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 – supply chains are disrupted by pandemic , geopolitical disruptions, talent flight as more people leaving formal jobs, technology disruption, competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, there is increasing trade war between United States & China,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, 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 -
Superior customer experience
– The customer experience strategy of Toyo Tire & Rubber Co Ltd in Tires industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Toyo Tire & Rubber Co Ltd has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Tires industry. Secondly the value chain collaborators of Toyo Tire & Rubber Co Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
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.
Learning organization
- Toyo Tire & Rubber 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 Toyo Tire & Rubber Co Ltd is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Toyo Tire & Rubber Co Ltd emphasize – knowledge, initiative, and innovation.
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.
Ability to lead change in Tires
– Toyo Tire & Rubber Co Ltd is one of the leading players in the Tires industry in Japan. Over the years it has not only transformed the business landscape in the Tires industry in Japan but also across the existing markets. The ability to lead change has enabled Toyo Tire & Rubber Co Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Toyo Tire & Rubber Co Ltd is one of the most innovative firm in Tires sector.
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.
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.
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.
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 -
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.
Workers concerns about automation
– As automation is fast increasing in the Tires industry, Toyo Tire & Rubber Co Ltd 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.
Need for greater diversity
– Toyo Tire & Rubber 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.
Ability to respond to the competition
– As the decision making is very deliberative at Toyo Tire & Rubber Co Ltd, in the dynamic environment of Tires industry it has struggled to respond to the nimble upstart competition. Toyo Tire & Rubber Co Ltd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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.
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 Toyo Tire & Rubber Co Ltd supply chain. Even after few cautionary changes, Toyo Tire & Rubber Co Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toyo Tire & Rubber Co Ltd vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Japan, Toyo Tire & Rubber Co Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toyo Tire & Rubber 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 Toyo Tire & Rubber Co Ltd to hire the very best people irrespective of their geographical location.
Use of Bitcoin and other crypto currencies for transactions in Tires industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Toyo Tire & Rubber Co Ltd in the Tires industry. Now Toyo Tire & Rubber Co Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Toyo Tire & Rubber 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 Tires industry.
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.
Creating value in data economy
– The success of analytics program of Toyo Tire & Rubber Co Ltd has opened avenues for new revenue streams for the organization in Tires industry. This can help Toyo Tire & Rubber Co Ltd to build a more holistic ecosystem for Toyo Tire & Rubber Co Ltd products in the Tires industry by providing – data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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 -
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. Toyo Tire & Rubber Co Ltd needs to understand the core reasons impacting the Tires industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Toyo Tire & Rubber Co Ltd has witnessed rapid integration of technology during Covid-19 in the Tires industry. As one of the leading players in the industry, Toyo Tire & Rubber Co Ltd needs to keep up with the evolution of technology in the Tires sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
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.
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.
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.
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.
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.
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. Toyo Tire & Rubber Co Ltd will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toyo Tire & Rubber Co Ltd in Tires industry. The Tires industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
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.
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.
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.
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.
