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 – there is backlash against globalization, geopolitical disruptions, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing energy prices, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion,
wage bills are increasing, increasing commodity prices, 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 -
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.
High switching costs
– The high switching costs that East Japan Railway Co. has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Railroads industry
– East Japan Railway Co. has clearly differentiated products in the market place. This has enabled East Japan Railway Co. to fetch slight price premium compare to the competitors in the Railroads industry. The sustainable margins have also helped East Japan Railway Co. to invest into research and development (R&D) and innovation.
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.
Cross disciplinary teams
– Horizontal connected teams at the East Japan Railway Co. 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.
Innovation driven organization
– East Japan Railway Co. is one of the most innovative firm in Railroads sector.
Operational resilience
– The operational resilience strategy of East 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.
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.
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.
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.
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.
Superior customer experience
– The customer experience strategy of East Japan Railway Co. in Railroads industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
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 -
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.
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.
Skills based hiring in Railroads industry
– The stress on hiring functional specialists at East 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 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.
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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, East Japan Railway Co. is slow explore the new channels of communication. These new channels of communication can help East 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.
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.
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.
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.
High cash cycle compare to competitors
East 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.
Workers concerns about automation
– As automation is fast increasing in the Railroads industry, East Japan Railway Co. 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.
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 -
Loyalty marketing
– East Japan Railway Co. has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Creating value in data economy
– The success of analytics program of East Japan Railway Co. has opened avenues for new revenue streams for the organization in Railroads industry. This can help East Japan Railway Co. to build a more holistic ecosystem for East Japan Railway Co. products in the Railroads industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for East 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 East Japan Railway Co. to hire the very best people irrespective of their geographical location.
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.
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.
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.
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 East Japan Railway Co. in the Railroads industry. Now East 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, 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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help East Japan Railway Co. to increase its market reach. East Japan Railway Co. will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
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 -
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, East Japan Railway Co. may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of 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 East Japan Railway Co. business can come under increasing regulations regarding data privacy, data security, etc.
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.
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.
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.
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.
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.
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.
Increasing wage structure of East 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 East Japan Railway Co..
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. East Japan Railway Co. 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.
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.
Consumer confidence and its impact on East 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.
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.