East Japan Railway Co. (9020) SWOT Analysis / TOWS Matrix / MBA Resources
Railroads
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for East Japan Railway Co. (Japan)
Based on various researches at Oak Spring University , East Japan Railway Co. is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , wage bills are increasing, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, there is backlash against globalization, cloud computing is disrupting traditional business models,
increasing inequality as vast percentage of new income is going to the top 1%, technology disruption, etc
Introduction to SWOT Analysis of East Japan Railway Co.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that East Japan Railway Co. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the East Japan Railway Co., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which East 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 East Japan Railway Co. can be done for the following purposes –
1. Strategic planning of East Japan Railway Co.
2. Improving business portfolio management of East 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 East Japan Railway Co.
Strengths of East Japan Railway Co. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of East Japan Railway Co. are -
Effective Research and Development (R&D)
– East Japan Railway Co. has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – East Japan Railway Co. staying ahead in the Railroads industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Railroads industry
- digital transformation varies from industry to industry. For East Japan Railway Co. digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. East 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.
Successful track record of launching new products
– East Japan Railway Co. has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. East 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.
Analytics focus
– East Japan Railway Co. 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 Railroads industry. The technology infrastructure of Japan 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.
Highly skilled collaborators
– East 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 East Japan Railway Co. have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– East 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.
Ability to recruit top talent
– East Japan Railway Co. is one of the leading players in the Railroads industry in Japan. It is in a position to attract the best talent available in Japan. The firm has a robust talent identification program that helps in identifying the brightest.
Strong track record of project management in the Railroads industry
– East 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.
High brand equity
– East Japan Railway Co. has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled East Japan Railway Co. to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- East 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 East Japan Railway Co. is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at East Japan Railway Co. emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– East Japan Railway Co. is present in almost all the verticals within the Railroads industry. This has provided East Japan Railway Co. 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.
Organizational Resilience of East Japan Railway Co.
– The covid-19 pandemic has put organizational resilience at the centre of everthing East Japan Railway Co. does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of East Japan Railway Co. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of East Japan Railway Co. are -
Lack of clear differentiation of East Japan Railway Co. products
– To increase the profitability and margins on the products, East Japan Railway Co. needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of East Japan Railway Co. strategy
– From the outside it seems that the employees of East Japan Railway Co. 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.
Interest costs
– Compare to the competition, East 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.
Ability to respond to the competition
– As the decision making is very deliberative at East Japan Railway Co., in the dynamic environment of Railroads industry it has struggled to respond to the nimble upstart competition. East Japan Railway Co. has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Aligning sales with marketing
– From the outside it seems that East 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 East Japan Railway Co. can leverage the sales team experience to cultivate customer relationships as East Japan Railway Co. is planning to shift buying processes online.
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 East Japan Railway Co. supply chain. Even after few cautionary changes, East Japan Railway Co. is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left East Japan Railway Co. vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, East Japan Railway Co. has high operating costs in the Railroads industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract East Japan Railway Co. lucrative customers.
Low market penetration in new markets
– Outside its home market of Japan, East Japan Railway Co. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Railroads industry
– because of the regulatory requirements in Japan, East Japan Railway Co. 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 Railroads industry.
Slow decision making process
– As mentioned earlier in the report, East 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. East 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.
High dependence on East Japan Railway Co. ‘s star products
– The top 2 products and services of East 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 East Japan Railway Co. has relatively successful track record of launching new products.
East Japan Railway Co. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of East Japan Railway Co. are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, East Japan Railway Co. can use these opportunities to build new business models that can help the communities that East Japan Railway Co. operates in. Secondly it can use opportunities from government spending in Railroads sector.
Redefining models of collaboration and team work
– As explained in the weaknesses section, East Japan Railway Co. is facing challenges because of the dominance of functional experts in the organization. East 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, East 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 East 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.
Developing new processes and practices
– East Japan Railway Co. can develop new processes and procedures in Railroads 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Railroads industry, but it has also influenced the consumer preferences. East Japan Railway Co. can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– East Japan Railway Co. 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, East 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.
Building a culture of innovation
– managers at East Japan Railway Co. 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 Railroads industry.
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. East Japan Railway Co. can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for East 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects East 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.
Learning at scale
– Online learning technologies has now opened space for East Japan Railway Co. to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
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 East Japan Railway Co. 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 East Japan Railway Co. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of East Japan Railway Co. are -
Environmental challenges
– East 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. East Japan Railway Co. can take advantage of this fund but it will also bring new competitors 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.
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. East 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.
Technology acceleration in Forth Industrial Revolution
– East Japan Railway Co. has witnessed rapid integration of technology during Covid-19 in the Railroads industry. As one of the leading players in the industry, East Japan Railway Co. needs to keep up with the evolution of technology in the Railroads 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.
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. East 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
– East 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.
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 East Japan Railway Co..
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 East Japan Railway Co. in the Railroads sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that East Japan Railway Co. is facing in Railroads sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, East Japan Railway Co. 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 East Japan Railway Co. prominent markets.
Regulatory challenges
– East 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 dependence on third party suppliers
– East Japan Railway Co. high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of East 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 East 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 East 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 East 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 East 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 East Japan Railway Co. needs to make to build a sustainable competitive advantage.