FANUC Corporation: Reassessing the Firm's Governance and Financial Policies SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of FANUC Corporation: Reassessing the Firm's Governance and Financial Policies
In February 2015, Daniel Loeb (a US-based activist investor) announced his firm had a large investment in FANUC Corporation, a leading producer of industrial robots and software for machine tools. Loeb was demanding that the Japanese firm change its financial and governance policies (e.g., distribute more cash, fix its "illogical" capital structure, and provide more information to shareholders). FANUC's CEO, Yoshiharu Inaba, and his board must decide if and how to respond. One the one hand, the firm had been very successful having built leading global market shares in each of its core divisions and profitability that exceeded what Goldman Sachs earned on a per person basis. On the other hand, the Japanese government was calling for financial and governance reform as part of the prime minister's recently-announced economic growth strategy known as "Abenomics". Although Inaba and his team had previously considered many of the proposed changes, the question was whether it was now time to actually make some of the changes.
Authors :: Benjamin C. Esty, Nobuo Sato, Akiko Kanno
Swot Analysis of "FANUC Corporation: Reassessing the Firm's Governance and Financial Policies" written by Benjamin C. Esty, Nobuo Sato, Akiko Kanno includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fanuc Inaba facing as an external strategic factors. Some of the topics covered in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies case study are - Strategic Management Strategies, Corporate governance, Economics, Financial analysis, Financial management, Policy, Regulation and Finance & Accounting.
Some of the macro environment factors that can be used to understand the FANUC Corporation: Reassessing the Firm's Governance and Financial Policies casestudy better are - – technology disruption, cloud computing is disrupting traditional business models, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing commodity prices, challanges to central banks by blockchain based private currencies,
there is increasing trade war between United States & China, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of FANUC Corporation: Reassessing the Firm's Governance and Financial Policies
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fanuc Inaba, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fanuc Inaba 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies can be done for the following purposes –
1. Strategic planning using facts provided in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies case study
2. Improving business portfolio management of Fanuc Inaba
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 Fanuc Inaba
Strengths FANUC Corporation: Reassessing the Firm's Governance and Financial Policies | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fanuc Inaba in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies Harvard Business Review case study are -
Innovation driven organization
– Fanuc Inaba is one of the most innovative firm in sector. Manager in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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
– Fanuc Inaba 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 Fanuc Inaba in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of Fanuc Inaba in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Fanuc Inaba 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 Fanuc Inaba is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Fanuc Inaba 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 Fanuc Inaba
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fanuc Inaba does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Fanuc Inaba 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 Benjamin C. Esty, Nobuo Sato, Akiko Kanno 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.
Successful track record of launching new products
– Fanuc Inaba has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fanuc Inaba 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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Fanuc Inaba digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fanuc Inaba 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.
Effective Research and Development (R&D)
– Fanuc Inaba 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Fanuc Inaba is present in almost all the verticals within the industry. This has provided firm in FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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.
Ability to recruit top talent
– Fanuc Inaba is one of the leading recruiters in the industry. Managers in the FANUC Corporation: Reassessing the Firm's Governance and Financial Policies are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses FANUC Corporation: Reassessing the Firm's Governance and Financial Policies | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of FANUC Corporation: Reassessing the Firm's Governance and Financial Policies are -
Capital Spending Reduction
– Even during the low interest decade, Fanuc Inaba 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies can leverage the sales team experience to cultivate customer relationships as Fanuc Inaba is planning to shift buying processes online.
Workers concerns about automation
– As automation is fast increasing in the segment, Fanuc Inaba needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Fanuc Inaba products
– To increase the profitability and margins on the products, Fanuc Inaba needs to provide more differentiated products than what it is currently offering in the marketplace.
No frontier risks strategy
– After analyzing the HBR case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies, 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies, is just above the industry average. Fanuc Inaba 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.
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 Fanuc Inaba supply chain. Even after few cautionary changes mentioned in the HBR case study - FANUC Corporation: Reassessing the Firm's Governance and Financial Policies, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fanuc Inaba vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Fanuc Inaba is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow to strategic competitive environment developments
– As FANUC Corporation: Reassessing the Firm's Governance and Financial Policies HBR case study mentions - Fanuc Inaba 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.
Low market penetration in new markets
– Outside its home market of Fanuc Inaba, firm in the HBR case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Fanuc Inaba 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies | 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Fanuc Inaba 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fanuc Inaba 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, FANUC Corporation: Reassessing the Firm's Governance and Financial Policies, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Fanuc Inaba can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Fanuc Inaba to increase its market reach. Fanuc Inaba 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.
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 Fanuc Inaba 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.
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 Fanuc Inaba in the consumer business. Now Fanuc Inaba can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fanuc Inaba can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Fanuc Inaba 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.
Creating value in data economy
– The success of analytics program of Fanuc Inaba has opened avenues for new revenue streams for the organization in the industry. This can help Fanuc Inaba to build a more holistic ecosystem as suggested in the FANUC Corporation: Reassessing the Firm's Governance and Financial Policies case study. Fanuc Inaba can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Fanuc Inaba can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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.
Leveraging digital technologies
– Fanuc Inaba 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fanuc Inaba 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 Fanuc Inaba 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, Fanuc Inaba can use these opportunities to build new business models that can help the communities that Fanuc Inaba operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Threats FANUC Corporation: Reassessing the Firm's Governance and Financial Policies External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies are -
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 Fanuc Inaba business can come under increasing regulations regarding data privacy, data security, etc.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fanuc Inaba with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fanuc Inaba in the Finance & Accounting industry. The Finance & Accounting 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.
Regulatory challenges
– Fanuc Inaba 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.
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 Fanuc Inaba.
Environmental challenges
– Fanuc Inaba 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. Fanuc Inaba can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fanuc Inaba 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies .
Stagnating economy with rate increase
– Fanuc Inaba 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study FANUC Corporation: Reassessing the Firm's Governance and Financial Policies, Fanuc Inaba 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 .
Increasing wage structure of Fanuc Inaba
– 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 Fanuc Inaba.
Consumer confidence and its impact on Fanuc Inaba 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.
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 Fanuc Inaba in the Finance & Accounting sector and impact the bottomline of the organization.
Weighted SWOT Analysis of FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 FANUC Corporation: Reassessing the Firm's Governance and Financial Policies 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 Fanuc Inaba needs to make to build a sustainable competitive advantage.