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 - – increasing transportation and logistics costs, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, wage bills are increasing, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, increasing government debt because of Covid-19 spendings,
talent flight as more people leaving formal jobs, increasing commodity prices, 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.
Effective Research and Development (R&D)
– Jnb Internet 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 Japan Net Bank: Japan's First Internet-Only Bank - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Jnb Internet is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ali F. Farhoomand, Vincent Mak, Pauline Ng can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
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.
Organizational Resilience of Jnb Internet
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Jnb Internet does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
Strong track record of project management
– Jnb Internet is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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.
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.
Low bargaining power of suppliers
– Suppliers of Jnb Internet in the sector have low bargaining power. Japan Net Bank: Japan's First Internet-Only Bank has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Jnb Internet to manage not only supply disruptions but also source products at highly competitive prices.
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.
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 -
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Japan Net Bank: Japan's First Internet-Only Bank, it seems that the employees of Jnb Internet 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.
Products dominated business model
– Even though Jnb Internet 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 - Japan Net Bank: Japan's First Internet-Only Bank should strive to include more intangible value offerings along with its core products and services.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali F. Farhoomand, Vincent Mak, Pauline Ng suggests that, Jnb Internet 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.
Skills based hiring
– The stress on hiring functional specialists at Jnb Internet 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.
No frontier risks strategy
– After analyzing the HBR case study Japan Net Bank: Japan's First Internet-Only Bank, it seems that company is thinking about the frontier risks that can impact Technology & Operations 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.
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.
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.
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 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 Jnb Internet supply chain. Even after few cautionary changes mentioned in the HBR case study - Japan Net Bank: Japan's First Internet-Only Bank, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Jnb Internet vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Jnb Internet 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.
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 -
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.
Creating value in data economy
– The success of analytics program of Jnb Internet has opened avenues for new revenue streams for the organization in the industry. This can help Jnb Internet to build a more holistic ecosystem as suggested in the Japan Net Bank: Japan's First Internet-Only Bank case study. Jnb Internet can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Jnb Internet can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations 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.
Loyalty marketing
– Jnb Internet 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.
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.
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. Jnb Internet can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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.
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.
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.
Developing new processes and practices
– Jnb Internet can develop new processes and procedures in Technology & Operations 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Jnb Internet is facing challenges because of the dominance of functional experts in the organization. Japan Net Bank: Japan's First Internet-Only Bank 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
– Jnb Internet can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Japan Net Bank: Japan's First Internet-Only Bank 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.
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.
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 -
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.
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.
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.
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.
Increasing wage structure of Jnb Internet
– 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 Jnb Internet.
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.
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.
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.
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. Jnb Internet needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Jnb Internet 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.
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
– 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.
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.