Sumitomo Rubber Ind Ltd (5110) SWOT Analysis / TOWS Matrix / MBA Resources
Tires
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Sumitomo Rubber Ind Ltd (Japan)
Based on various researches at Oak Spring University , Sumitomo Rubber Ind Ltd is operating in a macro-environment that has been destablized by – increasing energy prices, increasing transportation and logistics costs, increasing government debt because of Covid-19 spendings, technology disruption, there is increasing trade war between United States & China, geopolitical disruptions, increasing household debt because of falling income levels,
challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, etc
Introduction to SWOT Analysis of Sumitomo Rubber Ind Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sumitomo Rubber Ind Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sumitomo Rubber Ind Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd can be done for the following purposes –
1. Strategic planning of Sumitomo Rubber Ind Ltd
2. Improving business portfolio management of Sumitomo Rubber Ind Ltd
3. Assessing feasibility of the new initiative in Japan
4. Making a Tires sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sumitomo Rubber Ind Ltd
Strengths of Sumitomo Rubber Ind Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sumitomo Rubber Ind Ltd are -
Innovation driven organization
– Sumitomo Rubber Ind Ltd is one of the most innovative firm in Tires sector.
Ability to recruit top talent
– Sumitomo Rubber Ind Ltd is one of the leading players in the Tires 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.
Organizational Resilience of Sumitomo Rubber Ind Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sumitomo Rubber Ind Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Sumitomo Rubber Ind Ltd in Tires industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Sumitomo Rubber Ind Ltd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sumitomo Rubber Ind Ltd 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 lead change in Tires
– Sumitomo Rubber Ind Ltd is one of the leading players in the Tires industry in Japan. Over the years it has not only transformed the business landscape in the Tires industry in Japan but also across the existing markets. The ability to lead change has enabled Sumitomo Rubber Ind 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 Tires industry
- digital transformation varies from industry to industry. For Sumitomo Rubber Ind Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sumitomo Rubber Ind 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.
High brand equity
– Sumitomo Rubber Ind Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sumitomo Rubber Ind Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Training and development
– Sumitomo Rubber Ind Ltd has one of the best training and development program in Consumer Cyclical 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.
Operational resilience
– The operational resilience strategy of Sumitomo Rubber Ind Ltd comprises – understanding the underlying the factors in the Tires 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.
Learning organization
- Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sumitomo Rubber Ind Ltd emphasize – knowledge, initiative, and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Sumitomo Rubber Ind 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.
Weaknesses of Sumitomo Rubber Ind Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sumitomo Rubber Ind Ltd are -
Aligning sales with marketing
– From the outside it seems that Sumitomo Rubber Ind Ltd needs to have more collaboration between its sales team and marketing team. Sales professionals in the Tires industry have deep experience in developing customer relationships. Marketing department at Sumitomo Rubber Ind Ltd can leverage the sales team experience to cultivate customer relationships as Sumitomo Rubber Ind Ltd is planning to shift buying processes online.
Lack of clear differentiation of Sumitomo Rubber Ind Ltd products
– To increase the profitability and margins on the products, Sumitomo Rubber Ind Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to strategic competitive environment developments
– As Sumitomo Rubber Ind Ltd is one of the leading players in the Tires industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Tires industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative at Sumitomo Rubber Ind Ltd, in the dynamic environment of Tires industry it has struggled to respond to the nimble upstart competition. Sumitomo Rubber Ind Ltd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sumitomo Rubber Ind Ltd is slow explore the new channels of communication. These new channels of communication can help Sumitomo Rubber Ind Ltd to provide better information regarding Tires products and services. It can also build an online community to further reach out to potential customers.
Need for greater diversity
– Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd ‘s star products
– The top 2 products and services of Sumitomo Rubber Ind Ltd still accounts for major business revenue. This dependence on star products in Tires industry has resulted into insufficient focus on developing new products, even though Sumitomo Rubber Ind Ltd has relatively successful track record of launching new products.
No frontier risks strategy
– From the 10K / annual statement of Sumitomo Rubber Ind Ltd, it seems that company is thinking out the frontier risks that can impact Tires 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.
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 Sumitomo Rubber Ind Ltd supply chain. Even after few cautionary changes, Sumitomo Rubber Ind Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sumitomo Rubber Ind Ltd vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Sumitomo Rubber Ind Ltd is dominated by functional specialists. It is not different from other players in the Tires industry, but Sumitomo Rubber Ind Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sumitomo Rubber Ind Ltd to focus more on services in the Tires industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Sumitomo Rubber Ind Ltd has a high cash cycle compare to other players in the Tires industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Sumitomo Rubber Ind Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sumitomo Rubber Ind Ltd are -
Buying journey improvements
– Sumitomo Rubber Ind Ltd can improve the customer journey of consumers in the Tires 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sumitomo Rubber Ind Ltd can use these opportunities to build new business models that can help the communities that Sumitomo Rubber Ind Ltd operates in. Secondly it can use opportunities from government spending in Tires sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sumitomo Rubber Ind Ltd in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Tires industry, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Sumitomo Rubber Ind Ltd has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Tires sector. This continuous investment in analytics has enabled Sumitomo Rubber Ind Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sumitomo Rubber Ind Ltd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Learning at scale
– Online learning technologies has now opened space for Sumitomo Rubber Ind 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sumitomo Rubber Ind 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.
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 Sumitomo Rubber Ind 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.
Creating value in data economy
– The success of analytics program of Sumitomo Rubber Ind Ltd has opened avenues for new revenue streams for the organization in Tires industry. This can help Sumitomo Rubber Ind Ltd to build a more holistic ecosystem for Sumitomo Rubber Ind Ltd products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sumitomo Rubber Ind 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 Sumitomo Rubber Ind 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sumitomo Rubber Ind Ltd can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sumitomo Rubber Ind Ltd is facing challenges because of the dominance of functional experts in the organization. Sumitomo Rubber Ind Ltd can utilize new technology in the field of Tires industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Use of Bitcoin and other crypto currencies for transactions in Tires industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sumitomo Rubber Ind Ltd in the Tires industry. Now Sumitomo Rubber Ind Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Tires industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sumitomo Rubber Ind 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. Sumitomo Rubber Ind 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.
Threats Sumitomo Rubber Ind Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sumitomo Rubber Ind Ltd 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 Sumitomo Rubber Ind Ltd in the Tires sector and impact the bottomline of the organization.
High dependence on third party suppliers
– Sumitomo Rubber Ind 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd prominent markets.
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 Sumitomo Rubber Ind Ltd business can come under increasing regulations regarding data privacy, data security, etc.
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. Sumitomo Rubber Ind 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Tires industry are lowering. It can presents Sumitomo Rubber Ind Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Tires sector.
Increasing wage structure of Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd.
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.
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. Sumitomo Rubber Ind Ltd needs to understand the core reasons impacting the Tires industry. This will help it in building a better workplace.
Consumer confidence and its impact on Sumitomo Rubber Ind 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 Tires industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sumitomo Rubber Ind Ltd in Tires industry. The Tires 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.
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 Tires industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sumitomo Rubber Ind Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Sumitomo Rubber Ind Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sumitomo Rubber Ind 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 Sumitomo Rubber Ind 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 Sumitomo Rubber Ind 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 Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd needs to make to build a sustainable competitive advantage.
