MS&AD Insurance Group Holdings (8725) SWOT Analysis / TOWS Matrix / MBA Resources
Insurance (Prop. & Casualty)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for MS&AD Insurance Group Holdings (Japan)
Based on various researches at Oak Spring University , MS&AD Insurance Group Holdings is operating in a macro-environment that has been destablized by – increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, there is increasing trade war between United States & China, increasing energy prices, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of MS&AD Insurance Group Holdings
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that MS&AD Insurance Group Holdings can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the MS&AD Insurance Group Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings can be done for the following purposes –
1. Strategic planning of MS&AD Insurance Group Holdings
2. Improving business portfolio management of MS&AD Insurance Group Holdings
3. Assessing feasibility of the new initiative in Japan
4. Making a Insurance (Prop. & Casualty) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of MS&AD Insurance Group Holdings
Strengths of MS&AD Insurance Group Holdings | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of MS&AD Insurance Group Holdings are -
Ability to lead change in Insurance (Prop. & Casualty)
– MS&AD Insurance Group Holdings is one of the leading players in the Insurance (Prop. & Casualty) industry in Japan. Over the years it has not only transformed the business landscape in the Insurance (Prop. & Casualty) industry in Japan but also across the existing markets. The ability to lead change has enabled MS&AD Insurance Group Holdings in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Superior customer experience
– The customer experience strategy of MS&AD Insurance Group Holdings in Insurance (Prop. & Casualty) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– MS&AD Insurance Group Holdings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. MS&AD Insurance Group Holdings 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.
Effective Research and Development (R&D)
– MS&AD Insurance Group Holdings has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – MS&AD Insurance Group Holdings staying ahead in the Insurance (Prop. & Casualty) industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the MS&AD Insurance Group Holdings 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.
Sustainable margins compare to other players in Insurance (Prop. & Casualty) industry
– MS&AD Insurance Group Holdings has clearly differentiated products in the market place. This has enabled MS&AD Insurance Group Holdings to fetch slight price premium compare to the competitors in the Insurance (Prop. & Casualty) industry. The sustainable margins have also helped MS&AD Insurance Group Holdings to invest into research and development (R&D) and innovation.
Strong track record of project management in the Insurance (Prop. & Casualty) industry
– MS&AD Insurance Group Holdings is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of MS&AD Insurance Group Holdings
– The covid-19 pandemic has put organizational resilience at the centre of everthing MS&AD Insurance Group Holdings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High brand equity
– MS&AD Insurance Group Holdings has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled MS&AD Insurance Group Holdings to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at MS&AD Insurance Group Holdings emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– MS&AD Insurance Group Holdings is present in almost all the verticals within the Insurance (Prop. & Casualty) industry. This has provided MS&AD Insurance Group Holdings 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.
Innovation driven organization
– MS&AD Insurance Group Holdings is one of the most innovative firm in Insurance (Prop. & Casualty) sector.
Weaknesses of MS&AD Insurance Group Holdings | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of MS&AD Insurance Group Holdings are -
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 MS&AD Insurance Group Holdings supply chain. Even after few cautionary changes, MS&AD Insurance Group Holdings is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left MS&AD Insurance Group Holdings vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that MS&AD Insurance Group Holdings needs to have more collaboration between its sales team and marketing team. Sales professionals in the Insurance (Prop. & Casualty) industry have deep experience in developing customer relationships. Marketing department at MS&AD Insurance Group Holdings can leverage the sales team experience to cultivate customer relationships as MS&AD Insurance Group Holdings is planning to shift buying processes online.
Products dominated business model
– Even though MS&AD Insurance Group Holdings has some of the most successful models in the Insurance (Prop. & Casualty) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. MS&AD Insurance Group Holdings should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of MS&AD Insurance Group Holdings is dominated by functional specialists. It is not different from other players in the Insurance (Prop. & Casualty) industry, but MS&AD Insurance Group Holdings needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help MS&AD Insurance Group Holdings to focus more on services in the Insurance (Prop. & Casualty) industry rather than just following the product oriented approach.
High dependence on MS&AD Insurance Group Holdings ‘s star products
– The top 2 products and services of MS&AD Insurance Group Holdings still accounts for major business revenue. This dependence on star products in Insurance (Prop. & Casualty) industry has resulted into insufficient focus on developing new products, even though MS&AD Insurance Group Holdings has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Japan, MS&AD Insurance Group Holdings needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Insurance (Prop. & Casualty) industry
– because of the regulatory requirements in Japan, MS&AD Insurance Group Holdings 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 Insurance (Prop. & Casualty) industry.
No frontier risks strategy
– From the 10K / annual statement of MS&AD Insurance Group Holdings, it seems that company is thinking out the frontier risks that can impact Insurance (Prop. & Casualty) 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.
High operating costs
– Compare to the competitors, MS&AD Insurance Group Holdings has high operating costs in the Insurance (Prop. & Casualty) industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract MS&AD Insurance Group Holdings lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at MS&AD Insurance Group Holdings, in the dynamic environment of Insurance (Prop. & Casualty) industry it has struggled to respond to the nimble upstart competition. MS&AD Insurance Group Holdings 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 Insurance (Prop. & Casualty) industry
– The stress on hiring functional specialists at MS&AD Insurance Group Holdings 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.
MS&AD Insurance Group Holdings Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of MS&AD Insurance Group Holdings are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects MS&AD Insurance Group Holdings 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, MS&AD Insurance Group Holdings is facing challenges because of the dominance of functional experts in the organization. MS&AD Insurance Group Holdings can utilize new technology in the field of Insurance (Prop. & Casualty) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of MS&AD Insurance Group Holdings has opened avenues for new revenue streams for the organization in Insurance (Prop. & Casualty) industry. This can help MS&AD Insurance Group Holdings to build a more holistic ecosystem for MS&AD Insurance Group Holdings products in the Insurance (Prop. & Casualty) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, MS&AD Insurance Group Holdings can use these opportunities to build new business models that can help the communities that MS&AD Insurance Group Holdings operates in. Secondly it can use opportunities from government spending in Insurance (Prop. & Casualty) sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, MS&AD Insurance Group Holdings 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.
Manufacturing automation
– MS&AD Insurance Group Holdings can use the latest technology developments to improve its manufacturing and designing process in Insurance (Prop. & Casualty) 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for MS&AD Insurance Group Holdings in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Insurance (Prop. & Casualty) industry, and it will provide faster access to the consumers.
Leveraging digital technologies
– MS&AD Insurance Group Holdings 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.
Buying journey improvements
– MS&AD Insurance Group Holdings can improve the customer journey of consumers in the Insurance (Prop. & Casualty) industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Insurance (Prop. & Casualty) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. MS&AD Insurance Group Holdings 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. MS&AD Insurance Group Holdings 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help MS&AD Insurance Group Holdings to increase its market reach. MS&AD Insurance Group Holdings 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.
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. MS&AD Insurance Group Holdings can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats MS&AD Insurance Group Holdings External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of MS&AD Insurance Group Holdings are -
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.
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. MS&AD Insurance Group Holdings 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 Insurance (Prop. & Casualty) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. MS&AD Insurance Group Holdings can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. MS&AD Insurance Group Holdings needs to understand the core reasons impacting the Insurance (Prop. & Casualty) industry. This will help it in building a better workplace.
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 MS&AD Insurance Group Holdings in the Insurance (Prop. & Casualty) sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– MS&AD Insurance Group Holdings has witnessed rapid integration of technology during Covid-19 in the Insurance (Prop. & Casualty) industry. As one of the leading players in the industry, MS&AD Insurance Group Holdings needs to keep up with the evolution of technology in the Insurance (Prop. & Casualty) 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 dependence on third party suppliers
– MS&AD Insurance Group Holdings 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.
Environmental challenges
– MS&AD Insurance Group Holdings 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. MS&AD Insurance Group Holdings can take advantage of this fund but it will also bring new competitors in the Insurance (Prop. & Casualty) 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings prominent markets.
Stagnating economy with rate increase
– MS&AD Insurance Group Holdings 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 Insurance (Prop. & Casualty) industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for MS&AD Insurance Group Holdings in Insurance (Prop. & Casualty) industry. The Insurance (Prop. & Casualty) industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, MS&AD Insurance Group Holdings may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Insurance (Prop. & Casualty) sector.
Weighted SWOT Analysis of MS&AD Insurance Group Holdings Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings 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 MS&AD Insurance Group Holdings needs to make to build a sustainable competitive advantage.