Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets
In 2016, the Japanese company Toyota Tsusho Corporation (TTC) acquired the remaining shares of the French trading company Compagnie Francaise de l'Afrique Occidentale (CFAO), which was operating in Africa. That same year, TTC registered its first financial loss in 16 years. Several years earlier, in 2012, TTC had participated in CFAO's equity as its majority shareholder. These strategic moves were all part of TTC's corporate campaign Vision 2015, "Lead the Next", which aimed specifically to reduce its dependence on its parent group by diversifying to increase earnings from non-automotive businesses, rather than targeting African markets as a long-term sustainability plan. What were the motivations of TTC and CFAO in pursuing these transactions? Was the positive performance that followed the acquisition a result of synergies or just a simple sum of the consolidation and an industry trend? Why did TTC move from preserving CFAO's operational autonomy in 2012 to delisting and fully internalizing it in 2016? Was there a link between poor performance in 2016 and the acquisition of CFAO? How should CFAO solve the conflict between its existing automotive customers and the Toyota Group as its main rival? How could CFAO defend its leader position from the entry of major competitors from South Korea, India, and China? Although the Vision 2015 campaign was validated, should TTC revise its global vision strategy and 10-year plan in the future, given its bad year in 2016? Wiboon Kittilaksanawong is affiliated with Saitama University. Mayeni Gueye is affiliated with Nagoya University of Commerce & Business.
Swot Analysis of "Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets" written by Wiboon Kittilaksanawong, Mayeni Gueye includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cfao Ttc facing as an external strategic factors. Some of the topics covered in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets case study are - Strategic Management Strategies, Corporate governance, Emerging markets and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, increasing transportation and logistics costs, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs,
wage bills are increasing, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cfao Ttc, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cfao Ttc 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets can be done for the following purposes –
1. Strategic planning using facts provided in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets case study
2. Improving business portfolio management of Cfao Ttc
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Cfao Ttc
Strengths Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cfao Ttc in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Cfao Ttc 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.
Highly skilled collaborators
– Cfao Ttc 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Cfao Ttc has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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.
Learning organization
- Cfao Ttc 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 Cfao Ttc is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Cfao Ttc is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Cfao Ttc is one of the most innovative firm in sector. Manager in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets firm has clearly differentiated products in the market place. This has enabled Cfao Ttc to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Cfao Ttc to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Cfao Ttc 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Cfao Ttc digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cfao Ttc 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.
Analytics focus
– Cfao Ttc 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 Wiboon Kittilaksanawong, Mayeni Gueye 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.
Diverse revenue streams
– Cfao Ttc is present in almost all the verticals within the industry. This has provided firm in Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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.
Superior customer experience
– The customer experience strategy of Cfao Ttc in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Cfao Ttc has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the segment, Cfao Ttc 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets, in the dynamic environment Cfao Ttc has struggled to respond to the nimble upstart competition. Cfao Ttc has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Cfao Ttc, firm in the HBR case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Cfao Ttc 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 - Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Cfao Ttc 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.
Skills based hiring
– The stress on hiring functional specialists at Cfao Ttc 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.
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 Cfao Ttc supply chain. Even after few cautionary changes mentioned in the HBR case study - Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cfao Ttc vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets, is just above the industry average. Cfao Ttc 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cfao Ttc is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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, Cfao Ttc 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.
Opportunities Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets | 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Cfao Ttc is facing challenges because of the dominance of functional experts in the organization. Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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.
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. Cfao Ttc can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Cfao Ttc can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Cfao Ttc can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Low interest rates
– Even though inflation is raising its head in most developed economies, Cfao Ttc 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.
Learning at scale
– Online learning technologies has now opened space for Cfao Ttc 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
– Cfao Ttc can develop new processes and procedures in Innovation & Entrepreneurship 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cfao Ttc in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship 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 Cfao Ttc in the consumer business. Now Cfao Ttc can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Cfao Ttc can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Cfao Ttc 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 Cfao Ttc to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Cfao Ttc has opened avenues for new revenue streams for the organization in the industry. This can help Cfao Ttc to build a more holistic ecosystem as suggested in the Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets case study. Cfao Ttc can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cfao Ttc 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, Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Cfao Ttc 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.
Threats Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets are -
Increasing wage structure of Cfao Ttc
– 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 Cfao Ttc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cfao Ttc 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets .
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 Cfao Ttc business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Cfao Ttc is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Technology acceleration in Forth Industrial Revolution
– Cfao Ttc has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Cfao Ttc needs to keep up with the evolution of technology in the Innovation & Entrepreneurship 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.
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 Cfao Ttc in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Cfao Ttc can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Cfao Ttc in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
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 Cfao Ttc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets, Cfao Ttc may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Consumer confidence and its impact on Cfao Ttc 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.
Stagnating economy with rate increase
– Cfao Ttc can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Toyota Tsusho Corporation: Acquiring the French CFAO to Penetrate African Markets 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 Cfao Ttc needs to make to build a sustainable competitive advantage.
