Sundrug Co Ltd (9989) SWOT Analysis / TOWS Matrix / MBA Resources
Retail (Drugs)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Sundrug Co Ltd (Japan)
Based on various researches at Oak Spring University , Sundrug Co Ltd is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization,
increasing government debt because of Covid-19 spendings, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sundrug Co Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sundrug Co Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sundrug Co Ltd 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 Sundrug Co Ltd can be done for the following purposes –
1. Strategic planning of Sundrug Co Ltd
2. Improving business portfolio management of Sundrug Co Ltd
3. Assessing feasibility of the new initiative in Japan
4. Making a Retail (Drugs) sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sundrug Co Ltd
Strengths of Sundrug Co Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sundrug Co Ltd are -
Sustainable margins compare to other players in Retail (Drugs) industry
– Sundrug Co Ltd has clearly differentiated products in the market place. This has enabled Sundrug Co Ltd to fetch slight price premium compare to the competitors in the Retail (Drugs) industry. The sustainable margins have also helped Sundrug Co Ltd to invest into research and development (R&D) and innovation.
High brand equity
– Sundrug Co Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sundrug Co Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Sundrug Co Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sundrug Co Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Retail (Drugs)
– Sundrug Co Ltd is one of the leading players in the Retail (Drugs) industry in Japan. Over the years it has not only transformed the business landscape in the Retail (Drugs) industry in Japan but also across the existing markets. The ability to lead change has enabled Sundrug Co Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Retail (Drugs) industry
- digital transformation varies from industry to industry. For Sundrug Co Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sundrug Co Ltd 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.
Operational resilience
– The operational resilience strategy of Sundrug Co Ltd comprises – understanding the underlying the factors in the Retail (Drugs) 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.
Cross disciplinary teams
– Horizontal connected teams at the Sundrug Co Ltd are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
High switching costs
– The high switching costs that Sundrug Co Ltd 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.
Superior customer experience
– The customer experience strategy of Sundrug Co Ltd in Retail (Drugs) industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Sundrug Co Ltd is one of the leading players in the Retail (Drugs) 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
– Sundrug Co Ltd is one of the most innovative firm in Retail (Drugs) sector.
Learning organization
- Sundrug Co Ltd 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 Sundrug Co Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sundrug Co Ltd emphasize – knowledge, initiative, and innovation.
Weaknesses of Sundrug Co Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sundrug Co Ltd are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sundrug Co Ltd is slow explore the new channels of communication. These new channels of communication can help Sundrug Co Ltd to provide better information regarding Retail (Drugs) products and services. It can also build an online community to further reach out to potential customers.
Employees’ less understanding of Sundrug Co Ltd strategy
– From the outside it seems that the employees of Sundrug Co Ltd 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.
Compensation and incentives
– The revenue per employee of Sundrug Co Ltd is just above the Retail (Drugs) 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 Sundrug Co Ltd supply chain. Even after few cautionary changes, Sundrug Co Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sundrug Co Ltd vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative at Sundrug Co Ltd, in the dynamic environment of Retail (Drugs) industry it has struggled to respond to the nimble upstart competition. Sundrug Co Ltd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Sundrug Co Ltd 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 Retail (Drugs) industry using digital technology.
Workers concerns about automation
– As automation is fast increasing in the Retail (Drugs) industry, Sundrug Co Ltd 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.
Need for greater diversity
– Sundrug Co Ltd 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 dependence on Sundrug Co Ltd ‘s star products
– The top 2 products and services of Sundrug Co Ltd still accounts for major business revenue. This dependence on star products in Retail (Drugs) industry has resulted into insufficient focus on developing new products, even though Sundrug Co Ltd has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Sundrug Co Ltd is dominated by functional specialists. It is not different from other players in the Retail (Drugs) industry, but Sundrug Co Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sundrug Co Ltd to focus more on services in the Retail (Drugs) industry rather than just following the product oriented approach.
Lack of clear differentiation of Sundrug Co Ltd products
– To increase the profitability and margins on the products, Sundrug Co Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
Sundrug Co Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sundrug Co Ltd are -
Building a culture of innovation
– managers at Sundrug Co Ltd 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 Retail (Drugs) industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sundrug Co Ltd 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.
Use of Bitcoin and other crypto currencies for transactions in Retail (Drugs) industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sundrug Co Ltd in the Retail (Drugs) industry. Now Sundrug Co Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Sundrug Co Ltd has opened avenues for new revenue streams for the organization in Retail (Drugs) industry. This can help Sundrug Co Ltd to build a more holistic ecosystem for Sundrug Co Ltd products in the Retail (Drugs) industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Retail (Drugs) industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sundrug Co Ltd 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. Sundrug Co Ltd 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sundrug Co Ltd 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 Sundrug Co Ltd to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Sundrug Co Ltd 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sundrug Co Ltd is facing challenges because of the dominance of functional experts in the organization. Sundrug Co Ltd can utilize new technology in the field of Retail (Drugs) industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sundrug Co Ltd 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 Sundrug Co Ltd to hire the very best people irrespective of their geographical location.
Buying journey improvements
– Sundrug Co Ltd can improve the customer journey of consumers in the Retail (Drugs) 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.
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 Sundrug Co Ltd 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.
Leveraging digital technologies
– Sundrug Co Ltd 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sundrug Co Ltd can use these opportunities to build new business models that can help the communities that Sundrug Co Ltd operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
Threats Sundrug Co Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sundrug Co Ltd are -
High dependence on third party suppliers
– Sundrug Co Ltd high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Easy access to finance
– Easy access to finance in Retail (Drugs) industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sundrug Co Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Sundrug Co Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Retail (Drugs) sector.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Sundrug Co Ltd
– 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 Sundrug Co Ltd.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sundrug Co Ltd 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 Sundrug Co Ltd prominent markets.
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. Sundrug Co Ltd 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.
Shortening product life cycle
– it is one of the major threat that Sundrug Co Ltd is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Sundrug Co Ltd 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 Retail (Drugs) industry regulations.
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 Sundrug Co Ltd business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Sundrug Co Ltd 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 Retail (Drugs) industry and other sectors.
Environmental challenges
– Sundrug Co Ltd 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. Sundrug Co Ltd can take advantage of this fund but it will also bring new competitors in the Retail (Drugs) industry.
Weighted SWOT Analysis of Sundrug Co Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sundrug Co Ltd 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 Sundrug Co Ltd 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 Sundrug Co Ltd 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 Sundrug Co Ltd 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 Sundrug Co Ltd needs to make to build a sustainable competitive advantage.