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 - – increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation, there is backlash against globalization, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing household debt because of falling income levels,
there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, 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 -
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.
Ability to lead change in Management field
– Nomura Holdings 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 Nomura Holdings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
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.
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.
Digital Transformation in Management segment
- digital transformation varies from industry to industry. For Nomura Holdings digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nomura Holdings 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.
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.
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.
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.
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.
Learning organization
- Nomura Holdings 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 Nomura Holdings is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nomura Holdings Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Nomura Holdings 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 Nomura Holdings HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Nomura Holdings | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nomura Holdings are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nomura Holdings is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Nomura Holdings can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Nomura Holdings that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Nomura Holdings can leverage the sales team experience to cultivate customer relationships as Nomura Holdings is planning to shift buying processes online.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Nomura Holdings 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.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, Tarun Khanna, Masako Egawa, Atsuko Nakajima suggests that, Nomura Holdings 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.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nomura Holdings, is just above the industry average. Nomura Holdings 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.
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.
Lack of clear differentiation of Nomura Holdings products
– To increase the profitability and margins on the products, Nomura Holdings needs to provide more differentiated products than what it is currently offering in the marketplace.
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 -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nomura Holdings 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 Nomura Holdings to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nomura Holdings can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Nomura Holdings has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nomura Holdings - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nomura Holdings to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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. Nomura Holdings can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
Better consumer reach
– The expansion of the 5G network will help Nomura Holdings to increase its market reach. Nomura Holdings 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.
Learning at scale
– Online learning technologies has now opened space for Nomura Holdings 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.
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.
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.
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.
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.
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.
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 -
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.
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.
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.
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 Nomura Holdings business can come under increasing regulations regarding data privacy, data security, etc.
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 Nomura Holdings.
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.
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.
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.
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.
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.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Nomura Holdings needs to understand the core reasons impacting the Management industry. This will help it in building a better workplace.
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.
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.
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.
