Japanese Banking: Crisis and Reform SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
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Case Study SWOT Analysis Solution
Case Study Description of Japanese Banking: Crisis and Reform
The Japanese banking industry entered a major crisis in the 1990s, as massive nonperforming loans threatened the survival of even the largest banks. This was a far cry from Japan's stellar growth from 1950 and the heady days of spiraling property and stock market prices in the 1980s. Traces the development of the Japanese economy from the end of the Second World War, the role of international trade flows and finance and foreign direct investment as well as the part played by the Japanese banking sector in those developments. By the year 2000, the government had spent trillions of yen in rescue packages, including the nationalization of two of the largest banks, and was attempting to institute banking sector reforms to resolve the crisis.
Authors :: Michael J. Enright, James Newton, Elyssa Tran
Swot Analysis of "Japanese Banking: Crisis and Reform" written by Michael J. Enright, James Newton, Elyssa Tran includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Japanese Banking facing as an external strategic factors. Some of the topics covered in Japanese Banking: Crisis and Reform case study are - Strategic Management Strategies, Economic development, Government, International business, Reorganization and Global Business.
Some of the macro environment factors that can be used to understand the Japanese Banking: Crisis and Reform casestudy better are - – supply chains are disrupted by pandemic , talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing transportation and logistics costs, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies,
increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Japanese Banking: Crisis and Reform
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Japanese Banking: Crisis and Reform case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Japanese Banking, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Japanese Banking 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 Japanese Banking: Crisis and Reform can be done for the following purposes –
1. Strategic planning using facts provided in Japanese Banking: Crisis and Reform case study
2. Improving business portfolio management of Japanese Banking
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Japanese Banking
Strengths Japanese Banking: Crisis and Reform | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Japanese Banking in Japanese Banking: Crisis and Reform Harvard Business Review case study are -
High brand equity
– Japanese Banking has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Japanese Banking to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Superior customer experience
– The customer experience strategy of Japanese Banking in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Global Business industry
– Japanese Banking: Crisis and Reform firm has clearly differentiated products in the market place. This has enabled Japanese Banking to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Japanese Banking to invest into research and development (R&D) and innovation.
Organizational Resilience of Japanese Banking
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Japanese Banking does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Japanese Banking is one of the leading recruiters in the industry. Managers in the Japanese Banking: Crisis and Reform are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Diverse revenue streams
– Japanese Banking is present in almost all the verticals within the industry. This has provided firm in Japanese Banking: Crisis and Reform 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.
Analytics focus
– Japanese Banking 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 Michael J. Enright, James Newton, Elyssa Tran 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.
Operational resilience
– The operational resilience strategy in the Japanese Banking: Crisis and Reform Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Japanese Banking 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 Japanese Banking: Crisis and Reform HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Japanese Banking has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Japanese Banking 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.
Low bargaining power of suppliers
– Suppliers of Japanese Banking in the sector have low bargaining power. Japanese Banking: Crisis and Reform has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Japanese Banking to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Japanese Banking is one of the most innovative firm in sector. Manager in Japanese Banking: Crisis and Reform Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Weaknesses Japanese Banking: Crisis and Reform | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Japanese Banking: Crisis and Reform are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Japanese Banking is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Japanese Banking: Crisis and Reform can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Japanese Banking 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 bargaining power of channel partners
– Because of the regulatory requirements, Michael J. Enright, James Newton, Elyssa Tran suggests that, Japanese Banking 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.
Low market penetration in new markets
– Outside its home market of Japanese Banking, firm in the HBR case study Japanese Banking: Crisis and Reform 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 Japanese Banking: Crisis and Reform 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 Japanese Banking 's lucrative customers.
Interest costs
– Compare to the competition, Japanese Banking has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Increasing silos among functional specialists
– The organizational structure of Japanese Banking is dominated by functional specialists. It is not different from other players in the Global Business segment. Japanese Banking needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Japanese Banking to focus more on services rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Japanese Banking: Crisis and Reform, is just above the industry average. Japanese Banking 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 star products
– The top 2 products and services of the firm as mentioned in the Japanese Banking: Crisis and Reform 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 Japanese Banking has relatively successful track record of launching new products.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Japanese Banking: Crisis and Reform, it seems that the employees of Japanese Banking 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.
Need for greater diversity
– Japanese Banking has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Japanese Banking: Crisis and Reform | 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 Japanese Banking: Crisis and Reform are -
Leveraging digital technologies
– Japanese Banking 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.
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. Japanese Banking can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Japanese Banking 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 Global Business segment.
Low interest rates
– Even though inflation is raising its head in most developed economies, Japanese Banking 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.
Buying journey improvements
– Japanese Banking can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Japanese Banking: Crisis and Reform 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Japanese Banking can use these opportunities to build new business models that can help the communities that Japanese Banking operates in. Secondly it can use opportunities from government spending in Global Business sector.
Manufacturing automation
– Japanese Banking can use the latest technology developments to improve its manufacturing and designing process in Global Business 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Japanese Banking 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. Japanese Banking 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Japanese Banking can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Japanese Banking 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, Japanese Banking: Crisis and Reform, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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 Japanese Banking in the consumer business. Now Japanese Banking can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Japanese Banking to increase its market reach. Japanese Banking 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.
Using analytics as competitive advantage
– Japanese Banking 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 Japanese Banking: Crisis and Reform - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Japanese Banking to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Threats Japanese Banking: Crisis and Reform External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Japanese Banking: Crisis and Reform are -
Consumer confidence and its impact on Japanese Banking 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.
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. Japanese Banking 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.
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.
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 Japanese Banking in the Global Business sector and impact the bottomline of the organization.
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 Japanese Banking business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Japanese Banking 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. Japanese Banking can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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. Japanese Banking needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Japanese Banking 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 Japanese Banking in the Global Business industry. The Global Business 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 Japanese Banking.
Stagnating economy with rate increase
– Japanese Banking 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.
Shortening product life cycle
– it is one of the major threat that Japanese Banking is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Japanese Banking: Crisis and Reform 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 Japanese Banking: Crisis and Reform 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 Japanese Banking: Crisis and Reform 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 Japanese Banking: Crisis and Reform 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 Japanese Banking: Crisis and Reform 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 Japanese Banking needs to make to build a sustainable competitive advantage.
