Based on various researches at Oak Spring University , Denki Kagaku Kogyo K.K. is operating in a macro-environment that has been destablized by – geopolitical disruptions, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing commodity prices, cloud computing is disrupting traditional business models,
competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Denki Kagaku Kogyo K.K.
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Denki Kagaku Kogyo K.K. can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Denki Kagaku Kogyo K.K., and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Denki Kagaku Kogyo 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 Denki Kagaku Kogyo K.K. can be done for the following purposes –
1. Strategic planning of Denki Kagaku Kogyo K.K.
2. Improving business portfolio management of Denki Kagaku Kogyo K.K.
3. Assessing feasibility of the new initiative in Japan
4. Making a Chemical Manufacturing sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Denki Kagaku Kogyo K.K.
Strengths of Denki Kagaku Kogyo K.K. | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Denki Kagaku Kogyo K.K. are -
Cross disciplinary teams
– Horizontal connected teams at the Denki Kagaku Kogyo 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.
Sustainable margins compare to other players in Chemical Manufacturing industry
– Denki Kagaku Kogyo K.K. has clearly differentiated products in the market place. This has enabled Denki Kagaku Kogyo K.K. to fetch slight price premium compare to the competitors in the Chemical Manufacturing industry. The sustainable margins have also helped Denki Kagaku Kogyo K.K. to invest into research and development (R&D) and innovation.
Organizational Resilience of Denki Kagaku Kogyo K.K.
– The covid-19 pandemic has put organizational resilience at the centre of everthing Denki Kagaku Kogyo K.K. does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Denki Kagaku Kogyo 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 Chemical Manufacturing industry. Secondly the value chain collaborators of Denki Kagaku Kogyo K.K. have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Denki Kagaku Kogyo K.K. has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Denki Kagaku Kogyo K.K. staying ahead in the Chemical Manufacturing industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Chemical Manufacturing
– Denki Kagaku Kogyo K.K. is one of the leading players in the Chemical Manufacturing industry in Japan. Over the years it has not only transformed the business landscape in the Chemical Manufacturing industry in Japan but also across the existing markets. The ability to lead change has enabled Denki Kagaku Kogyo K.K. in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Denki Kagaku Kogyo 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 Chemical Manufacturing 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
– Denki Kagaku Kogyo K.K. has one of the best training and development program in Basic Materials 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.
Successful track record of launching new products
– Denki Kagaku Kogyo K.K. has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Denki Kagaku Kogyo K.K. 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 Chemical Manufacturing industry
– Denki Kagaku Kogyo 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.
High brand equity
– Denki Kagaku Kogyo K.K. has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Denki Kagaku Kogyo K.K. to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Operational resilience
– The operational resilience strategy of Denki Kagaku Kogyo K.K. comprises – understanding the underlying the factors in the Chemical Manufacturing 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.
Weaknesses of Denki Kagaku Kogyo K.K. | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Denki Kagaku Kogyo K.K. are -
Compensation and incentives
– The revenue per employee of Denki Kagaku Kogyo K.K. is just above the Chemical Manufacturing 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.
Products dominated business model
– Even though Denki Kagaku Kogyo K.K. has some of the most successful models in the Chemical Manufacturing industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Denki Kagaku Kogyo K.K. should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Denki Kagaku Kogyo K.K. products
– To increase the profitability and margins on the products, Denki Kagaku Kogyo K.K. needs to provide more differentiated products than what it is currently offering in the marketplace.
Skills based hiring in Chemical Manufacturing industry
– The stress on hiring functional specialists at Denki Kagaku Kogyo K.K. 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.
Slow decision making process
– As mentioned earlier in the report, Denki Kagaku Kogyo 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 Chemical Manufacturing industry over the last five years. Denki Kagaku Kogyo 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.
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 Denki Kagaku Kogyo K.K. supply chain. Even after few cautionary changes, Denki Kagaku Kogyo K.K. is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Denki Kagaku Kogyo K.K. vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the Chemical Manufacturing industry, Denki Kagaku Kogyo K.K. 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.
High operating costs
– Compare to the competitors, Denki Kagaku Kogyo K.K. has high operating costs in the Chemical Manufacturing industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Denki Kagaku Kogyo K.K. lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at Denki Kagaku Kogyo K.K., in the dynamic environment of Chemical Manufacturing industry it has struggled to respond to the nimble upstart competition. Denki Kagaku Kogyo 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 Denki Kagaku Kogyo K.K. ‘s star products
– The top 2 products and services of Denki Kagaku Kogyo K.K. still accounts for major business revenue. This dependence on star products in Chemical Manufacturing industry has resulted into insufficient focus on developing new products, even though Denki Kagaku Kogyo K.K. has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that Denki Kagaku Kogyo K.K. needs to have more collaboration between its sales team and marketing team. Sales professionals in the Chemical Manufacturing industry have deep experience in developing customer relationships. Marketing department at Denki Kagaku Kogyo K.K. can leverage the sales team experience to cultivate customer relationships as Denki Kagaku Kogyo K.K. is planning to shift buying processes online.
Denki Kagaku Kogyo K.K. Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Denki Kagaku Kogyo K.K. are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Chemical Manufacturing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Denki Kagaku Kogyo K.K. 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. Denki Kagaku Kogyo K.K. 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Denki Kagaku Kogyo K.K. is facing challenges because of the dominance of functional experts in the organization. Denki Kagaku Kogyo K.K. can utilize new technology in the field of Chemical Manufacturing industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Denki Kagaku Kogyo 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.
Building a culture of innovation
– managers at Denki Kagaku Kogyo 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 Chemical Manufacturing industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Denki Kagaku Kogyo 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.
Leveraging digital technologies
– Denki Kagaku Kogyo 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.
Using analytics as competitive advantage
– Denki Kagaku Kogyo K.K. has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Chemical Manufacturing sector. This continuous investment in analytics has enabled Denki Kagaku Kogyo K.K. to build a competitive advantage using analytics. The analytics driven competitive advantage can help Denki Kagaku Kogyo K.K. to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Denki Kagaku Kogyo 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 Denki Kagaku Kogyo 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.
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. Denki Kagaku Kogyo K.K. can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Low interest rates
– Even though inflation is raising its head in most developed economies, Denki Kagaku Kogyo 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Chemical Manufacturing industry, but it has also influenced the consumer preferences. Denki Kagaku Kogyo 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.
Developing new processes and practices
– Denki Kagaku Kogyo K.K. can develop new processes and procedures in Chemical Manufacturing 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.
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 Denki Kagaku Kogyo K.K. 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.
Threats Denki Kagaku Kogyo K.K. External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Denki Kagaku Kogyo K.K. are -
Increasing wage structure of Denki Kagaku Kogyo 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 Denki Kagaku Kogyo K.K..
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Denki Kagaku Kogyo 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 Denki Kagaku Kogyo K.K. prominent markets.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Denki Kagaku Kogyo K.K. may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Chemical Manufacturing sector.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Chemical Manufacturing industry are lowering. It can presents Denki Kagaku Kogyo K.K. with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Chemical Manufacturing sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Denki Kagaku Kogyo K.K. in Chemical Manufacturing industry. The Chemical Manufacturing 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.
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.
Regulatory challenges
– Denki Kagaku Kogyo 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 Chemical Manufacturing industry regulations.
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 Denki Kagaku Kogyo K.K..
Consumer confidence and its impact on Denki Kagaku Kogyo K.K. 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 Chemical Manufacturing industry and other sectors.
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. Denki Kagaku Kogyo K.K. needs to understand the core reasons impacting the Chemical Manufacturing industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Denki Kagaku Kogyo K.K. is facing in Chemical Manufacturing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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 Denki Kagaku Kogyo K.K. in the Chemical Manufacturing sector and impact the bottomline 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. Denki Kagaku Kogyo 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.
Weighted SWOT Analysis of Denki Kagaku Kogyo K.K. Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Denki Kagaku Kogyo 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 Denki Kagaku Kogyo 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 Denki Kagaku Kogyo 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 Denki Kagaku Kogyo 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 Denki Kagaku Kogyo K.K. needs to make to build a sustainable competitive advantage.
