Suruga Bank Ltd (8358) SWOT Analysis / TOWS Matrix / MBA Resources
Regional Banks
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Suruga Bank Ltd (Japan)
Based on various researches at Oak Spring University , Suruga Bank Ltd is operating in a macro-environment that has been destablized by – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings, increasing commodity prices, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, increasing household debt because of falling income levels, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Suruga Bank Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Suruga Bank Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Suruga Bank 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 Suruga Bank Ltd can be done for the following purposes –
1. Strategic planning of Suruga Bank Ltd
2. Improving business portfolio management of Suruga Bank Ltd
3. Assessing feasibility of the new initiative in Japan
4. Making a Regional Banks sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Suruga Bank Ltd
Strengths of Suruga Bank Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Suruga Bank Ltd are -
High brand equity
– Suruga Bank Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Suruga Bank Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Regional Banks industry
- digital transformation varies from industry to industry. For Suruga Bank Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Suruga Bank 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.
Analytics focus
– Suruga Bank 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 Regional Banks 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 Suruga Bank Ltd in the Financial sector have low bargaining power. Suruga Bank Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Suruga Bank Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management in the Regional Banks industry
– Suruga Bank 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.
Operational resilience
– The operational resilience strategy of Suruga Bank Ltd comprises – understanding the underlying the factors in the Regional Banks 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.
Ability to lead change in Regional Banks
– Suruga Bank Ltd is one of the leading players in the Regional Banks industry in Japan. Over the years it has not only transformed the business landscape in the Regional Banks industry in Japan but also across the existing markets. The ability to lead change has enabled Suruga Bank Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Regional Banks industry
– Suruga Bank Ltd has clearly differentiated products in the market place. This has enabled Suruga Bank Ltd to fetch slight price premium compare to the competitors in the Regional Banks industry. The sustainable margins have also helped Suruga Bank Ltd to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Suruga Bank Ltd has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Regional Banks industry. Secondly the value chain collaborators of Suruga Bank Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Suruga Bank 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.
Ability to recruit top talent
– Suruga Bank Ltd is one of the leading players in the Regional Banks 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.
Training and development
– Suruga Bank Ltd has one of the best training and development program in Financial 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 Suruga Bank Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Suruga Bank Ltd are -
High bargaining power of channel partners in Regional Banks industry
– because of the regulatory requirements in Japan, Suruga Bank 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 Regional Banks industry.
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 Suruga Bank Ltd supply chain. Even after few cautionary changes, Suruga Bank Ltd is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Suruga Bank Ltd vulnerable to further global disruptions in South East Asia.
Aligning sales with marketing
– From the outside it seems that Suruga Bank Ltd needs to have more collaboration between its sales team and marketing team. Sales professionals in the Regional Banks industry have deep experience in developing customer relationships. Marketing department at Suruga Bank Ltd can leverage the sales team experience to cultivate customer relationships as Suruga Bank Ltd is planning to shift buying processes online.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Suruga Bank Ltd is slow explore the new channels of communication. These new channels of communication can help Suruga Bank Ltd to provide better information regarding Regional Banks products and services. It can also build an online community to further reach out to potential customers.
High dependence on Suruga Bank Ltd ‘s star products
– The top 2 products and services of Suruga Bank Ltd still accounts for major business revenue. This dependence on star products in Regional Banks industry has resulted into insufficient focus on developing new products, even though Suruga Bank Ltd has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Suruga Bank Ltd is dominated by functional specialists. It is not different from other players in the Regional Banks industry, but Suruga Bank Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Suruga Bank Ltd to focus more on services in the Regional Banks industry rather than just following the product oriented approach.
No frontier risks strategy
– From the 10K / annual statement of Suruga Bank Ltd, it seems that company is thinking out the frontier risks that can impact Regional Banks 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.
Ability to respond to the competition
– As the decision making is very deliberative at Suruga Bank Ltd, in the dynamic environment of Regional Banks industry it has struggled to respond to the nimble upstart competition. Suruga Bank Ltd has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Lack of clear differentiation of Suruga Bank Ltd products
– To increase the profitability and margins on the products, Suruga Bank Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Suruga Bank 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 Regional Banks industry over the last five years. Suruga Bank 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.
Workers concerns about automation
– As automation is fast increasing in the Regional Banks industry, Suruga Bank 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.
Suruga Bank Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Suruga Bank Ltd are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Suruga Bank Ltd is facing challenges because of the dominance of functional experts in the organization. Suruga Bank Ltd can utilize new technology in the field of Regional Banks 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 Suruga Bank 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Suruga Bank 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 Suruga Bank Ltd to hire the very best people irrespective of their geographical location.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Regional Banks industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Suruga Bank 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. Suruga Bank 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, Suruga Bank Ltd can use these opportunities to build new business models that can help the communities that Suruga Bank Ltd operates in. Secondly it can use opportunities from government spending in Regional Banks sector.
Using analytics as competitive advantage
– Suruga Bank Ltd has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Regional Banks sector. This continuous investment in analytics has enabled Suruga Bank Ltd to build a competitive advantage using analytics. The analytics driven competitive advantage can help Suruga Bank Ltd to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Regional Banks industry, but it has also influenced the consumer preferences. Suruga Bank Ltd 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
– Suruga Bank Ltd can develop new processes and procedures in Regional Banks 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Suruga Bank 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Suruga Bank 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 Regional Banks industry, and it will provide faster access to the consumers.
Leveraging digital technologies
– Suruga Bank 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.
Loyalty marketing
– Suruga Bank 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 Suruga Bank 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 Regional Banks industry.
Threats Suruga Bank Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Suruga Bank 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.
Shortening product life cycle
– it is one of the major threat that Suruga Bank Ltd is facing in Regional Banks sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Suruga Bank 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 Regional Banks sector.
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.
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 Suruga Bank Ltd in the Regional Banks sector and impact the bottomline of the organization.
Regulatory challenges
– Suruga Bank 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 Regional Banks industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Suruga Bank 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 Suruga Bank Ltd prominent markets.
Increasing wage structure of Suruga Bank 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 Suruga Bank Ltd.
Technology acceleration in Forth Industrial Revolution
– Suruga Bank Ltd has witnessed rapid integration of technology during Covid-19 in the Regional Banks industry. As one of the leading players in the industry, Suruga Bank Ltd needs to keep up with the evolution of technology in the Regional Banks 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Suruga Bank Ltd in Regional Banks industry. The Regional Banks 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 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. Suruga Bank Ltd needs to understand the core reasons impacting the Regional Banks industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Regional Banks industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Suruga Bank Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Suruga Bank 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.
Weighted SWOT Analysis of Suruga Bank Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Suruga Bank 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 Suruga Bank 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 Suruga Bank 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 Suruga Bank 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 Suruga Bank Ltd needs to make to build a sustainable competitive advantage.