Softbank's New Strategy: The Largest LBO in Japan SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study Description of Softbank's New Strategy: The Largest LBO in Japan
On 17 March 2006, Japanese Internet company Softbank Corp announced that it had reached a final agreement with British cellular phone giant Vodafone Group Plc to buy its Japanese unit, Vodafone K.K. for A¥1.75 trillion. To finance the largest business acquisition ever by a Japanese firm, Softbank intended to raise between A¥1.1 trillion and A¥1.2 trillion through leveraged-buyout ("LBO") financing, using Vodafone K.K.'s assets as collateral . With the acquisition of Vodafone K.K., Softbank aimed to build a multilateral communications business, integrating news, video and other online content with Vodafone's cellular and fixed-line services. But first Softbank had to borrow between A¥1.1 trillion and A¥1.2 trillion to finance its purchase. The sum was the largest ever to be raised for a buyout by a single Japanese company.
Swot Analysis of "Softbank's New Strategy: The Largest LBO in Japan" written by Mitsuru Misawa includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Softbank Trillion facing as an external strategic factors. Some of the topics covered in Softbank's New Strategy: The Largest LBO in Japan case study are - Strategic Management Strategies, Growth strategy, Mergers & acquisitions, Supply chain, Technology and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Softbank's New Strategy: The Largest LBO in Japan casestudy better are - – increasing energy prices, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, increasing commodity prices, geopolitical disruptions, there is increasing trade war between United States & China, there is backlash against globalization,
technology disruption, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Softbank's New Strategy: The Largest LBO in Japan
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Softbank's New Strategy: The Largest LBO in Japan case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Softbank Trillion, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Softbank Trillion 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 Softbank's New Strategy: The Largest LBO in Japan can be done for the following purposes –
1. Strategic planning using facts provided in Softbank's New Strategy: The Largest LBO in Japan case study
2. Improving business portfolio management of Softbank Trillion
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Softbank Trillion
Strengths Softbank's New Strategy: The Largest LBO in Japan | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Softbank Trillion in Softbank's New Strategy: The Largest LBO in Japan Harvard Business Review case study are -
Highly skilled collaborators
– Softbank Trillion 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 Softbank's New Strategy: The Largest LBO in Japan HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Softbank Trillion 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.
Training and development
– Softbank Trillion has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Softbank's New Strategy: The Largest LBO in 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.
Operational resilience
– The operational resilience strategy in the Softbank's New Strategy: The Largest LBO in Japan 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.
Ability to recruit top talent
– Softbank Trillion is one of the leading recruiters in the industry. Managers in the Softbank's New Strategy: The Largest LBO in Japan are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Cross disciplinary teams
– Horizontal connected teams at the Softbank Trillion 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.
Innovation driven organization
– Softbank Trillion is one of the most innovative firm in sector. Manager in Softbank's New Strategy: The Largest LBO in Japan Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Finance & Accounting field
– Softbank Trillion 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 Softbank Trillion in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Softbank Trillion is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Softbank Trillion 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 Softbank's New Strategy: The Largest LBO in 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.
Sustainable margins compare to other players in Finance & Accounting industry
– Softbank's New Strategy: The Largest LBO in Japan firm has clearly differentiated products in the market place. This has enabled Softbank Trillion to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Softbank Trillion to invest into research and development (R&D) and innovation.
Organizational Resilience of Softbank Trillion
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Softbank Trillion does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Softbank's New Strategy: The Largest LBO in Japan | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Softbank's New Strategy: The Largest LBO in Japan are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Softbank's New Strategy: The Largest LBO in Japan, in the dynamic environment Softbank Trillion has struggled to respond to the nimble upstart competition. Softbank Trillion has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Softbank Trillion 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.
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 Softbank Trillion supply chain. Even after few cautionary changes mentioned in the HBR case study - Softbank's New Strategy: The Largest LBO in Japan, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Softbank Trillion vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Softbank Trillion 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.
Increasing silos among functional specialists
– The organizational structure of Softbank Trillion is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Softbank Trillion needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Softbank Trillion to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Softbank's New Strategy: The Largest LBO in 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 Softbank Trillion 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Softbank Trillion 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.
No frontier risks strategy
– After analyzing the HBR case study Softbank's New Strategy: The Largest LBO in Japan, it seems that company is thinking about the frontier risks that can impact Finance & Accounting 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.
High cash cycle compare to competitors
Softbank Trillion 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.
Slow to strategic competitive environment developments
– As Softbank's New Strategy: The Largest LBO in Japan HBR case study mentions - Softbank Trillion takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Softbank Trillion is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Softbank's New Strategy: The Largest LBO in Japan can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Opportunities Softbank's New Strategy: The Largest LBO in 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 Softbank's New Strategy: The Largest LBO in Japan are -
Creating value in data economy
– The success of analytics program of Softbank Trillion has opened avenues for new revenue streams for the organization in the industry. This can help Softbank Trillion to build a more holistic ecosystem as suggested in the Softbank's New Strategy: The Largest LBO in Japan case study. Softbank Trillion can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Softbank Trillion can use these opportunities to build new business models that can help the communities that Softbank Trillion operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Softbank Trillion 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, Softbank Trillion is facing challenges because of the dominance of functional experts in the organization. Softbank's New Strategy: The Largest LBO in 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.
Buying journey improvements
– Softbank Trillion can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Softbank's New Strategy: The Largest LBO in 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Softbank Trillion can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Softbank Trillion can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Softbank Trillion can develop new processes and procedures in Finance & Accounting 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
– Softbank Trillion can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Building a culture of innovation
– managers at Softbank Trillion can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Learning at scale
– Online learning technologies has now opened space for Softbank Trillion 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.
Leveraging digital technologies
– Softbank Trillion 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Softbank Trillion 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 Softbank's New Strategy: The Largest LBO in Japan External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Softbank's New Strategy: The Largest LBO in Japan are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Softbank's New Strategy: The Largest LBO in Japan, Softbank Trillion may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Softbank Trillion with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Softbank Trillion.
Increasing wage structure of Softbank Trillion
– 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 Softbank Trillion.
Shortening product life cycle
– it is one of the major threat that Softbank Trillion is facing in Finance & Accounting 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 Softbank Trillion in the Finance & Accounting sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Softbank Trillion 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 Softbank's New Strategy: The Largest LBO in Japan .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Softbank Trillion can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Softbank Trillion 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.
Regulatory challenges
– Softbank Trillion 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 Finance & Accounting industry regulations.
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 Softbank Trillion business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Softbank Trillion 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
– Softbank Trillion 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. Softbank Trillion can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of Softbank's New Strategy: The Largest LBO in 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 Softbank's New Strategy: The Largest LBO in 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 Softbank's New Strategy: The Largest LBO in 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 Softbank's New Strategy: The Largest LBO in 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 Softbank's New Strategy: The Largest LBO in 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 Softbank Trillion needs to make to build a sustainable competitive advantage.