Central Japan Railway Co. (9022) SWOT Analysis / TOWS Matrix / MBA Resources
Railroads
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Central Japan Railway Co. (Japan)
Based on various researches at Oak Spring University , Central Japan Railway Co. is operating in a macro-environment that has been destablized by – talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Central Japan Railway Co.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Central Japan Railway Co. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Central Japan Railway Co., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Central Japan Railway Co. 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 Central Japan Railway Co. can be done for the following purposes –
1. Strategic planning of Central Japan Railway Co.
2. Improving business portfolio management of Central Japan Railway Co.
3. Assessing feasibility of the new initiative in Japan
4. Making a Railroads sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Central Japan Railway Co.
Strengths of Central Japan Railway Co. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Central Japan Railway Co. are -
Successful track record of launching new products
– Central Japan Railway Co. has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Central Japan Railway Co. 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.
Ability to lead change in Railroads
– Central Japan Railway Co. is one of the leading players in the Railroads industry in Japan. Over the years it has not only transformed the business landscape in the Railroads industry in Japan but also across the existing markets. The ability to lead change has enabled Central Japan Railway Co. in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Central Japan Railway Co. has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Railroads industry. Secondly the value chain collaborators of Central Japan Railway Co. have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Central Japan Railway Co. has one of the best training and development program in Transportation industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Central Japan Railway Co.
– The covid-19 pandemic has put organizational resilience at the centre of everthing Central Japan Railway Co. does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Railroads industry
- digital transformation varies from industry to industry. For Central Japan Railway Co. digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Central Japan Railway Co. 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.
Strong track record of project management in the Railroads industry
– Central Japan Railway Co. is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy of Central Japan Railway Co. comprises – understanding the underlying the factors in the Railroads 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.
Sustainable margins compare to other players in Railroads industry
– Central Japan Railway Co. has clearly differentiated products in the market place. This has enabled Central Japan Railway Co. to fetch slight price premium compare to the competitors in the Railroads industry. The sustainable margins have also helped Central Japan Railway Co. to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Central Japan Railway Co. in the Transportation sector have low bargaining power. Central Japan Railway Co. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Central Japan Railway Co. to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Central Japan Railway Co. has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Central Japan Railway Co. to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Central Japan Railway Co. 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 Central Japan Railway Co. is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Central Japan Railway Co. emphasize – knowledge, initiative, and innovation.
Weaknesses of Central Japan Railway Co. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Central Japan Railway Co. are -
Increasing silos among functional specialists
– The organizational structure of Central Japan Railway Co. is dominated by functional specialists. It is not different from other players in the Railroads industry, but Central Japan Railway Co. needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Central Japan Railway Co. to focus more on services in the Railroads industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Central Japan Railway Co. has a high cash cycle compare to other players in the Railroads industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Railroads industry
– The stress on hiring functional specialists at Central Japan Railway Co. 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 Central Japan Railway Co. is one of the leading players in the Railroads industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Railroads industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Central Japan Railway Co. has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Railroads industry over the last five years. Central Japan Railway Co. even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Aligning sales with marketing
– From the outside it seems that Central Japan Railway Co. needs to have more collaboration between its sales team and marketing team. Sales professionals in the Railroads industry have deep experience in developing customer relationships. Marketing department at Central Japan Railway Co. can leverage the sales team experience to cultivate customer relationships as Central Japan Railway Co. is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Central Japan Railway Co. is slow explore the new channels of communication. These new channels of communication can help Central Japan Railway Co. to provide better information regarding Railroads products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee of Central Japan Railway Co. is just above the Railroads 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.
Interest costs
– Compare to the competition, Central Japan Railway Co. 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.
Lack of clear differentiation of Central Japan Railway Co. products
– To increase the profitability and margins on the products, Central Japan Railway Co. needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on Central Japan Railway Co. ‘s star products
– The top 2 products and services of Central Japan Railway Co. still accounts for major business revenue. This dependence on star products in Railroads industry has resulted into insufficient focus on developing new products, even though Central Japan Railway Co. has relatively successful track record of launching new products.
Central Japan Railway Co. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Central Japan Railway Co. are -
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. Central Japan Railway Co. can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Using analytics as competitive advantage
– Central Japan Railway Co. has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Railroads sector. This continuous investment in analytics has enabled Central Japan Railway Co. to build a competitive advantage using analytics. The analytics driven competitive advantage can help Central Japan Railway Co. to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Central Japan Railway Co. in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Railroads industry, and it will provide faster access to the consumers.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Central Japan Railway Co. 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 Central Japan Railway Co. to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Central Japan Railway Co. has opened avenues for new revenue streams for the organization in Railroads industry. This can help Central Japan Railway Co. to build a more holistic ecosystem for Central Japan Railway Co. products in the Railroads industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions in Railroads industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Central Japan Railway Co. in the Railroads industry. Now Central Japan Railway Co. can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Central Japan Railway Co. 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 Central Japan Railway Co. to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Central Japan Railway Co. can use these opportunities to build new business models that can help the communities that Central Japan Railway Co. operates in. Secondly it can use opportunities from government spending in Railroads sector.
Manufacturing automation
– Central Japan Railway Co. can use the latest technology developments to improve its manufacturing and designing process in Railroads sector. 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, Central Japan Railway Co. 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Railroads industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Central Japan Railway Co. 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. Central Japan Railway Co. 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 Central Japan Railway Co. can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Central Japan Railway Co. is facing challenges because of the dominance of functional experts in the organization. Central Japan Railway Co. can utilize new technology in the field of Railroads industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Central Japan Railway Co. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Central Japan Railway Co. are -
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 Central Japan Railway Co..
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Railroads industry are lowering. It can presents Central Japan Railway Co. with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Railroads sector.
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 Central Japan Railway Co. business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Railroads industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Central Japan Railway Co. 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 Central Japan Railway Co. in the Railroads sector and impact the bottomline of the organization.
Increasing wage structure of Central Japan Railway Co.
– 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 Central Japan Railway Co..
Consumer confidence and its impact on Central Japan Railway Co. 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 Railroads industry and other sectors.
Environmental challenges
– Central Japan Railway Co. 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. Central Japan Railway Co. can take advantage of this fund but it will also bring new competitors in the Railroads industry.
Regulatory challenges
– Central Japan Railway Co. 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 Railroads industry regulations.
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. Central Japan Railway Co. needs to understand the core reasons impacting the Railroads industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Central Japan Railway Co. 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 Railroads industry.
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 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.
Weighted SWOT Analysis of Central Japan Railway Co. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Central Japan Railway Co. 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 Central Japan Railway Co. 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 Central Japan Railway Co. 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 Central Japan Railway Co. 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 Central Japan Railway Co. needs to make to build a sustainable competitive advantage.