Toyo Tire & Rubber Co Ltd (5105) SWOT Analysis / TOWS Matrix / MBA Resources
Tires
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Toyo Tire & Rubber Co Ltd (Japan)
Based on various researches at Oak Spring University , Toyo Tire & Rubber Co Ltd is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, increasing commodity prices, geopolitical disruptions, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing,
competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Toyo Tire & Rubber Co Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Toyo Tire & Rubber Co Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toyo Tire & Rubber Co Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toyo Tire & Rubber 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 Toyo Tire & Rubber Co Ltd can be done for the following purposes –
1. Strategic planning of Toyo Tire & Rubber Co Ltd
2. Improving business portfolio management of Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co Ltd
Strengths of Toyo Tire & Rubber Co Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toyo Tire & Rubber Co Ltd are -
High brand equity
– Toyo Tire & Rubber Co Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toyo Tire & Rubber Co Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Toyo Tire & Rubber Co Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Toyo Tire & Rubber Co 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.
Sustainable margins compare to other players in Tires industry
– Toyo Tire & Rubber Co Ltd has clearly differentiated products in the market place. This has enabled Toyo Tire & Rubber Co Ltd to fetch slight price premium compare to the competitors in the Tires industry. The sustainable margins have also helped Toyo Tire & Rubber Co Ltd to invest into research and development (R&D) and innovation.
Analytics focus
– Toyo Tire & Rubber 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 Tires 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.
Low bargaining power of suppliers
– Suppliers of Toyo Tire & Rubber Co Ltd in the Consumer Cyclical sector have low bargaining power. Toyo Tire & Rubber Co Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Toyo Tire & Rubber Co Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Tires industry
- digital transformation varies from industry to industry. For Toyo Tire & Rubber Co Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Toyo Tire & Rubber Co 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 switching costs
– The high switching costs that Toyo Tire & Rubber 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.
Successful track record of launching new products
– Toyo Tire & Rubber Co Ltd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Toyo Tire & Rubber 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.
Ability to recruit top talent
– Toyo Tire & Rubber Co 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.
Operational resilience
– The operational resilience strategy of Toyo Tire & Rubber Co 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.
Cross disciplinary teams
– Horizontal connected teams at the Toyo Tire & Rubber 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.
Training and development
– Toyo Tire & Rubber Co 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.
Weaknesses of Toyo Tire & Rubber Co Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toyo Tire & Rubber Co Ltd are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Toyo Tire & Rubber Co Ltd is slow explore the new channels of communication. These new channels of communication can help Toyo Tire & Rubber Co Ltd to provide better information regarding Tires products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring in Tires industry
– The stress on hiring functional specialists at Toyo Tire & Rubber 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 operating costs
– Compare to the competitors, Toyo Tire & Rubber Co Ltd has high operating costs in the Tires industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Toyo Tire & Rubber Co Ltd lucrative customers.
No frontier risks strategy
– From the 10K / annual statement of Toyo Tire & Rubber Co 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.
Aligning sales with marketing
– From the outside it seems that Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co Ltd can leverage the sales team experience to cultivate customer relationships as Toyo Tire & Rubber Co Ltd is planning to shift buying processes online.
Lack of clear differentiation of Toyo Tire & Rubber Co Ltd products
– To increase the profitability and margins on the products, Toyo Tire & Rubber Co Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on Toyo Tire & Rubber Co Ltd ‘s star products
– The top 2 products and services of Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co Ltd has relatively successful track record of launching new products.
High cash cycle compare to competitors
Toyo Tire & Rubber Co 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.
High bargaining power of channel partners in Tires industry
– because of the regulatory requirements in Japan, Toyo Tire & Rubber Co Ltd is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Tires industry.
Slow decision making process
– As mentioned earlier in the report, Toyo Tire & Rubber Co Ltd has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Tires industry over the last five years. Toyo Tire & Rubber Co Ltd 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.
Interest costs
– Compare to the competition, Toyo Tire & Rubber 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.
Toyo Tire & Rubber Co Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Toyo Tire & Rubber Co Ltd are -
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. Toyo Tire & Rubber Co Ltd can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Better consumer reach
– The expansion of the 5G network will help Toyo Tire & Rubber Co Ltd to increase its market reach. Toyo Tire & Rubber 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Toyo Tire & Rubber Co Ltd is facing challenges because of the dominance of functional experts in the organization. Toyo Tire & Rubber Co 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.
Buying journey improvements
– Toyo Tire & Rubber Co 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.
Using analytics as competitive advantage
– Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help Toyo Tire & Rubber Co 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 Toyo Tire & Rubber 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Toyo Tire & Rubber 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co 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.
Leveraging digital technologies
– Toyo Tire & Rubber 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.
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. Toyo Tire & Rubber Co 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. Toyo Tire & Rubber Co 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Toyo Tire & Rubber Co Ltd can use these opportunities to build new business models that can help the communities that Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co 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.
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 Toyo Tire & Rubber Co 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.
Threats Toyo Tire & Rubber Co Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Toyo Tire & Rubber Co Ltd are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Tires industry are lowering. It can presents Toyo Tire & Rubber Co Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Tires sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Toyo Tire & Rubber 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 Tires sector.
Stagnating economy with rate increase
– Toyo Tire & Rubber 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 Tires industry.
Consumer confidence and its impact on Toyo Tire & Rubber Co 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.
Environmental challenges
– Toyo Tire & Rubber Co 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. Toyo Tire & Rubber Co Ltd can take advantage of this fund but it will also bring new competitors in the Tires industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toyo Tire & Rubber 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 Toyo Tire & Rubber Co Ltd prominent markets.
Shortening product life cycle
– it is one of the major threat that Toyo Tire & Rubber Co Ltd is facing in Tires 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.
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 Toyo Tire & Rubber Co Ltd.
Increasing wage structure of Toyo Tire & Rubber Co 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 Toyo Tire & Rubber Co Ltd.
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. Toyo Tire & Rubber 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.
High dependence on third party suppliers
– Toyo Tire & Rubber Co 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.
Regulatory challenges
– Toyo Tire & Rubber 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 Tires industry regulations.
Weighted SWOT Analysis of Toyo Tire & Rubber Co Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Toyo Tire & Rubber 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 Toyo Tire & Rubber 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 Toyo Tire & Rubber 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 Toyo Tire & Rubber 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 Toyo Tire & Rubber Co Ltd needs to make to build a sustainable competitive advantage.