Nomura Holdings, Japan's largest investment bank, faced with intensifying competition in the global financial markets, was trying to decide how global its operations should be despite its Japan-centered business. Was the question of how global Nomura should be related to its choice of governance structure? Was the committee system adopted by Nomura the appropriate governance model for all leading Japanese companies?
Swot Analysis of "Nomura Holdings" written by Tarun Khanna, Masako Egawa, Atsuko Nakajima includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nomura Holdings facing as an external strategic factors. Some of the topics covered in Nomura Holdings case study are - Strategic Management Strategies, Competitive strategy, Corporate governance, Financial management, International business and Management.
Some of the macro environment factors that can be used to understand the Nomura Holdings casestudy better are - – talent flight as more people leaving formal jobs, technology disruption, competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, geopolitical disruptions,
supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nomura Holdings case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nomura Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nomura Holdings 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 Nomura Holdings can be done for the following purposes –
1. Strategic planning using facts provided in Nomura Holdings case study
2. Improving business portfolio management of Nomura Holdings
3. Assessing feasibility of the new initiative in Management field.
4. Making a Management topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nomura Holdings
Strengths Nomura Holdings | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nomura Holdings in Nomura Holdings Harvard Business Review case study are -
Organizational Resilience of Nomura Holdings
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nomura Holdings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Management industry
– Nomura Holdings firm has clearly differentiated products in the market place. This has enabled Nomura Holdings to fetch slight price premium compare to the competitors in the Management industry. The sustainable margins have also helped Nomura Holdings to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Nomura Holdings 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.
Ability to recruit top talent
– Nomura Holdings is one of the leading recruiters in the industry. Managers in the Nomura Holdings are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Nomura Holdings is present in almost all the verticals within the industry. This has provided firm in Nomura Holdings case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Nomura Holdings in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Nomura Holdings 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.
Successful track record of launching new products
– Nomura Holdings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nomura Holdings 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.
High brand equity
– Nomura Holdings has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nomura Holdings to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Nomura Holdings is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Nomura Holdings 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 Tarun Khanna, Masako Egawa, Atsuko Nakajima 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.
Innovation driven organization
– Nomura Holdings is one of the most innovative firm in sector. Manager in Nomura Holdings Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Nomura Holdings | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nomura Holdings are -
Skills based hiring
– The stress on hiring functional specialists at Nomura Holdings 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 Nomura Holdings 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 - Nomura Holdings should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Nomura Holdings, firm in the HBR case study Nomura Holdings needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Nomura Holdings 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. Nomura Holdings 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.
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 Nomura Holdings supply chain. Even after few cautionary changes mentioned in the HBR case study - Nomura Holdings, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nomura Holdings vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Nomura Holdings 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.
No frontier risks strategy
– After analyzing the HBR case study Nomura Holdings, it seems that company is thinking about the frontier risks that can impact Management 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.
Capital Spending Reduction
– Even during the low interest decade, Nomura Holdings 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 strategic competitive environment developments
– As Nomura Holdings HBR case study mentions - Nomura Holdings 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nomura Holdings, it seems that the employees of Nomura Holdings don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nomura Holdings, in the dynamic environment Nomura Holdings has struggled to respond to the nimble upstart competition. Nomura Holdings has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities Nomura Holdings | 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 Nomura Holdings 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 Nomura Holdings 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nomura Holdings 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nomura Holdings in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Management segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Nomura Holdings has opened avenues for new revenue streams for the organization in the industry. This can help Nomura Holdings to build a more holistic ecosystem as suggested in the Nomura Holdings case study. Nomura Holdings can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Nomura Holdings in the consumer business. Now Nomura Holdings can target international markets with far fewer capital restrictions requirements than the existing system.
Loyalty marketing
– Nomura Holdings 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Management industry, but it has also influenced the consumer preferences. Nomura Holdings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Nomura Holdings can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nomura Holdings 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Management industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nomura Holdings 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. Nomura Holdings 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nomura Holdings is facing challenges because of the dominance of functional experts in the organization. Nomura Holdings 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.
Manufacturing automation
– Nomura Holdings can use the latest technology developments to improve its manufacturing and designing process in Management 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nomura Holdings can use these opportunities to build new business models that can help the communities that Nomura Holdings operates in. Secondly it can use opportunities from government spending in Management sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nomura Holdings 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, Nomura Holdings, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Nomura Holdings External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nomura Holdings are -
High dependence on third party suppliers
– Nomura Holdings 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.
Easy access to finance
– Easy access to finance in Management field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nomura Holdings can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nomura Holdings 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 Nomura Holdings .
Stagnating economy with rate increase
– Nomura Holdings 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.
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 Nomura Holdings in the Management sector and impact the bottomline of the organization.
Regulatory challenges
– Nomura Holdings 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 Management industry regulations.
Increasing wage structure of Nomura Holdings
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Nomura Holdings.
Shortening product life cycle
– it is one of the major threat that Nomura Holdings is facing in Management sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Nomura Holdings has witnessed rapid integration of technology during Covid-19 in the Management industry. As one of the leading players in the industry, Nomura Holdings needs to keep up with the evolution of technology in the Management 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.
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 Nomura Holdings, Nomura Holdings may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Management .
Environmental challenges
– Nomura Holdings 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. Nomura Holdings can take advantage of this fund but it will also bring new competitors in the Management industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nomura Holdings with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings 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 Nomura Holdings needs to make to build a sustainable competitive advantage.