SWOT Analysis / TOWS Matrix for Nippon Prologis REIT (Japan)
Based on various researches at Oak Spring University , Nippon Prologis REIT is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, increasing commodity prices,
cloud computing is disrupting traditional business models, technology disruption, etc
Introduction to SWOT Analysis of Nippon Prologis REIT
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nippon Prologis REIT can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nippon Prologis REIT, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nippon Prologis REIT 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 Nippon Prologis REIT can be done for the following purposes –
1. Strategic planning of Nippon Prologis REIT
2. Improving business portfolio management of Nippon Prologis REIT
3. Assessing feasibility of the new initiative in Japan
4. Making a Rental & Leasing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nippon Prologis REIT
Strengths of Nippon Prologis REIT | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nippon Prologis REIT are -
Ability to lead change in Rental & Leasing
– Nippon Prologis REIT is one of the leading players in the Rental & Leasing industry in Japan. Over the years it has not only transformed the business landscape in the Rental & Leasing industry in Japan but also across the existing markets. The ability to lead change has enabled Nippon Prologis REIT in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management in the Rental & Leasing industry
– Nippon Prologis REIT is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Nippon Prologis REIT has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nippon Prologis REIT staying ahead in the Rental & Leasing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Nippon Prologis REIT is present in almost all the verticals within the Rental & Leasing industry. This has provided Nippon Prologis REIT 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.
Digital Transformation in Rental & Leasing industry
- digital transformation varies from industry to industry. For Nippon Prologis REIT digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nippon Prologis REIT 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.
Learning organization
- Nippon Prologis REIT 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 Nippon Prologis REIT is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Nippon Prologis REIT emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy of Nippon Prologis REIT comprises – understanding the underlying the factors in the Rental & Leasing 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 brand equity
– Nippon Prologis REIT has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nippon Prologis REIT to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Nippon Prologis REIT in the Services sector have low bargaining power. Nippon Prologis REIT has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nippon Prologis REIT to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Nippon Prologis REIT 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 Rental & Leasing 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.
Innovation driven organization
– Nippon Prologis REIT is one of the most innovative firm in Rental & Leasing sector.
Sustainable margins compare to other players in Rental & Leasing industry
– Nippon Prologis REIT has clearly differentiated products in the market place. This has enabled Nippon Prologis REIT to fetch slight price premium compare to the competitors in the Rental & Leasing industry. The sustainable margins have also helped Nippon Prologis REIT to invest into research and development (R&D) and innovation.
Weaknesses of Nippon Prologis REIT | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nippon Prologis REIT are -
Slow to strategic competitive environment developments
– As Nippon Prologis REIT is one of the leading players in the Rental & Leasing industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Rental & Leasing industry in last five years.
High dependence on Nippon Prologis REIT ‘s star products
– The top 2 products and services of Nippon Prologis REIT still accounts for major business revenue. This dependence on star products in Rental & Leasing industry has resulted into insufficient focus on developing new products, even though Nippon Prologis REIT has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Nippon Prologis REIT 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 Nippon Prologis REIT strategy
– From the outside it seems that the employees of Nippon Prologis REIT 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.
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 Nippon Prologis REIT supply chain. Even after few cautionary changes, Nippon Prologis REIT is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nippon Prologis REIT vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Nippon Prologis REIT needs to have more collaboration between its sales team and marketing team. Sales professionals in the Rental & Leasing industry have deep experience in developing customer relationships. Marketing department at Nippon Prologis REIT can leverage the sales team experience to cultivate customer relationships as Nippon Prologis REIT is planning to shift buying processes online.
High cash cycle compare to competitors
Nippon Prologis REIT has a high cash cycle compare to other players in the Rental & Leasing industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative at Nippon Prologis REIT, in the dynamic environment of Rental & Leasing industry it has struggled to respond to the nimble upstart competition. Nippon Prologis REIT has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Nippon Prologis REIT 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 bargaining power of channel partners in Rental & Leasing industry
– because of the regulatory requirements in Japan, Nippon Prologis REIT 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 Rental & Leasing industry.
Products dominated business model
– Even though Nippon Prologis REIT has some of the most successful models in the Rental & Leasing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Nippon Prologis REIT should strive to include more intangible value offerings along with its core products and services.
Nippon Prologis REIT Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nippon Prologis REIT are -
Leveraging digital technologies
– Nippon Prologis REIT 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nippon Prologis REIT can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nippon Prologis REIT 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 Nippon Prologis REIT 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
– Nippon Prologis REIT has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Rental & Leasing sector. This continuous investment in analytics has enabled Nippon Prologis REIT to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nippon Prologis REIT to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Nippon Prologis REIT to increase its market reach. Nippon Prologis REIT 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.
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 Nippon Prologis REIT 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 Nippon Prologis REIT 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 Rental & Leasing industry.
Buying journey improvements
– Nippon Prologis REIT can improve the customer journey of consumers in the Rental & Leasing 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.
Use of Bitcoin and other crypto currencies for transactions in Rental & Leasing industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Nippon Prologis REIT in the Rental & Leasing industry. Now Nippon Prologis REIT can target international markets with far fewer capital restrictions requirements than the existing system.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nippon Prologis REIT can use these opportunities to build new business models that can help the communities that Nippon Prologis REIT operates in. Secondly it can use opportunities from government spending in Rental & Leasing sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Rental & Leasing industry, but it has also influenced the consumer preferences. Nippon Prologis REIT can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Nippon Prologis REIT can develop new processes and procedures in Rental & Leasing 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nippon Prologis REIT 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 Nippon Prologis REIT External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nippon Prologis REIT are -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nippon Prologis REIT may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Rental & Leasing sector.
Regulatory challenges
– Nippon Prologis REIT 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 Rental & Leasing industry regulations.
Technology acceleration in Forth Industrial Revolution
– Nippon Prologis REIT has witnessed rapid integration of technology during Covid-19 in the Rental & Leasing industry. As one of the leading players in the industry, Nippon Prologis REIT needs to keep up with the evolution of technology in the Rental & Leasing 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.
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. Nippon Prologis REIT 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
– Nippon Prologis REIT 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 Rental & Leasing industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Rental & Leasing industry are lowering. It can presents Nippon Prologis REIT with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Rental & Leasing sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nippon Prologis REIT 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 Nippon Prologis REIT prominent markets.
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 Nippon Prologis REIT in the Rental & Leasing 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. Nippon Prologis REIT needs to understand the core reasons impacting the Rental & Leasing industry. This will help it in building a better workplace.
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 Nippon Prologis REIT business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Nippon Prologis REIT
– 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 Nippon Prologis REIT.
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
– Nippon Prologis REIT 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. Nippon Prologis REIT can take advantage of this fund but it will also bring new competitors in the Rental & Leasing industry.
Weighted SWOT Analysis of Nippon Prologis REIT Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nippon Prologis REIT 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 Nippon Prologis REIT 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 Nippon Prologis REIT 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 Nippon Prologis REIT 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 Nippon Prologis REIT needs to make to build a sustainable competitive advantage.