The Kansai Electric Power Co. (9503) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for The Kansai Electric Power Co. (Japan)

Based on various researches at Oak Spring University , The Kansai Electric Power Co. is operating in a macro-environment that has been destablized by – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, wage bills are increasing, increasing transportation and logistics costs, increasing energy prices, etc

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Introduction to SWOT Analysis of The Kansai Electric Power Co.

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

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of The Kansai Electric Power Co. can be done for the following purposes –
1. Strategic planning of The Kansai Electric Power Co.
2. Improving business portfolio management of The Kansai Electric Power Co.
3. Assessing feasibility of the new initiative in Japan
4. Making a Electric Utilities sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of The Kansai Electric Power Co.

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Strengths of The Kansai Electric Power Co. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of The Kansai Electric Power Co. are -

Highly skilled collaborators

– The Kansai Electric Power Co. has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Electric Utilities industry. Secondly the value chain collaborators of The Kansai Electric Power Co. have helped the firm to develop new products and bring them quickly to the marketplace.

Sustainable margins compare to other players in Electric Utilities industry

– The Kansai Electric Power Co. has clearly differentiated products in the market place. This has enabled The Kansai Electric Power Co. to fetch slight price premium compare to the competitors in the Electric Utilities industry. The sustainable margins have also helped The Kansai Electric Power Co. to invest into research and development (R&D) and innovation.

Training and development

– The Kansai Electric Power Co. has one of the best training and development program in Utilities 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 switching costs

– The high switching costs that The Kansai Electric Power 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.

Ability to lead change in Electric Utilities

– The Kansai Electric Power Co. is one of the leading players in the Electric Utilities industry in Japan. Over the years it has not only transformed the business landscape in the Electric Utilities industry in Japan but also across the existing markets. The ability to lead change has enabled The Kansai Electric Power Co. in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.

Effective Research and Development (R&D)

– The Kansai Electric Power Co. has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – The Kansai Electric Power Co. staying ahead in the Electric Utilities industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Analytics focus

– The Kansai Electric Power 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 Electric Utilities 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.

High brand equity

– The Kansai Electric Power Co. has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled The Kansai Electric Power Co. to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Learning organization

- The Kansai Electric Power 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 The Kansai Electric Power Co. is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at The Kansai Electric Power Co. emphasize – knowledge, initiative, and innovation.

Cross disciplinary teams

– Horizontal connected teams at the The Kansai Electric Power 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.

Low bargaining power of suppliers

– Suppliers of The Kansai Electric Power Co. in the Utilities sector have low bargaining power. The Kansai Electric Power Co. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps The Kansai Electric Power Co. to manage not only supply disruptions but also source products at highly competitive prices.

Diverse revenue streams

– The Kansai Electric Power Co. is present in almost all the verticals within the Electric Utilities industry. This has provided The Kansai Electric Power 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.

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Weaknesses of The Kansai Electric Power Co. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of The Kansai Electric Power Co. are -

No frontier risks strategy

– From the 10K / annual statement of The Kansai Electric Power Co., it seems that company is thinking out the frontier risks that can impact Electric Utilities 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.

Capital Spending Reduction

– Even during the low interest decade, The Kansai Electric Power Co. has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Electric Utilities industry using digital technology.

Skills based hiring in Electric Utilities industry

– The stress on hiring functional specialists at The Kansai Electric Power 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.

Compensation and incentives

– The revenue per employee of The Kansai Electric Power Co. is just above the Electric Utilities 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.

Workers concerns about automation

– As automation is fast increasing in the Electric Utilities industry, The Kansai Electric Power 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.

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 The Kansai Electric Power Co. supply chain. Even after few cautionary changes, The Kansai Electric Power Co. is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left The Kansai Electric Power Co. vulnerable to further global disruptions in South East Asia.

Need for greater diversity

– The Kansai Electric Power Co. has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.

High operating costs

– Compare to the competitors, The Kansai Electric Power Co. has high operating costs in the Electric Utilities industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract The Kansai Electric Power Co. lucrative customers.

High dependence on The Kansai Electric Power Co. ‘s star products

– The top 2 products and services of The Kansai Electric Power Co. still accounts for major business revenue. This dependence on star products in Electric Utilities industry has resulted into insufficient focus on developing new products, even though The Kansai Electric Power Co. has relatively successful track record of launching new products.

Slow to strategic competitive environment developments

– As The Kansai Electric Power Co. is one of the leading players in the Electric Utilities industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Electric Utilities industry in last five years.

Ability to respond to the competition

– As the decision making is very deliberative at The Kansai Electric Power Co., in the dynamic environment of Electric Utilities industry it has struggled to respond to the nimble upstart competition. The Kansai Electric Power Co. has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

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The Kansai Electric Power Co. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of The Kansai Electric Power Co. are -

Creating value in data economy

– The success of analytics program of The Kansai Electric Power Co. has opened avenues for new revenue streams for the organization in Electric Utilities industry. This can help The Kansai Electric Power Co. to build a more holistic ecosystem for The Kansai Electric Power Co. products in the Electric Utilities industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Loyalty marketing

– The Kansai Electric Power 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.

Redefining models of collaboration and team work

– As explained in the weaknesses section, The Kansai Electric Power Co. is facing challenges because of the dominance of functional experts in the organization. The Kansai Electric Power Co. can utilize new technology in the field of Electric Utilities 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, The Kansai Electric Power 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 The Kansai Electric Power 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.

Using analytics as competitive advantage

– The Kansai Electric Power Co. has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Electric Utilities sector. This continuous investment in analytics has enabled The Kansai Electric Power Co. to build a competitive advantage using analytics. The analytics driven competitive advantage can help The Kansai Electric Power 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 The Kansai Electric Power 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 Electric Utilities industry, and it will provide faster access to the consumers.

Learning at scale

– Online learning technologies has now opened space for The Kansai Electric Power 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Electric Utilities industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. The Kansai Electric Power 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. The Kansai Electric Power 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.

Buying journey improvements

– The Kansai Electric Power Co. can improve the customer journey of consumers in the Electric Utilities 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Electric Utilities industry, but it has also influenced the consumer preferences. The Kansai Electric Power 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 The Kansai Electric Power 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.

Building a culture of innovation

– managers at The Kansai Electric Power 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 Electric Utilities industry.

Reforming the budgeting process

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

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Threats The Kansai Electric Power Co. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of The Kansai Electric Power Co. are -

Technology acceleration in Forth Industrial Revolution

– The Kansai Electric Power Co. has witnessed rapid integration of technology during Covid-19 in the Electric Utilities industry. As one of the leading players in the industry, The Kansai Electric Power Co. needs to keep up with the evolution of technology in the Electric Utilities 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

– The Kansai Electric Power 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.

Regulatory challenges

– The Kansai Electric Power 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 Electric Utilities 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.

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. The Kansai Electric Power 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.

Stagnating economy with rate increase

– The Kansai Electric Power 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 Electric Utilities industry.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for The Kansai Electric Power Co. in Electric Utilities industry. The Electric Utilities 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.

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 The Kansai Electric Power Co. in the Electric Utilities sector and impact the bottomline 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. The Kansai Electric Power Co. needs to understand the core reasons impacting the Electric Utilities industry. This will help it in building a better workplace.

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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, The Kansai Electric Power 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 Electric Utilities sector.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, The Kansai Electric Power 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 The Kansai Electric Power Co. prominent markets.

Consumer confidence and its impact on The Kansai Electric Power 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 Electric Utilities industry and other sectors.

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Weighted SWOT Analysis of The Kansai Electric Power Co. Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at The Kansai Electric Power 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 The Kansai Electric Power 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 The Kansai Electric Power 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 The Kansai Electric Power 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 The Kansai Electric Power Co. needs to make to build a sustainable competitive advantage.

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