Johnson Controls-Hitachi Air (JCHA) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Johnson Controls-Hitachi Air (India)

Based on various researches at Oak Spring University , Johnson Controls-Hitachi Air is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, geopolitical disruptions, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, increasing household debt because of falling income levels, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, competitive advantages are harder to sustain because of technology dispersion, etc

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Introduction to SWOT Analysis of Johnson Controls-Hitachi Air

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Johnson Controls-Hitachi Air can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Johnson Controls-Hitachi Air, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Johnson Controls-Hitachi Air 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Johnson Controls-Hitachi Air can be done for the following purposes –
1. Strategic planning of Johnson Controls-Hitachi Air
2. Improving business portfolio management of Johnson Controls-Hitachi Air
3. Assessing feasibility of the new initiative in India
4. Making a Appliance & Tool sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Johnson Controls-Hitachi Air

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Strengths of Johnson Controls-Hitachi Air | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Johnson Controls-Hitachi Air are -

High brand equity

– Johnson Controls-Hitachi Air has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Johnson Controls-Hitachi Air to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Ability to recruit top talent

– Johnson Controls-Hitachi Air is one of the leading players in the Appliance & Tool industry in India. It is in a position to attract the best talent available in India. The firm has a robust talent identification program that helps in identifying the brightest.

Superior customer experience

– The customer experience strategy of Johnson Controls-Hitachi Air in Appliance & Tool industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Analytics focus

– Johnson Controls-Hitachi Air 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 Appliance & Tool industry. The technology infrastructure of India is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.

Strong track record of project management in the Appliance & Tool industry

– Johnson Controls-Hitachi Air is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Sustainable margins compare to other players in Appliance & Tool industry

– Johnson Controls-Hitachi Air has clearly differentiated products in the market place. This has enabled Johnson Controls-Hitachi Air to fetch slight price premium compare to the competitors in the Appliance & Tool industry. The sustainable margins have also helped Johnson Controls-Hitachi Air to invest into research and development (R&D) and innovation.

Digital Transformation in Appliance & Tool industry

- digital transformation varies from industry to industry. For Johnson Controls-Hitachi Air digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Johnson Controls-Hitachi Air 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.

Ability to lead change in Appliance & Tool

– Johnson Controls-Hitachi Air is one of the leading players in the Appliance & Tool industry in India. Over the years it has not only transformed the business landscape in the Appliance & Tool industry in India but also across the existing markets. The ability to lead change has enabled Johnson Controls-Hitachi Air in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Organizational Resilience of Johnson Controls-Hitachi Air

– The covid-19 pandemic has put organizational resilience at the centre of everthing Johnson Controls-Hitachi Air does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Cross disciplinary teams

– Horizontal connected teams at the Johnson Controls-Hitachi Air 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.

Low bargaining power of suppliers

– Suppliers of Johnson Controls-Hitachi Air in the Consumer Cyclical sector have low bargaining power. Johnson Controls-Hitachi Air has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Johnson Controls-Hitachi Air to manage not only supply disruptions but also source products at highly competitive prices.

Learning organization

- Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Johnson Controls-Hitachi Air emphasize – knowledge, initiative, and innovation.

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Weaknesses of Johnson Controls-Hitachi Air | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Johnson Controls-Hitachi Air are -

No frontier risks strategy

– From the 10K / annual statement of Johnson Controls-Hitachi Air, it seems that company is thinking out the frontier risks that can impact Appliance & Tool industry. 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.

Products dominated business model

– Even though Johnson Controls-Hitachi Air has some of the most successful models in the Appliance & Tool industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Johnson Controls-Hitachi Air should strive to include more intangible value offerings along with its core products and services.

High operating costs

– Compare to the competitors, Johnson Controls-Hitachi Air has high operating costs in the Appliance & Tool industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Johnson Controls-Hitachi Air lucrative customers.

Ability to respond to the competition

– As the decision making is very deliberative at Johnson Controls-Hitachi Air, in the dynamic environment of Appliance & Tool industry it has struggled to respond to the nimble upstart competition. Johnson Controls-Hitachi Air has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Compensation and incentives

– The revenue per employee of Johnson Controls-Hitachi Air is just above the Appliance & Tool industry average. It 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, Johnson Controls-Hitachi Air is slow explore the new channels of communication. These new channels of communication can help Johnson Controls-Hitachi Air to provide better information regarding Appliance & Tool products and services. It can also build an online community to further reach out to potential customers.

Interest costs

– Compare to the competition, Johnson Controls-Hitachi Air 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 in Appliance & Tool industry

– The stress on hiring functional specialists at Johnson Controls-Hitachi Air 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.

Slow to strategic competitive environment developments

– As Johnson Controls-Hitachi Air is one of the leading players in the Appliance & Tool industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Appliance & Tool industry in last five years.

Need for greater diversity

– Johnson Controls-Hitachi Air 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.

Increasing silos among functional specialists

– The organizational structure of Johnson Controls-Hitachi Air is dominated by functional specialists. It is not different from other players in the Appliance & Tool industry, but Johnson Controls-Hitachi Air needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Johnson Controls-Hitachi Air to focus more on services in the Appliance & Tool industry rather than just following the product oriented approach.

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Johnson Controls-Hitachi Air Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Johnson Controls-Hitachi Air are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Johnson Controls-Hitachi Air in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Appliance & Tool industry, and it will provide faster access to the consumers.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Johnson Controls-Hitachi Air can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Use of Bitcoin and other crypto currencies for transactions in Appliance & Tool industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Johnson Controls-Hitachi Air in the Appliance & Tool industry. Now Johnson Controls-Hitachi Air can target international markets with far fewer capital restrictions requirements than the existing system.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Johnson Controls-Hitachi Air is facing challenges because of the dominance of functional experts in the organization. Johnson Controls-Hitachi Air can utilize new technology in the field of Appliance & Tool industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

Developing new processes and practices

– Johnson Controls-Hitachi Air can develop new processes and procedures in Appliance & Tool 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, Johnson Controls-Hitachi Air 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.

Leveraging digital technologies

– Johnson Controls-Hitachi Air 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. Johnson Controls-Hitachi Air can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air to hire the very best people irrespective of their geographical location.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Appliance & Tool industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Johnson Controls-Hitachi Air 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. Johnson Controls-Hitachi Air 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.

Creating value in data economy

– The success of analytics program of Johnson Controls-Hitachi Air has opened avenues for new revenue streams for the organization in Appliance & Tool industry. This can help Johnson Controls-Hitachi Air to build a more holistic ecosystem for Johnson Controls-Hitachi Air products in the Appliance & Tool industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Building a culture of innovation

– managers at Johnson Controls-Hitachi Air 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 Appliance & Tool industry.

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 Johnson Controls-Hitachi Air 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.

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Threats Johnson Controls-Hitachi Air External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Johnson Controls-Hitachi Air are -

Consumer confidence and its impact on Johnson Controls-Hitachi Air 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 Appliance & Tool industry and other sectors.

Technology acceleration in Forth Industrial Revolution

– Johnson Controls-Hitachi Air has witnessed rapid integration of technology during Covid-19 in the Appliance & Tool industry. As one of the leading players in the industry, Johnson Controls-Hitachi Air needs to keep up with the evolution of technology in the Appliance & Tool 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.

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. Johnson Controls-Hitachi Air 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air prominent markets.

Easy access to finance

– Easy access to finance in Appliance & Tool industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Johnson Controls-Hitachi Air can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 Johnson Controls-Hitachi Air business can come under increasing regulations regarding data privacy, data security, etc.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Appliance & Tool industry are lowering. It can presents Johnson Controls-Hitachi Air with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Appliance & Tool sector.

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 Johnson Controls-Hitachi Air in the Appliance & Tool 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, Johnson Controls-Hitachi Air may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Appliance & Tool sector.

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. Johnson Controls-Hitachi Air needs to understand the core reasons impacting the Appliance & Tool industry. This will help it in building a better workplace.

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.

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 Johnson Controls-Hitachi Air.

Regulatory challenges

– Johnson Controls-Hitachi Air 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 Appliance & Tool industry regulations.

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Weighted SWOT Analysis of Johnson Controls-Hitachi Air Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air 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 Johnson Controls-Hitachi Air needs to make to build a sustainable competitive advantage.

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