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 – cloud computing is disrupting traditional business models, geopolitical disruptions, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, wage bills are increasing, technology disruption,
talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, 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 -
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.
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.
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.
Innovation driven organization
– Sumitomo Rubber Ind Ltd is one of the most innovative firm in Tires sector.
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.
Highly skilled collaborators
– Sumitomo Rubber Ind Ltd has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Tires industry. Secondly the value chain collaborators of Sumitomo Rubber Ind Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Sumitomo Rubber Ind Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Sumitomo Rubber Ind Ltd staying ahead in the Tires industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Sumitomo Rubber Ind Ltd in the Consumer Cyclical sector have low bargaining power. Sumitomo Rubber Ind Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sumitomo Rubber Ind Ltd to manage not only supply disruptions but also source products at highly competitive prices.
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.
Strong track record of project management in the Tires industry
– Sumitomo Rubber Ind Ltd is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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.
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 -
Skills based hiring in Tires industry
– The stress on hiring functional specialists at Sumitomo Rubber Ind Ltd has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
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.
Interest costs
– Compare to the competition, Sumitomo Rubber Ind Ltd 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 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.
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 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.
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.
Products dominated business model
– Even though Sumitomo Rubber Ind Ltd has some of the most successful models in the Tires industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Sumitomo Rubber Ind Ltd should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Japan, Sumitomo Rubber Ind Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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 -
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sumitomo Rubber Ind 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 Sumitomo Rubber Ind Ltd to hire the very best people irrespective of their geographical location.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Sumitomo Rubber Ind Ltd to increase its market reach. Sumitomo Rubber Ind Ltd 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.
Developing new processes and practices
– Sumitomo Rubber Ind Ltd can develop new processes and procedures in Tires 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.
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.
Leveraging digital technologies
– Sumitomo Rubber Ind 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.
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.
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.
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.
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.
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.
Technology acceleration in Forth Industrial Revolution
– Sumitomo Rubber Ind Ltd has witnessed rapid integration of technology during Covid-19 in the Tires industry. As one of the leading players in the industry, Sumitomo Rubber Ind Ltd needs to keep up with the evolution of technology in the Tires 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.
Environmental challenges
– Sumitomo Rubber Ind 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. Sumitomo Rubber Ind Ltd can take advantage of this fund but it will also bring new competitors in the Tires industry.
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 Sumitomo Rubber Ind Ltd.
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.
Regulatory challenges
– Sumitomo Rubber Ind 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 Tires industry regulations.
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.
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.
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.
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.
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.
Shortening product life cycle
– it is one of the major threat that Sumitomo Rubber Ind Ltd is facing in Tires sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sumitomo Rubber Ind Ltd may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Tires sector.
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.