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 – supply chains are disrupted by pandemic , wage bills are increasing, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, geopolitical disruptions, 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 -

Organizational Resilience of JFE Holdings, Inc.

– The covid-19 pandemic has put organizational resilience at the centre of everthing JFE Holdings, Inc. does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

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.

Analytics focus

– JFE Holdings, Inc. 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.

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.

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.

Highly skilled collaborators

– JFE Holdings, Inc. 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 JFE Holdings, Inc. have helped the firm to develop new products and bring them quickly to the marketplace.

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.

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.

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.

Innovation driven organization

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

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.

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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 -

Slow to strategic competitive environment developments

– As JFE Holdings, Inc. is one of the leading players in the Iron & Steel industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Iron & Steel industry in last five years.

Capital Spending Reduction

– Even during the low interest decade, JFE Holdings, Inc. 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.

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.

Employees’ less understanding of JFE Holdings, Inc. strategy

– From the outside it seems that the employees of JFE Holdings, Inc. don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

Lack of clear differentiation of JFE Holdings, Inc. products

– To increase the profitability and margins on the products, JFE Holdings, Inc. needs to provide more differentiated products than what it is currently offering in the marketplace.

High cash cycle compare to competitors

JFE Holdings, Inc. has a high cash cycle compare to other players in the Iron & Steel industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

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.

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.

Compensation and incentives

– The revenue per employee of JFE Holdings, Inc. is just above the Iron & Steel 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.

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

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.

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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.

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.

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.

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.

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.

Loyalty marketing

– JFE Holdings, Inc. 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, JFE Holdings, Inc. 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 JFE Holdings, Inc. to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

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.

Buying journey improvements

– JFE Holdings, Inc. can improve the customer journey of consumers in the Iron & Steel 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 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.

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.

Better consumer reach

– The expansion of the 5G network will help JFE Holdings, Inc. to increase its market reach. JFE Holdings, Inc. 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.

Creating value in data economy

– The success of analytics program of JFE Holdings, Inc. has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help JFE Holdings, Inc. to build a more holistic ecosystem for JFE Holdings, Inc. products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.

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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 -

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 JFE Holdings, Inc. in the Iron & Steel sector and impact the bottomline of the organization.

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.

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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for JFE Holdings, Inc. in Iron & Steel industry. The Iron & Steel 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, JFE Holdings, Inc. 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.

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.

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.

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.

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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, JFE Holdings, Inc. 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 JFE Holdings, Inc. prominent markets.

Technology acceleration in Forth Industrial Revolution

– JFE Holdings, Inc. has witnessed rapid integration of technology during Covid-19 in the Iron & Steel industry. As one of the leading players in the industry, JFE Holdings, Inc. needs to keep up with the evolution of technology in the Iron & Steel 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.

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..

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..

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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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