Consumer Payment Systems - Japan SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Consumer Payment Systems - Japan
In 2008, the Japanese consumer payments landscape featured ongoing widespread use of cash, limited use of credit cards and rapid rise of e-money systems based on contactless technology embedded in cards and especially mobile phones. The case details the alliances that created new products, as well as the regulations that sometimes stood in the way. Throughout, the case identifies incentives for both consumers and merchants, including direct costs, efficiency benefits, rebates, and treatment in case of loss or fraud.
Swot Analysis of "Consumer Payment Systems - Japan" written by Benjamin Edelman, Andrei Hagiu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cards Contactless facing as an external strategic factors. Some of the topics covered in Consumer Payment Systems - Japan case study are - Strategic Management Strategies, IT, Joint ventures, Regulation, Sales, Supply chain and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Consumer Payment Systems - Japan casestudy better are - – technology disruption, there is backlash against globalization, supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%,
increasing commodity prices, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of Consumer Payment Systems - Japan
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Consumer Payment Systems - Japan case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cards Contactless, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cards Contactless 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 Consumer Payment Systems - Japan can be done for the following purposes –
1. Strategic planning using facts provided in Consumer Payment Systems - Japan case study
2. Improving business portfolio management of Cards Contactless
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cards Contactless
Strengths Consumer Payment Systems - Japan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cards Contactless in Consumer Payment Systems - Japan Harvard Business Review case study are -
Innovation driven organization
– Cards Contactless is one of the most innovative firm in sector. Manager in Consumer Payment Systems - Japan Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Cards Contactless has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Cards Contactless 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.
Cross disciplinary teams
– Horizontal connected teams at the Cards Contactless 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.
High switching costs
– The high switching costs that Cards Contactless 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
– Cards Contactless 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 lead change in Strategy & Execution field
– Cards Contactless 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 Cards Contactless in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Cards Contactless has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cards Contactless to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Cards Contactless has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Consumer Payment Systems - Japan 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.
Effective Research and Development (R&D)
– Cards Contactless 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 Consumer Payment Systems - Japan - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Cards Contactless 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 Consumer Payment Systems - Japan HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Consumer Payment Systems - Japan firm has clearly differentiated products in the market place. This has enabled Cards Contactless to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cards Contactless to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cards Contactless digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cards Contactless 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.
Weaknesses Consumer Payment Systems - Japan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Consumer Payment Systems - Japan are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Consumer Payment Systems - Japan, is just above the industry average. Cards Contactless 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.
Low market penetration in new markets
– Outside its home market of Cards Contactless, firm in the HBR case study Consumer Payment Systems - Japan needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Cards Contactless supply chain. Even after few cautionary changes mentioned in the HBR case study - Consumer Payment Systems - Japan, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cards Contactless vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Cards Contactless 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.
Aligning sales with marketing
– It come across in the case study Consumer Payment Systems - Japan 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 Consumer Payment Systems - Japan can leverage the sales team experience to cultivate customer relationships as Cards Contactless is planning to shift buying processes online.
Products dominated business model
– Even though Cards Contactless 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 - Consumer Payment Systems - Japan should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Cards Contactless 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Consumer Payment Systems - Japan, it seems that the employees of Cards Contactless 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, Benjamin Edelman, Andrei Hagiu suggests that, Cards Contactless 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.
Lack of clear differentiation of Cards Contactless products
– To increase the profitability and margins on the products, Cards Contactless needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Consumer Payment Systems - Japan has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Cards Contactless 's lucrative customers.
Opportunities Consumer Payment Systems - Japan | 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 Consumer Payment Systems - Japan are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cards Contactless is facing challenges because of the dominance of functional experts in the organization. Consumer Payment Systems - Japan 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.
Loyalty marketing
– Cards Contactless 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 Strategy & Execution industry, but it has also influenced the consumer preferences. Cards Contactless can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cards Contactless can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Cards Contactless has opened avenues for new revenue streams for the organization in the industry. This can help Cards Contactless to build a more holistic ecosystem as suggested in the Consumer Payment Systems - Japan case study. Cards Contactless can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Cards Contactless 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cards Contactless can use these opportunities to build new business models that can help the communities that Cards Contactless operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Buying journey improvements
– Cards Contactless can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Consumer Payment Systems - Japan 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.
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 Cards Contactless in the consumer business. Now Cards Contactless can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Cards Contactless 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.
Developing new processes and practices
– Cards Contactless can develop new processes and procedures in Strategy & Execution 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
– Cards Contactless can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Using analytics as competitive advantage
– Cards Contactless 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 Consumer Payment Systems - Japan - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Cards Contactless to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Consumer Payment Systems - Japan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Consumer Payment Systems - Japan are -
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cards Contactless in the Strategy & Execution industry. The Strategy & Execution 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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cards Contactless can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing wage structure of Cards Contactless
– 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 Cards Contactless.
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. Cards Contactless needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Cards Contactless with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Cards Contactless 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Consumer Payment Systems - Japan, Cards Contactless may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Shortening product life cycle
– it is one of the major threat that Cards Contactless is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Cards Contactless 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 Strategy & Execution 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 Cards Contactless in the Strategy & Execution sector and impact the bottomline of the organization.
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 Cards Contactless business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Cards Contactless 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.
Weighted SWOT Analysis of Consumer Payment Systems - Japan 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 Consumer Payment Systems - Japan 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 Consumer Payment Systems - Japan 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 Consumer Payment Systems - Japan 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 Consumer Payment Systems - Japan 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 Cards Contactless needs to make to build a sustainable competitive advantage.
