobility services.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  1. Core Competencies: Huanxin's existing manufacturing capabilities and brand recognition in China provide a strong foundation for entering the shared stroller market.
  2. External Customers: The target market for shared strollers includes urban families seeking convenient and affordable mobility solutions for their children.
  3. Competitors: While there are emerging players in the shared stroller space, Huanxin's established brand, manufacturing expertise, and access to the Chinese market give it a competitive advantage.
  4. Attractiveness: The shared stroller market is expected to grow significantly in the coming years, offering Huanxin a lucrative opportunity for expansion.

6. Conclusion

By strategically pivoting towards a shared stroller business model, Huanxin can leverage its existing strengths and tap into a rapidly growing market. This move will require careful planning, product development, strategic partnerships, and a commitment to innovation. However, the potential rewards in terms of market share, revenue growth, and brand expansion are significant.

7. Discussion

Other alternatives considered include:

  • Product Diversification: Expanding the product portfolio to include other baby products, such as car seats, high chairs, and toys.
  • Market Penetration: Focusing on increasing market share in the traditional stroller market through aggressive pricing strategies and promotional campaigns.
  • International Expansion: Expanding into new markets outside of China, targeting countries with similar demographic trends and market opportunities.

The risks associated with the shared stroller strategy include:

  • Competition: The shared stroller market is attracting new entrants, potentially leading to increased competition and price pressure.
  • Regulation: Regulatory uncertainties surrounding shared mobility services could pose challenges to the business model.
  • Technology Disruptions: Emerging technologies, such as autonomous vehicles, could disrupt the shared mobility landscape.

8. Next Steps

Huanxin should implement the following steps to execute its shared stroller strategy:

  • Phase 1 (6 months): Conduct market research and develop a detailed business plan for the shared stroller service.
  • Phase 2 (12 months): Design and manufacture a dedicated line of shared strollers. Develop the mobile application and secure necessary regulatory approvals.
  • Phase 3 (18 months): Launch the shared stroller service in a pilot city in China. Establish strategic partnerships with local businesses.
  • Phase 4 (24 months): Evaluate the pilot program and expand the service to other cities. Continuously monitor market trends and adapt the business model accordingly.

By taking these steps, Huanxin can successfully pivot towards a shared stroller business model, achieving sustainable growth and solidifying its position as a leader in the evolving mobility landscape.

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Case Description

This case relates to Shanghai Huanxin Electronic Technology Company (hereinafter "Huanxin"), and discusses the company's decision to launch a new scheme for shared strollers. Huanxin, established in 2012, initially focused on providing technologies and services for government-funded public bicycle programs and metro cards. In 2016, following the arrival of bike-sharing in China, Huanxin rolled out its own scheme called '100Bike'. However, it was very short-lived. The company subsequently launched "Share++", an IoT SaaS platform for business customers which aimed to make their products and services (such as umbrellas) available for sharing. However, "Share++" soon encountered difficulties, including customer acquisition challenges and high operating costs. Therefore, Zhao Wei, CEO of Huanxin, decided to focus on a specific segment. By chance, he had heard his family complaining about the lack of baby strollers available for rent when they went on holiday. This inspired him with the idea of launching a stroller rental scheme. Should Huanxin enter into this new market?

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