Toyota Tsusho Corp. (8015) SWOT Analysis / TOWS Matrix / MBA Resources
Iron & Steel
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Toyota Tsusho Corp. (Japan)
Based on various researches at Oak Spring University , Toyota Tsusho Corp. is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, wage bills are increasing, there is backlash against globalization, technology disruption, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels,
cloud computing is disrupting traditional business models, geopolitical disruptions, etc
Introduction to SWOT Analysis of Toyota Tsusho Corp.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Toyota Tsusho Corp. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toyota Tsusho Corp., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toyota Tsusho Corp. 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 Toyota Tsusho Corp. can be done for the following purposes –
1. Strategic planning of Toyota Tsusho Corp.
2. Improving business portfolio management of Toyota Tsusho Corp.
3. Assessing feasibility of the new initiative in Japan
4. Making a Iron & Steel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Toyota Tsusho Corp.
Strengths of Toyota Tsusho Corp. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toyota Tsusho Corp. are -
Sustainable margins compare to other players in Iron & Steel industry
– Toyota Tsusho Corp. has clearly differentiated products in the market place. This has enabled Toyota Tsusho Corp. to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped Toyota Tsusho Corp. to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Toyota Tsusho Corp. in the Basic Materials sector have low bargaining power. Toyota Tsusho Corp. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toyota Tsusho Corp. to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Toyota Tsusho Corp. has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Iron & Steel industry. Secondly the value chain collaborators of Toyota Tsusho Corp. have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Toyota Tsusho Corp. has one of the best training and development program in Basic Materials 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.
Superior customer experience
– The customer experience strategy of Toyota Tsusho Corp. in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Strong track record of project management in the Iron & Steel industry
– Toyota Tsusho Corp. is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Iron & Steel industry
- digital transformation varies from industry to industry. For Toyota Tsusho Corp. digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Toyota Tsusho Corp. 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.
Organizational Resilience of Toyota Tsusho Corp.
– The covid-19 pandemic has put organizational resilience at the centre of everthing Toyota Tsusho Corp. does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Toyota Tsusho Corp. 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 Iron & Steel 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.
Learning organization
- Toyota Tsusho Corp. 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 Toyota Tsusho Corp. is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Toyota Tsusho Corp. emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Toyota Tsusho Corp. 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.
High switching costs
– The high switching costs that Toyota Tsusho Corp. 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.
Weaknesses of Toyota Tsusho Corp. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toyota Tsusho Corp. are -
High dependence on Toyota Tsusho Corp. ‘s star products
– The top 2 products and services of Toyota Tsusho Corp. still accounts for major business revenue. This dependence on star products in Iron & Steel industry has resulted into insufficient focus on developing new products, even though Toyota Tsusho Corp. has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Toyota Tsusho Corp. 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 Iron & Steel industry using digital technology.
Lack of clear differentiation of Toyota Tsusho Corp. products
– To increase the profitability and margins on the products, Toyota Tsusho Corp. needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Toyota Tsusho Corp. is dominated by functional specialists. It is not different from other players in the Iron & Steel industry, but Toyota Tsusho Corp. needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toyota Tsusho Corp. to focus more on services in the Iron & Steel industry rather than just following the product oriented approach.
No frontier risks strategy
– From the 10K / annual statement of Toyota Tsusho Corp., it seems that company is thinking out the frontier risks that can impact Iron & Steel 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.
Interest costs
– Compare to the competition, Toyota Tsusho Corp. 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.
Low market penetration in new markets
– Outside its home market of Japan, Toyota Tsusho Corp. needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 Toyota Tsusho Corp. supply chain. Even after few cautionary changes, Toyota Tsusho Corp. is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toyota Tsusho Corp. vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners in Iron & Steel industry
– because of the regulatory requirements in Japan, Toyota Tsusho Corp. 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 Iron & Steel industry.
Skills based hiring in Iron & Steel industry
– The stress on hiring functional specialists at Toyota Tsusho Corp. 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.
Need for greater diversity
– Toyota Tsusho Corp. 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.
Toyota Tsusho Corp. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Toyota Tsusho Corp. are -
Leveraging digital technologies
– Toyota Tsusho Corp. 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.
Manufacturing automation
– Toyota Tsusho Corp. can use the latest technology developments to improve its manufacturing and designing process in Iron & Steel 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.
Developing new processes and practices
– Toyota Tsusho Corp. can develop new processes and procedures in Iron & Steel 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.
Better consumer reach
– The expansion of the 5G network will help Toyota Tsusho Corp. to increase its market reach. Toyota Tsusho Corp. 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.
Using analytics as competitive advantage
– Toyota Tsusho Corp. has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Iron & Steel sector. This continuous investment in analytics has enabled Toyota Tsusho Corp. to build a competitive advantage using analytics. The analytics driven competitive advantage can help Toyota Tsusho Corp. to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Toyota Tsusho Corp. has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help Toyota Tsusho Corp. to build a more holistic ecosystem for Toyota Tsusho Corp. products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Toyota Tsusho Corp. 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 Iron & Steel industry.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toyota Tsusho Corp. 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 Toyota Tsusho Corp. to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Toyota Tsusho Corp. can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Toyota Tsusho Corp. 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Iron & Steel industry, but it has also influenced the consumer preferences. Toyota Tsusho Corp. can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Toyota Tsusho Corp. 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, Toyota Tsusho Corp. 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.
Threats Toyota Tsusho Corp. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Toyota Tsusho Corp. are -
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 Toyota Tsusho Corp. in the Iron & Steel sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Toyota Tsusho Corp. may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Iron & Steel sector.
Environmental challenges
– Toyota Tsusho Corp. 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. Toyota Tsusho Corp. can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.
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 Toyota Tsusho Corp..
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. Toyota Tsusho Corp. needs to understand the core reasons impacting the Iron & Steel industry. This will help it in building a better workplace.
Consumer confidence and its impact on Toyota Tsusho Corp. 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 Iron & Steel industry and other sectors.
Easy access to finance
– Easy access to finance in Iron & Steel industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Toyota Tsusho Corp. can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Stagnating economy with rate increase
– Toyota Tsusho Corp. 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 Iron & Steel industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toyota Tsusho Corp. 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 Toyota Tsusho Corp. prominent markets.
Increasing wage structure of Toyota Tsusho Corp.
– 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 Toyota Tsusho Corp..
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Iron & Steel industry are lowering. It can presents Toyota Tsusho Corp. with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Iron & Steel sector.
Weighted SWOT Analysis of Toyota Tsusho Corp. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Toyota Tsusho Corp. 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 Toyota Tsusho Corp. 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 Toyota Tsusho Corp. 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 Toyota Tsusho Corp. 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 Toyota Tsusho Corp. needs to make to build a sustainable competitive advantage.