SWOT Analysis / TOWS Matrix for Nishi Nippon Railroad (Japan)
Based on various researches at Oak Spring University , Nishi Nippon Railroad is operating in a macro-environment that has been destablized by – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, geopolitical disruptions, wage bills are increasing, there is backlash against globalization, talent flight as more people leaving formal jobs,
increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Nishi Nippon Railroad
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nishi Nippon Railroad can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nishi Nippon Railroad, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nishi Nippon Railroad 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 Nishi Nippon Railroad can be done for the following purposes –
1. Strategic planning of Nishi Nippon Railroad
2. Improving business portfolio management of Nishi Nippon Railroad
3. Assessing feasibility of the new initiative in Japan
4. Making a Railroads sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nishi Nippon Railroad
Strengths of Nishi Nippon Railroad | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nishi Nippon Railroad are -
Sustainable margins compare to other players in Railroads industry
– Nishi Nippon Railroad has clearly differentiated products in the market place. This has enabled Nishi Nippon Railroad to fetch slight price premium compare to the competitors in the Railroads industry. The sustainable margins have also helped Nishi Nippon Railroad to invest into research and development (R&D) and innovation.
Learning organization
- Nishi Nippon Railroad 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 Nishi Nippon Railroad is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Nishi Nippon Railroad emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Nishi Nippon Railroad in the Transportation sector have low bargaining power. Nishi Nippon Railroad has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nishi Nippon Railroad to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Nishi Nippon Railroad in Railroads industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Effective Research and Development (R&D)
– Nishi Nippon Railroad has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nishi Nippon Railroad staying ahead in the Railroads industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy of Nishi Nippon Railroad comprises – understanding the underlying the factors in the Railroads 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.
Strong track record of project management in the Railroads industry
– Nishi Nippon Railroad is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Nishi Nippon Railroad
– The covid-19 pandemic has put organizational resilience at the centre of everthing Nishi Nippon Railroad 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 Nishi Nippon Railroad 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.
Innovation driven organization
– Nishi Nippon Railroad is one of the most innovative firm in Railroads sector.
Successful track record of launching new products
– Nishi Nippon Railroad has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nishi Nippon Railroad 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 recruit top talent
– Nishi Nippon Railroad is one of the leading players in the Railroads 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.
Weaknesses of Nishi Nippon Railroad | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nishi Nippon Railroad are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nishi Nippon Railroad is slow explore the new channels of communication. These new channels of communication can help Nishi Nippon Railroad to provide better information regarding Railroads products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– From the outside it seems that Nishi Nippon Railroad needs to have more collaboration between its sales team and marketing team. Sales professionals in the Railroads industry have deep experience in developing customer relationships. Marketing department at Nishi Nippon Railroad can leverage the sales team experience to cultivate customer relationships as Nishi Nippon Railroad is planning to shift buying processes online.
Low market penetration in new markets
– Outside its home market of Japan, Nishi Nippon Railroad needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Nishi Nippon Railroad 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.
Workers concerns about automation
– As automation is fast increasing in the Railroads industry, Nishi Nippon Railroad 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.
Capital Spending Reduction
– Even during the low interest decade, Nishi Nippon Railroad 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 Railroads industry using digital technology.
Products dominated business model
– Even though Nishi Nippon Railroad has some of the most successful models in the Railroads industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Nishi Nippon Railroad should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, Nishi Nippon Railroad has high operating costs in the Railroads industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Nishi Nippon Railroad lucrative customers.
Compensation and incentives
– The revenue per employee of Nishi Nippon Railroad is just above the Railroads 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 Nishi Nippon Railroad supply chain. Even after few cautionary changes, Nishi Nippon Railroad is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nishi Nippon Railroad vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Nishi Nippon Railroad is one of the leading players in the Railroads industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Railroads industry in last five years.
Nishi Nippon Railroad Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nishi Nippon Railroad are -
Manufacturing automation
– Nishi Nippon Railroad can use the latest technology developments to improve its manufacturing and designing process in Railroads sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Learning at scale
– Online learning technologies has now opened space for Nishi Nippon Railroad 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, Nishi Nippon Railroad 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nishi Nippon Railroad can use these opportunities to build new business models that can help the communities that Nishi Nippon Railroad operates in. Secondly it can use opportunities from government spending in Railroads sector.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nishi Nippon Railroad in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Railroads industry, and it will provide faster access to the consumers.
Loyalty marketing
– Nishi Nippon Railroad 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.
Better consumer reach
– The expansion of the 5G network will help Nishi Nippon Railroad to increase its market reach. Nishi Nippon Railroad 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.
Use of Bitcoin and other crypto currencies for transactions in Railroads industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Nishi Nippon Railroad in the Railroads industry. Now Nishi Nippon Railroad can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nishi Nippon Railroad 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 Nishi Nippon Railroad to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nishi Nippon Railroad 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 Nishi Nippon Railroad to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Railroads industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nishi Nippon Railroad 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. Nishi Nippon Railroad 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Railroads industry, but it has also influenced the consumer preferences. Nishi Nippon Railroad can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Nishi Nippon Railroad 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 Nishi Nippon Railroad External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nishi Nippon Railroad are -
Consumer confidence and its impact on Nishi Nippon Railroad 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 Railroads industry and other sectors.
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 Nishi Nippon Railroad.
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. Nishi Nippon Railroad needs to understand the core reasons impacting the Railroads industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Nishi Nippon Railroad 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.
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. Nishi Nippon Railroad 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 Nishi Nippon Railroad is facing in Railroads sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Technology acceleration in Forth Industrial Revolution
– Nishi Nippon Railroad has witnessed rapid integration of technology during Covid-19 in the Railroads industry. As one of the leading players in the industry, Nishi Nippon Railroad needs to keep up with the evolution of technology in the Railroads 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.
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 international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nishi Nippon Railroad 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 Nishi Nippon Railroad prominent markets.
Stagnating economy with rate increase
– Nishi Nippon Railroad 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 Railroads industry.
Increasing wage structure of Nishi Nippon Railroad
– 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 Nishi Nippon Railroad.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nishi Nippon Railroad in Railroads industry. The Railroads 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.
Weighted SWOT Analysis of Nishi Nippon Railroad Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nishi Nippon Railroad 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 Nishi Nippon Railroad 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 Nishi Nippon Railroad 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 Nishi Nippon Railroad 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 Nishi Nippon Railroad needs to make to build a sustainable competitive advantage.
