Japan Net Bank: Japan's First Internet-Only Bank SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Japan Net Bank: Japan's First Internet-Only Bank
Japan Net Bank (JNB), Japan's first Internet bank without physical branches, began operation in October 2000. It attracted mainly young customers looking for convenient, round-the-clock bank services with much more competitive interest rates and transaction charges than traditional Japanese banks. Its access channels included the mobile Internet service i-mode and fixed-line Internet. JNB relied on flexible, open computer systems and a small, young workforce to minimize operation cost. Its shareholders, including parent company Sumitomo Mitsui Banking Corp. as well as NTT DoCoMo (provider of i-mode), were all big companies from different industry sectors. By April 2001, JNB had 130,000 customers. But it needed to resolve a number of issues before being able to achieve long-term success in the face of strong competition from bricks-and-mortar banks and new Internet-only banks. One of those issues was about how to meet with wide fluctuations in usage without overinvesting; the other was alliance management, i.e., how to cooperate with alliance partners to achieve competitive advantage.
Authors :: Ali F. Farhoomand, Vincent Mak, Pauline Ng
Swot Analysis of "Japan Net Bank: Japan's First Internet-Only Bank" written by Ali F. Farhoomand, Vincent Mak, Pauline Ng includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Jnb Internet facing as an external strategic factors. Some of the topics covered in Japan Net Bank: Japan's First Internet-Only Bank case study are - Strategic Management Strategies, and Technology & Operations.
Some of the macro environment factors that can be used to understand the Japan Net Bank: Japan's First Internet-Only Bank casestudy better are - – supply chains are disrupted by pandemic , central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, increasing commodity prices,
there is increasing trade war between United States & China, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Japan Net Bank: Japan's First Internet-Only Bank
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Japan Net Bank: Japan's First Internet-Only Bank case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Jnb Internet, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Jnb Internet 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 Japan Net Bank: Japan's First Internet-Only Bank can be done for the following purposes –
1. Strategic planning using facts provided in Japan Net Bank: Japan's First Internet-Only Bank case study
2. Improving business portfolio management of Jnb Internet
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Jnb Internet
Strengths Japan Net Bank: Japan's First Internet-Only Bank | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Jnb Internet in Japan Net Bank: Japan's First Internet-Only Bank Harvard Business Review case study are -
Ability to recruit top talent
– Jnb Internet is one of the leading recruiters in the industry. Managers in the Japan Net Bank: Japan's First Internet-Only Bank are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Jnb Internet in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Jnb Internet has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Japan Net Bank: Japan's First Internet-Only Bank 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.
Diverse revenue streams
– Jnb Internet is present in almost all the verticals within the industry. This has provided firm in Japan Net Bank: Japan's First Internet-Only Bank case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Highly skilled collaborators
– Jnb Internet 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 Japan Net Bank: Japan's First Internet-Only Bank HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Jnb Internet digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Jnb Internet 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.
Ability to lead change in Technology & Operations field
– Jnb Internet 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 Jnb Internet in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Jnb Internet has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Jnb Internet to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Jnb Internet 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.
Learning organization
- Jnb Internet 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 Jnb Internet is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Japan Net Bank: Japan's First Internet-Only Bank Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Technology & Operations industry
– Japan Net Bank: Japan's First Internet-Only Bank firm has clearly differentiated products in the market place. This has enabled Jnb Internet to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Jnb Internet to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Jnb Internet has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Jnb Internet 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.
Weaknesses Japan Net Bank: Japan's First Internet-Only Bank | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Japan Net Bank: Japan's First Internet-Only Bank are -
Slow to strategic competitive environment developments
– As Japan Net Bank: Japan's First Internet-Only Bank HBR case study mentions - Jnb Internet 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.
Aligning sales with marketing
– It come across in the case study Japan Net Bank: Japan's First Internet-Only Bank 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 Japan Net Bank: Japan's First Internet-Only Bank can leverage the sales team experience to cultivate customer relationships as Jnb Internet is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Japan Net Bank: Japan's First Internet-Only Bank, in the dynamic environment Jnb Internet has struggled to respond to the nimble upstart competition. Jnb Internet has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Japan Net Bank: Japan's First Internet-Only Bank 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 Jnb Internet has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Jnb Internet 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. Jnb Internet 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.
Low market penetration in new markets
– Outside its home market of Jnb Internet, firm in the HBR case study Japan Net Bank: Japan's First Internet-Only Bank needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High operating costs
– Compare to the competitors, firm in the HBR case study Japan Net Bank: Japan's First Internet-Only Bank 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 Jnb Internet 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Jnb Internet is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Jnb Internet needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Jnb Internet to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Jnb Internet is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Japan Net Bank: Japan's First Internet-Only Bank can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Jnb Internet 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.
Interest costs
– Compare to the competition, Jnb Internet 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.
Opportunities Japan Net Bank: Japan's First Internet-Only Bank | 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 Japan Net Bank: Japan's First Internet-Only Bank are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Jnb Internet in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
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 Jnb Internet in the consumer business. Now Jnb Internet can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Jnb Internet 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Jnb Internet can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Jnb Internet 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 Japan Net Bank: Japan's First Internet-Only Bank - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Jnb Internet to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Jnb Internet can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Jnb Internet 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.
Building a culture of innovation
– managers at Jnb Internet 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 Technology & Operations segment.
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 Jnb Internet 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Jnb Internet 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 Jnb Internet to hire the very best people irrespective of their geographical location.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Jnb Internet can use these opportunities to build new business models that can help the communities that Jnb Internet operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Better consumer reach
– The expansion of the 5G network will help Jnb Internet to increase its market reach. Jnb Internet 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Jnb Internet can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Japan Net Bank: Japan's First Internet-Only Bank, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Japan Net Bank: Japan's First Internet-Only Bank External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Japan Net Bank: Japan's First Internet-Only Bank are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Jnb Internet 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 Jnb Internet.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Japan Net Bank: Japan's First Internet-Only Bank, Jnb Internet may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Jnb Internet can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Jnb Internet 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Jnb Internet in the Technology & Operations industry. The Technology & Operations 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.
Technology acceleration in Forth Industrial Revolution
– Jnb Internet has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Jnb Internet needs to keep up with the evolution of technology in the Technology & Operations 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.
Environmental challenges
– Jnb Internet 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. Jnb Internet can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
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.
High dependence on third party suppliers
– Jnb Internet 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Jnb Internet 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 Japan Net Bank: Japan's First Internet-Only Bank .
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 Jnb Internet in the Technology & Operations sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Jnb Internet is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Japan Net Bank: Japan's First Internet-Only Bank 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 Japan Net Bank: Japan's First Internet-Only Bank 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 Japan Net Bank: Japan's First Internet-Only Bank 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 Japan Net Bank: Japan's First Internet-Only Bank 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 Japan Net Bank: Japan's First Internet-Only Bank 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 Jnb Internet needs to make to build a sustainable competitive advantage.
