The Restructuring of Daiei SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of The Restructuring of Daiei
In 2004, the Industrial Revitalization Corporation of Japan (IRCJ) was given the task of restructuring Daiei, one of the largest Japanese retailers and the country's most prominent zombie companies. The IRCJ was a government sponsored organization that was funded with 50 billion Yen in equity capital and 10 trillion Yen of government guaranteed funds. Daiei presented the IRCJ with a unique opportunity to demonstrate the effectiveness of its restructuring strategy which would require a significant write-down of Daiei's bank debts, substantial store closures and workforce reductions, and sufficient new private equity capital to help reposition and revitalize Daiei's retail operations. Overcoming these hurdles in a large and visible company like Daiei would be an important accomplishment for the IRCJ. But, failure too would have far reaching consequences.
Swot Analysis of "The Restructuring of Daiei" written by Richard S. Ruback includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Daiei Ircj facing as an external strategic factors. Some of the topics covered in The Restructuring of Daiei case study are - Strategic Management Strategies, Costs, Entrepreneurial finance, Reorganization and Organizational Development.
Some of the macro environment factors that can be used to understand the The Restructuring of Daiei casestudy better are - – cloud computing is disrupting traditional business models, increasing transportation and logistics costs, there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of The Restructuring of Daiei
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Restructuring of Daiei case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Daiei Ircj, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Daiei Ircj 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 The Restructuring of Daiei can be done for the following purposes –
1. Strategic planning using facts provided in The Restructuring of Daiei case study
2. Improving business portfolio management of Daiei Ircj
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Daiei Ircj
Strengths The Restructuring of Daiei | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Daiei Ircj in The Restructuring of Daiei Harvard Business Review case study are -
High brand equity
– Daiei Ircj has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Daiei Ircj to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Organizational Development industry
– The Restructuring of Daiei firm has clearly differentiated products in the market place. This has enabled Daiei Ircj to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Daiei Ircj to invest into research and development (R&D) and innovation.
Learning organization
- Daiei Ircj 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 Daiei Ircj is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in The Restructuring of Daiei Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Daiei Ircj is one of the most innovative firm in sector. Manager in The Restructuring of Daiei 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 The Restructuring of Daiei 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.
Cross disciplinary teams
– Horizontal connected teams at the Daiei Ircj 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.
Effective Research and Development (R&D)
– Daiei Ircj has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study The Restructuring of Daiei - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Daiei Ircj 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 Richard S. Ruback 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 Organizational Development segment
- digital transformation varies from industry to industry. For Daiei Ircj digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Daiei Ircj 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.
Superior customer experience
– The customer experience strategy of Daiei Ircj in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management
– Daiei Ircj 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
– Daiei Ircj 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 The Restructuring of Daiei HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses The Restructuring of Daiei | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Restructuring of Daiei are -
Interest costs
– Compare to the competition, Daiei Ircj 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.
High bargaining power of channel partners
– Because of the regulatory requirements, Richard S. Ruback suggests that, Daiei Ircj 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.
Increasing silos among functional specialists
– The organizational structure of Daiei Ircj is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Daiei Ircj needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Daiei Ircj to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Daiei Ircj 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.
Aligning sales with marketing
– It come across in the case study The Restructuring of Daiei 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 The Restructuring of Daiei can leverage the sales team experience to cultivate customer relationships as Daiei Ircj is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Daiei Ircj 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 harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Daiei Ircj is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Restructuring of Daiei can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Restructuring of Daiei, in the dynamic environment Daiei Ircj has struggled to respond to the nimble upstart competition. Daiei Ircj has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Daiei Ircj 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 - The Restructuring of Daiei should strive to include more intangible value offerings along with its core products and services.
Skills based hiring
– The stress on hiring functional specialists at Daiei Ircj 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.
Lack of clear differentiation of Daiei Ircj products
– To increase the profitability and margins on the products, Daiei Ircj needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities The Restructuring of Daiei | 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 The Restructuring of Daiei 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 Daiei Ircj 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.
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 Daiei Ircj in the consumer business. Now Daiei Ircj can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Daiei Ircj can develop new processes and procedures in Organizational Development 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.
Manufacturing automation
– Daiei Ircj can use the latest technology developments to improve its manufacturing and designing process in Organizational Development 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Daiei Ircj can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Daiei Ircj 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, Daiei Ircj is facing challenges because of the dominance of functional experts in the organization. The Restructuring of Daiei 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Daiei Ircj in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Daiei Ircj can use these opportunities to build new business models that can help the communities that Daiei Ircj operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Daiei Ircj can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Daiei Ircj can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Daiei Ircj 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.
Creating value in data economy
– The success of analytics program of Daiei Ircj has opened avenues for new revenue streams for the organization in the industry. This can help Daiei Ircj to build a more holistic ecosystem as suggested in the The Restructuring of Daiei case study. Daiei Ircj can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats The Restructuring of Daiei External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Restructuring of Daiei are -
Stagnating economy with rate increase
– Daiei Ircj 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 Daiei Ircj in the Organizational Development sector and impact the bottomline of the organization.
Regulatory challenges
– Daiei Ircj 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 Organizational Development industry regulations.
High dependence on third party suppliers
– Daiei Ircj 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.
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 Daiei Ircj.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Daiei Ircj in the Organizational Development industry. The Organizational Development 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.
Increasing wage structure of Daiei Ircj
– 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 Daiei Ircj.
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 Daiei Ircj business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Daiei Ircj 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.
Environmental challenges
– Daiei Ircj 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. Daiei Ircj can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
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. Daiei Ircj needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Daiei Ircj has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Daiei Ircj needs to keep up with the evolution of technology in the Organizational Development 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.
Shortening product life cycle
– it is one of the major threat that Daiei Ircj is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of The Restructuring of Daiei 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 The Restructuring of Daiei 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 The Restructuring of Daiei 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 The Restructuring of Daiei 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 The Restructuring of Daiei 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 Daiei Ircj needs to make to build a sustainable competitive advantage.