In a deal marking the first acquisition of a domestic Japanese financial institution by foreigners, a consortium of Western investors purchased the assets of the Long Term Credit Bank (LTCB) of Japan in March 2000. The new management renames the bank Shinsei Bank, meaning new birth, and sets about implementing a bold new strategy calling for a hybrid bank that includes commercial, retail, and investment banking activities, managed according to Western banking principles. This case reviews the events that led up to LTCBs failure, nationalization, and subsequent purchase. The job of making the hybrid bank work falls to Shinsei president and CEO Masamoto Yashiro. Yashiro wonders how he can manage this hybrid bank.
Swot Analysis of "Shinsei Bank (A)" written by Michael Y. Yoshino, Perry L. Fagan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shinsei Bank facing as an external strategic factors. Some of the topics covered in Shinsei Bank (A) case study are - Strategic Management Strategies, and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Shinsei Bank (A) casestudy better are - – increasing transportation and logistics costs, geopolitical disruptions, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies,
central banks are concerned over increasing inflation, technology disruption, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Shinsei Bank (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shinsei Bank, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shinsei Bank 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 Shinsei Bank (A) can be done for the following purposes –
1. Strategic planning using facts provided in Shinsei Bank (A) case study
2. Improving business portfolio management of Shinsei Bank
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shinsei Bank
Strengths Shinsei Bank (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shinsei Bank in Shinsei Bank (A) Harvard Business Review case study are -
High brand equity
– Shinsei Bank has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shinsei Bank to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Shinsei Bank has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Shinsei Bank (A) 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.
Organizational Resilience of Shinsei Bank
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Shinsei Bank does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Shinsei Bank digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shinsei Bank 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.
Learning organization
- Shinsei Bank 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 Shinsei Bank is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Shinsei Bank (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Shinsei Bank in the sector have low bargaining power. Shinsei Bank (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shinsei Bank to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Shinsei Bank in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Shinsei Bank 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 Shinsei Bank (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Shinsei Bank is present in almost all the verticals within the industry. This has provided firm in Shinsei Bank (A) 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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Shinsei Bank (A) firm has clearly differentiated products in the market place. This has enabled Shinsei Bank to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Shinsei Bank to invest into research and development (R&D) and innovation.
Innovation driven organization
– Shinsei Bank is one of the most innovative firm in sector. Manager in Shinsei Bank (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Successful track record of launching new products
– Shinsei Bank has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shinsei Bank has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Weaknesses Shinsei Bank (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shinsei Bank (A) are -
Lack of clear differentiation of Shinsei Bank products
– To increase the profitability and margins on the products, Shinsei Bank needs to provide more differentiated products than what it is currently offering in the marketplace.
Products dominated business model
– Even though Shinsei Bank 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 - Shinsei Bank (A) should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Shinsei Bank 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.
Increasing silos among functional specialists
– The organizational structure of Shinsei Bank is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Shinsei Bank needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shinsei Bank 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 Shinsei Bank (A), is just above the industry average. Shinsei Bank 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 Shinsei Bank (A) 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 Shinsei Bank has relatively successful track record of launching new products.
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 Shinsei Bank supply chain. Even after few cautionary changes mentioned in the HBR case study - Shinsei Bank (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shinsei Bank vulnerable to further global disruptions in South East Asia.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Shinsei Bank (A), it seems that the employees of Shinsei Bank 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
– Shinsei Bank 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.
Low market penetration in new markets
– Outside its home market of Shinsei Bank, firm in the HBR case study Shinsei Bank (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael Y. Yoshino, Perry L. Fagan suggests that, Shinsei Bank 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.
Opportunities Shinsei Bank (A) | 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 Shinsei Bank (A) are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Shinsei Bank in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People 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 Shinsei Bank in the consumer business. Now Shinsei Bank can target international markets with far fewer capital restrictions requirements than the existing system.
Leveraging digital technologies
– Shinsei Bank 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shinsei Bank 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. Shinsei Bank 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 Shinsei Bank can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shinsei Bank can use these opportunities to build new business models that can help the communities that Shinsei Bank operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Buying journey improvements
– Shinsei Bank can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Shinsei Bank (A) 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.
Building a culture of innovation
– managers at Shinsei Bank 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 Leadership & Managing People segment.
Manufacturing automation
– Shinsei Bank can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shinsei Bank 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Shinsei Bank can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Shinsei Bank 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 Shinsei Bank (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shinsei Bank to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Shinsei Bank 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 Shinsei Bank (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Shinsei Bank (A) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shinsei Bank in the Leadership & Managing People industry. The Leadership & Managing People 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.
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.
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. Shinsei Bank needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Environmental challenges
– Shinsei Bank 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. Shinsei Bank can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Shinsei Bank 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 Leadership & Managing People industry regulations.
Consumer confidence and its impact on Shinsei Bank 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.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shinsei Bank can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Shinsei Bank in the Leadership & Managing People sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Shinsei Bank (A), Shinsei Bank may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Shortening product life cycle
– it is one of the major threat that Shinsei Bank is facing in Leadership & Managing People 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 Shinsei Bank.
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. Shinsei Bank 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.
Weighted SWOT Analysis of Shinsei Bank (A) 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 Shinsei Bank (A) 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 Shinsei Bank (A) 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 Shinsei Bank (A) 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 Shinsei Bank (A) 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 Shinsei Bank needs to make to build a sustainable competitive advantage.