Sugi Holdings Co Ltd (7649) SWOT Analysis / TOWS Matrix / MBA Resources
Retail (Drugs)
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Sugi Holdings Co Ltd (Japan)
Based on various researches at Oak Spring University , Sugi Holdings Co Ltd is operating in a macro-environment that has been destablized by – customer relationship management is fast transforming because of increasing concerns over data privacy, technology disruption, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, geopolitical disruptions, challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, central banks are concerned over increasing inflation, etc
Introduction to SWOT Analysis of Sugi Holdings Co Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sugi Holdings Co Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sugi Holdings Co Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sugi Holdings 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 Sugi Holdings Co Ltd can be done for the following purposes –
1. Strategic planning of Sugi Holdings Co Ltd
2. Improving business portfolio management of Sugi Holdings 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 Sugi Holdings Co Ltd
Strengths of Sugi Holdings Co Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sugi Holdings Co Ltd are -
Analytics focus
– Sugi Holdings Co Ltd 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 Retail (Drugs) 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.
High brand equity
– Sugi Holdings Co Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sugi Holdings Co Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management in the Retail (Drugs) industry
– Sugi Holdings Co 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
- Sugi Holdings 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 Sugi Holdings Co Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sugi Holdings Co Ltd emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Sugi Holdings Co Ltd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sugi Holdings Co 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.
Operational resilience
– The operational resilience strategy of Sugi Holdings 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.
Diverse revenue streams
– Sugi Holdings Co Ltd is present in almost all the verticals within the Retail (Drugs) industry. This has provided Sugi Holdings Co Ltd a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Sustainable margins compare to other players in Retail (Drugs) industry
– Sugi Holdings Co Ltd has clearly differentiated products in the market place. This has enabled Sugi Holdings Co Ltd to fetch slight price premium compare to the competitors in the Retail (Drugs) industry. The sustainable margins have also helped Sugi Holdings Co Ltd to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Sugi Holdings 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.
Organizational Resilience of Sugi Holdings Co Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sugi Holdings Co Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Sugi Holdings 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.
Training and development
– Sugi Holdings Co Ltd has one of the best training and development program in Services 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.
Weaknesses of Sugi Holdings Co Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sugi Holdings Co Ltd are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sugi Holdings Co Ltd is slow explore the new channels of communication. These new channels of communication can help Sugi Holdings 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.
Products dominated business model
– Even though Sugi Holdings Co Ltd has some of the most successful models in the Retail (Drugs) industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Sugi Holdings Co Ltd should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee of Sugi Holdings 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.
Low market penetration in new markets
– Outside its home market of Japan, Sugi Holdings Co Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative at Sugi Holdings Co Ltd, in the dynamic environment of Retail (Drugs) industry it has struggled to respond to the nimble upstart competition. Sugi Holdings 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, Sugi Holdings 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.
Lack of clear differentiation of Sugi Holdings Co Ltd products
– To increase the profitability and margins on the products, Sugi Holdings Co Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Sugi Holdings 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.
Skills based hiring in Retail (Drugs) industry
– The stress on hiring functional specialists at Sugi Holdings Co 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 Sugi Holdings Co Ltd supply chain. Even after few cautionary changes, Sugi Holdings Co Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sugi Holdings Co Ltd vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Sugi Holdings Co 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.
Sugi Holdings Co Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sugi Holdings Co Ltd are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sugi Holdings Co Ltd can use these opportunities to build new business models that can help the communities that Sugi Holdings Co Ltd operates in. Secondly it can use opportunities from government spending in Retail (Drugs) sector.
Leveraging digital technologies
– Sugi Holdings 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.
Using analytics as competitive advantage
– Sugi Holdings Co Ltd has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Retail (Drugs) sector. This continuous investment in analytics has enabled Sugi Holdings Co Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sugi Holdings Co Ltd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Sugi Holdings Co Ltd to increase its market reach. Sugi Holdings Co 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sugi Holdings 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 Sugi Holdings Co Ltd to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sugi Holdings Co Ltd can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sugi Holdings 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.
Developing new processes and practices
– Sugi Holdings Co Ltd can develop new processes and procedures in Retail (Drugs) 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sugi Holdings Co Ltd is facing challenges because of the dominance of functional experts in the organization. Sugi Holdings 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.
Learning at scale
– Online learning technologies has now opened space for Sugi Holdings 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Retail (Drugs) industry, but it has also influenced the consumer preferences. Sugi Holdings Co Ltd can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Sugi Holdings Co Ltd 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 Sugi Holdings 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.
Threats Sugi Holdings Co Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sugi Holdings Co Ltd are -
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.
Regulatory challenges
– Sugi Holdings 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sugi Holdings Co 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 Retail (Drugs) sector.
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 Sugi Holdings Co Ltd in the Retail (Drugs) sector and impact the bottomline of the organization.
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 Sugi Holdings Co Ltd.
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. Sugi Holdings Co Ltd needs to understand the core reasons impacting the Retail (Drugs) industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Sugi Holdings Co Ltd can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Retail (Drugs) industry.
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. Sugi Holdings 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.
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.
Technology acceleration in Forth Industrial Revolution
– Sugi Holdings Co Ltd has witnessed rapid integration of technology during Covid-19 in the Retail (Drugs) industry. As one of the leading players in the industry, Sugi Holdings Co Ltd needs to keep up with the evolution of technology in the Retail (Drugs) 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sugi Holdings 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 Sugi Holdings Co Ltd prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Retail (Drugs) industry are lowering. It can presents Sugi Holdings 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.
Shortening product life cycle
– it is one of the major threat that Sugi Holdings Co Ltd is facing in Retail (Drugs) sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Sugi Holdings Co Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sugi Holdings 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 Sugi Holdings 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 Sugi Holdings 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 Sugi Holdings 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 Sugi Holdings Co Ltd needs to make to build a sustainable competitive advantage.