Based on various researches at Oak Spring University , Showa Shell Sekiyu K.K. is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, geopolitical disruptions, increasing energy prices, wage bills are increasing, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings,
technology disruption, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Showa Shell Sekiyu K.K.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Showa Shell Sekiyu K.K. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Showa Shell Sekiyu K.K., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. can be done for the following purposes –
1. Strategic planning of Showa Shell Sekiyu K.K.
2. Improving business portfolio management of Showa Shell Sekiyu K.K.
3. Assessing feasibility of the new initiative in Japan
4. Making a Oil & Gas Operations sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Showa Shell Sekiyu K.K.
Strengths of Showa Shell Sekiyu K.K. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Showa Shell Sekiyu K.K. are -
Ability to lead change in Oil & Gas Operations
– Showa Shell Sekiyu K.K. is one of the leading players in the Oil & Gas Operations industry in Japan. Over the years it has not only transformed the business landscape in the Oil & Gas Operations industry in Japan but also across the existing markets. The ability to lead change has enabled Showa Shell Sekiyu K.K. 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)
– Showa Shell Sekiyu K.K. has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Showa Shell Sekiyu K.K. staying ahead in the Oil & Gas Operations industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Highly skilled collaborators
– Showa Shell Sekiyu K.K. has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Oil & Gas Operations industry. Secondly the value chain collaborators of Showa Shell Sekiyu K.K. have helped the firm to develop new products and bring them quickly to the marketplace.
Analytics focus
– Showa Shell Sekiyu K.K. 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 Oil & Gas Operations 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.
Training and development
– Showa Shell Sekiyu K.K. has one of the best training and development program in Energy 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.
Strong track record of project management in the Oil & Gas Operations industry
– Showa Shell Sekiyu K.K. is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Showa Shell Sekiyu K.K. is one of the most innovative firm in Oil & Gas Operations sector.
Ability to recruit top talent
– Showa Shell Sekiyu K.K. is one of the leading players in the Oil & Gas Operations 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.
Operational resilience
– The operational resilience strategy of Showa Shell Sekiyu K.K. comprises – understanding the underlying the factors in the Oil & Gas Operations industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Showa Shell Sekiyu K.K. 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.
Cross disciplinary teams
– Horizontal connected teams at the Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. in the Energy sector have low bargaining power. Showa Shell Sekiyu K.K. has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Showa Shell Sekiyu K.K. to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses of Showa Shell Sekiyu K.K. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Showa Shell Sekiyu K.K. are -
Capital Spending Reduction
– Even during the low interest decade, Showa Shell Sekiyu K.K. 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 Oil & Gas Operations industry using digital technology.
Slow to strategic competitive environment developments
– As Showa Shell Sekiyu K.K. is one of the leading players in the Oil & Gas Operations industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Oil & Gas Operations industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Showa Shell Sekiyu K.K. has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Oil & Gas Operations industry over the last five years. Showa Shell Sekiyu K.K. even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Ability to respond to the competition
– As the decision making is very deliberative at Showa Shell Sekiyu K.K., in the dynamic environment of Oil & Gas Operations industry it has struggled to respond to the nimble upstart competition. Showa Shell Sekiyu K.K. has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Showa Shell Sekiyu K.K. supply chain. Even after few cautionary changes, Showa Shell Sekiyu K.K. is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Showa Shell Sekiyu K.K. vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners in Oil & Gas Operations industry
– because of the regulatory requirements in Japan, Showa Shell Sekiyu K.K. 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 Oil & Gas Operations industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Showa Shell Sekiyu K.K. is slow explore the new channels of communication. These new channels of communication can help Showa Shell Sekiyu K.K. to provide better information regarding Oil & Gas Operations products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Showa Shell Sekiyu K.K. 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, Showa Shell Sekiyu K.K. has high operating costs in the Oil & Gas Operations industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Showa Shell Sekiyu K.K. lucrative customers.
Interest costs
– Compare to the competition, Showa Shell Sekiyu K.K. 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.
High dependence on Showa Shell Sekiyu K.K. ‘s star products
– The top 2 products and services of Showa Shell Sekiyu K.K. still accounts for major business revenue. This dependence on star products in Oil & Gas Operations industry has resulted into insufficient focus on developing new products, even though Showa Shell Sekiyu K.K. has relatively successful track record of launching new products.
Showa Shell Sekiyu K.K. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Showa Shell Sekiyu K.K. are -
Leveraging digital technologies
– Showa Shell Sekiyu K.K. 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.
Better consumer reach
– The expansion of the 5G network will help Showa Shell Sekiyu K.K. to increase its market reach. Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. has opened avenues for new revenue streams for the organization in Oil & Gas Operations industry. This can help Showa Shell Sekiyu K.K. to build a more holistic ecosystem for Showa Shell Sekiyu K.K. products in the Oil & Gas Operations industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Showa Shell Sekiyu K.K. can improve the customer journey of consumers in the Oil & Gas Operations 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Loyalty marketing
– Showa Shell Sekiyu K.K. 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.
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. Showa Shell Sekiyu K.K. can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Oil & Gas Operations industry, but it has also influenced the consumer preferences. Showa Shell Sekiyu K.K. can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Showa Shell Sekiyu K.K. can use these opportunities to build new business models that can help the communities that Showa Shell Sekiyu K.K. operates in. Secondly it can use opportunities from government spending in Oil & Gas Operations sector.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Showa Shell Sekiyu K.K. can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Building a culture of innovation
– managers at Showa Shell Sekiyu K.K. 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 Oil & Gas Operations industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Showa Shell Sekiyu K.K. are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. prominent markets.
Stagnating economy with rate increase
– Showa Shell Sekiyu K.K. 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 Oil & Gas Operations industry.
Shortening product life cycle
– it is one of the major threat that Showa Shell Sekiyu K.K. is facing in Oil & Gas Operations 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.
Technology acceleration in Forth Industrial Revolution
– Showa Shell Sekiyu K.K. has witnessed rapid integration of technology during Covid-19 in the Oil & Gas Operations industry. As one of the leading players in the industry, Showa Shell Sekiyu K.K. needs to keep up with the evolution of technology in the Oil & Gas Operations 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.
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 Showa Shell Sekiyu K.K..
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. Showa Shell Sekiyu K.K. 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.
Regulatory challenges
– Showa Shell Sekiyu K.K. 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 Oil & Gas Operations industry regulations.
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 Showa Shell Sekiyu K.K. in the Oil & Gas Operations sector and impact the bottomline of the organization.
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 Showa Shell Sekiyu K.K. business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Showa Shell Sekiyu K.K.
– 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 Showa Shell Sekiyu K.K..
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. Showa Shell Sekiyu K.K. needs to understand the core reasons impacting the Oil & Gas Operations industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Oil & Gas Operations industry are lowering. It can presents Showa Shell Sekiyu K.K. with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Oil & Gas Operations sector.
Weighted SWOT Analysis of Showa Shell Sekiyu K.K. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. 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 Showa Shell Sekiyu K.K. needs to make to build a sustainable competitive advantage.