JFE Holdings, Inc. (5411) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for JFE Holdings, Inc. (Japan)

Based on various researches at Oak Spring University , JFE Holdings, Inc. is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, wage bills are increasing, increasing transportation and logistics costs, increasing energy prices, there is backlash against globalization, central banks are concerned over increasing inflation, banking and financial system is disrupted by Bitcoin and other crypto currencies, challanges to central banks by blockchain based private currencies, etc

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Introduction to SWOT Analysis of JFE Holdings, Inc.

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that JFE Holdings, Inc. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the JFE Holdings, Inc., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which JFE Holdings, Inc. 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 JFE Holdings, Inc. can be done for the following purposes –
1. Strategic planning of JFE Holdings, Inc.
2. Improving business portfolio management of JFE Holdings, Inc.
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 JFE Holdings, Inc.

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Strengths of JFE Holdings, Inc. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of JFE Holdings, Inc. are -

Innovation driven organization

– JFE Holdings, Inc. is one of the most innovative firm in Iron & Steel sector.

Successful track record of launching new products

– JFE Holdings, Inc. has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. JFE Holdings, Inc. 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.

Strong track record of project management in the Iron & Steel industry

– JFE Holdings, Inc. is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Diverse revenue streams

– JFE Holdings, Inc. is present in almost all the verticals within the Iron & Steel industry. This has provided JFE Holdings, Inc. 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.

Ability to recruit top talent

– JFE Holdings, Inc. is one of the leading players in the Iron & Steel 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.

Superior customer experience

– The customer experience strategy of JFE Holdings, Inc. in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Learning organization

- JFE Holdings, Inc. 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 JFE Holdings, Inc. is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at JFE Holdings, Inc. emphasize – knowledge, initiative, and innovation.

Low bargaining power of suppliers

– Suppliers of JFE Holdings, Inc. in the Basic Materials sector have low bargaining power. JFE Holdings, Inc. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps JFE Holdings, Inc. to manage not only supply disruptions but also source products at highly competitive prices.

High switching costs

– The high switching costs that JFE Holdings, Inc. 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 Iron & Steel industry

– JFE Holdings, Inc. has clearly differentiated products in the market place. This has enabled JFE Holdings, Inc. to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped JFE Holdings, Inc. to invest into research and development (R&D) and innovation.

Digital Transformation in Iron & Steel industry

- digital transformation varies from industry to industry. For JFE Holdings, Inc. digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. JFE Holdings, Inc. 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.

Cross disciplinary teams

– Horizontal connected teams at the JFE Holdings, Inc. 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.

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Weaknesses of JFE Holdings, Inc. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of JFE Holdings, Inc. are -

High bargaining power of channel partners in Iron & Steel industry

– because of the regulatory requirements in Japan, JFE Holdings, Inc. 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.

Products dominated business model

– Even though JFE Holdings, Inc. has some of the most successful models in the Iron & Steel industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. JFE Holdings, Inc. should strive to include more intangible value offerings along with its core products and services.

Ability to respond to the competition

– As the decision making is very deliberative at JFE Holdings, Inc., in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. JFE Holdings, Inc. has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Interest costs

– Compare to the competition, JFE Holdings, Inc. 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.

Aligning sales with marketing

– From the outside it seems that JFE Holdings, Inc. needs to have more collaboration between its sales team and marketing team. Sales professionals in the Iron & Steel industry have deep experience in developing customer relationships. Marketing department at JFE Holdings, Inc. can leverage the sales team experience to cultivate customer relationships as JFE Holdings, Inc. is planning to shift buying processes online.

No frontier risks strategy

– From the 10K / annual statement of JFE Holdings, Inc., 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.

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, JFE Holdings, Inc. is slow explore the new channels of communication. These new channels of communication can help JFE Holdings, Inc. to provide better information regarding Iron & Steel products and services. It can also build an online community to further reach out to potential customers.

High dependence on JFE Holdings, Inc. ‘s star products

– The top 2 products and services of JFE Holdings, Inc. 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 JFE Holdings, Inc. has relatively successful track record of launching new products.

Workers concerns about automation

– As automation is fast increasing in the Iron & Steel industry, JFE Holdings, Inc. 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.

Increasing silos among functional specialists

– The organizational structure of JFE Holdings, Inc. is dominated by functional specialists. It is not different from other players in the Iron & Steel industry, but JFE Holdings, Inc. needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help JFE Holdings, Inc. to focus more on services in the Iron & Steel industry rather than just following the product oriented approach.

High operating costs

– Compare to the competitors, JFE Holdings, Inc. has high operating costs in the Iron & Steel industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract JFE Holdings, Inc. lucrative customers.

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JFE Holdings, Inc. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of JFE Holdings, Inc. are -

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, JFE Holdings, Inc. can use these opportunities to build new business models that can help the communities that JFE Holdings, Inc. operates in. Secondly it can use opportunities from government spending in Iron & Steel sector.

Leveraging digital technologies

– JFE Holdings, Inc. can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.

Low interest rates

– Even though inflation is raising its head in most developed economies, JFE Holdings, Inc. 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.

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. JFE Holdings, Inc. can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Building a culture of innovation

– managers at JFE Holdings, Inc. 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.

Learning at scale

– Online learning technologies has now opened space for JFE Holdings, Inc. 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.

Developing new processes and practices

– JFE Holdings, Inc. 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.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Iron & Steel industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. JFE Holdings, Inc. 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. JFE Holdings, Inc. 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for JFE Holdings, Inc. 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 JFE Holdings, Inc. to hire the very best people irrespective of their geographical location.

Use of Bitcoin and other crypto currencies for transactions in Iron & Steel industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for JFE Holdings, Inc. in the Iron & Steel industry. Now JFE Holdings, Inc. can target international markets with far fewer capital restrictions requirements than the existing system.

Using analytics as competitive advantage

– JFE Holdings, Inc. 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 JFE Holdings, Inc. to build a competitive advantage using analytics. The analytics driven competitive advantage can help JFE Holdings, Inc. to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Redefining models of collaboration and team work

– As explained in the weaknesses section, JFE Holdings, Inc. is facing challenges because of the dominance of functional experts in the organization. JFE Holdings, Inc. can utilize new technology in the field of Iron & Steel industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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. JFE Holdings, Inc. can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

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Threats JFE Holdings, Inc. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of JFE Holdings, Inc. are -

Shortening product life cycle

– it is one of the major threat that JFE Holdings, Inc. is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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.

Environmental challenges

– JFE Holdings, Inc. 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. JFE Holdings, Inc. can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.

Increasing wage structure of JFE Holdings, Inc.

– 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 JFE Holdings, Inc..

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. JFE Holdings, Inc. 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

– JFE Holdings, Inc. 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Iron & Steel industry are lowering. It can presents JFE Holdings, Inc. with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Iron & Steel 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 JFE Holdings, Inc. business can come under increasing regulations regarding data privacy, data security, etc.

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. JFE Holdings, Inc. needs to understand the core reasons impacting the Iron & Steel industry. This will help it in building a better workplace.

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 JFE Holdings, Inc..

Consumer confidence and its impact on JFE Holdings, Inc. 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.

Regulatory challenges

– JFE Holdings, Inc. 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 Iron & Steel industry regulations.

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. JFE Holdings, Inc. can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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Weighted SWOT Analysis of JFE Holdings, Inc. Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at JFE Holdings, Inc. 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 JFE Holdings, Inc. 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 JFE Holdings, Inc. 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 JFE Holdings, Inc. 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 JFE Holdings, Inc. needs to make to build a sustainable competitive advantage.

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