Nissan Motor Co., Ltd. (A): The Hakone Pilot SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Nissan Motor Co., Ltd. (A): The Hakone Pilot
Nissan Motors Ltd. went through a spectacular turnaround led by Carlos Ghosn. Nevertheless, in spite of strong growth in new car sales, "After Sales" of automobile parts in Japan did not keep up, hurting dealer profitability. Since dealer profitability is a key success factor in the auto industry, Nissan decided to lead its Japanese dealers to (1) improve their cost structure, (2) improve their management methods, and (3) stimulate "customer traffic" via better marketing strategies. The After Sales department identified a Toyota dealership that actually managed to increase its profitability by working on these three factors, and its president agreed to let Nissan benchmark with his operation. The department decided to replicate this Toyota dealer's management methods, costs and strategy. The latter includes significant price reductions on fees for road worthiness tests, which dealers are authorized to perform on behalf of the Japanese government. Many Nissan dealers raised objections to this pricing approach and, in order to convince them, the company executes the strategy on a "pilot" basis, in Hakone, testing the approach and, hopefully, creating a showcase. While initial results were encouraging, the growth in market share seems to flatten, possibly vindicating the doubting dealers' arguments. The case, generates considerable controversy in both MBA and executive classes, includes discussion on market segmentation, pricing strategy, channel design and dealer network management issues. The case includes a detailed discussion of the dealers' "business model", allowing the class to inspect the financial impact of various strategic scenarios for both Nissan and its dealers.
Swot Analysis of "Nissan Motor Co., Ltd. (A): The Hakone Pilot" written by David Weinstein includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Nissan Dealers facing as an external strategic factors. Some of the topics covered in Nissan Motor Co., Ltd. (A): The Hakone Pilot case study are - Strategic Management Strategies, Pricing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Nissan Motor Co., Ltd. (A): The Hakone Pilot casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , increasing household debt because of falling income levels, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
there is increasing trade war between United States & China, technology disruption, etc
Introduction to SWOT Analysis of Nissan Motor Co., Ltd. (A): The Hakone Pilot
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nissan Motor Co., Ltd. (A): The Hakone Pilot case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nissan Dealers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nissan Dealers 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot can be done for the following purposes –
1. Strategic planning using facts provided in Nissan Motor Co., Ltd. (A): The Hakone Pilot case study
2. Improving business portfolio management of Nissan Dealers
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nissan Dealers
Strengths Nissan Motor Co., Ltd. (A): The Hakone Pilot | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nissan Dealers in Nissan Motor Co., Ltd. (A): The Hakone Pilot Harvard Business Review case study are -
High switching costs
– The high switching costs that Nissan Dealers has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Nissan Dealers is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Nissan Dealers is one of the leading recruiters in the industry. Managers in the Nissan Motor Co., Ltd. (A): The Hakone Pilot are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Nissan Dealers 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Nissan Dealers has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Nissan Motor Co., Ltd. (A): The Hakone Pilot Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– Nissan Motor Co., Ltd. (A): The Hakone Pilot firm has clearly differentiated products in the market place. This has enabled Nissan Dealers to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Nissan Dealers to invest into research and development (R&D) and innovation.
Organizational Resilience of Nissan Dealers
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Nissan Dealers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Nissan Dealers 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 Nissan Dealers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nissan Motor Co., Ltd. (A): The Hakone Pilot Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Nissan Dealers is one of the most innovative firm in sector. Manager in Nissan Motor Co., Ltd. (A): The Hakone Pilot Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Nissan Dealers 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Nissan Dealers has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nissan Dealers 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 Sales & Marketing field
– Nissan Dealers 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 Nissan Dealers in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Nissan Motor Co., Ltd. (A): The Hakone Pilot | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nissan Motor Co., Ltd. (A): The Hakone Pilot are -
Slow decision making process
– As mentioned earlier in the report, Nissan Dealers 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. Nissan Dealers 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 Nissan Dealers supply chain. Even after few cautionary changes mentioned in the HBR case study - Nissan Motor Co., Ltd. (A): The Hakone Pilot, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nissan Dealers vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Nissan Dealers 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.
Need for greater diversity
– Nissan Dealers 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nissan Motor Co., Ltd. (A): The Hakone Pilot, in the dynamic environment Nissan Dealers has struggled to respond to the nimble upstart competition. Nissan Dealers has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Nissan Dealers has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Products dominated business model
– Even though Nissan Dealers 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 - Nissan Motor Co., Ltd. (A): The Hakone Pilot should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Nissan Dealers products
– To increase the profitability and margins on the products, Nissan Dealers needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Nissan Motor Co., Ltd. (A): The Hakone Pilot HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Nissan Dealers has relatively successful track record of launching new products.
Skills based hiring
– The stress on hiring functional specialists at Nissan Dealers 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Nissan Motor Co., Ltd. (A): The Hakone Pilot, it seems that the employees of Nissan Dealers 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.
Opportunities Nissan Motor Co., Ltd. (A): The Hakone Pilot | 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot are -
Creating value in data economy
– The success of analytics program of Nissan Dealers has opened avenues for new revenue streams for the organization in the industry. This can help Nissan Dealers to build a more holistic ecosystem as suggested in the Nissan Motor Co., Ltd. (A): The Hakone Pilot case study. Nissan Dealers can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Nissan Dealers 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nissan Dealers 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 Nissan Dealers to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Nissan Dealers to increase its market reach. Nissan Dealers 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nissan Dealers is facing challenges because of the dominance of functional experts in the organization. Nissan Motor Co., Ltd. (A): The Hakone Pilot 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.
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. Nissan Dealers can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Nissan Dealers can develop new processes and procedures in Sales & Marketing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nissan Dealers 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.
Learning at scale
– Online learning technologies has now opened space for Nissan Dealers 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nissan Dealers can use these opportunities to build new business models that can help the communities that Nissan Dealers operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Using analytics as competitive advantage
– Nissan Dealers 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nissan Dealers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Nissan Dealers can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Leveraging digital technologies
– Nissan Dealers 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.
Threats Nissan Motor Co., Ltd. (A): The Hakone Pilot External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nissan Motor Co., Ltd. (A): The Hakone Pilot are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Nissan Dealers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Stagnating economy with rate increase
– Nissan Dealers 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.
High dependence on third party suppliers
– Nissan Dealers 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Nissan Dealers will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Nissan Dealers is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Nissan Dealers in the Sales & Marketing sector and impact the bottomline 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot, Nissan Dealers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
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.
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.
Environmental challenges
– Nissan Dealers 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. Nissan Dealers can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nissan Dealers 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nissan Dealers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Nissan Dealers 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.
Weighted SWOT Analysis of Nissan Motor Co., Ltd. (A): The Hakone Pilot 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot 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 Nissan Motor Co., Ltd. (A): The Hakone Pilot 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 Nissan Dealers needs to make to build a sustainable competitive advantage.