Avex Group Holdings (7860) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Avex Group Holdings (Japan)

Based on various researches at Oak Spring University , Avex Group Holdings is operating in a macro-environment that has been destablized by – challanges to central banks by blockchain based private currencies, wage bills are increasing, increasing government debt because of Covid-19 spendings, cloud computing is disrupting traditional business models, increasing transportation and logistics costs, increasing energy prices, geopolitical disruptions, increasing commodity prices, customer relationship management is fast transforming because of increasing concerns over data privacy, etc

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Introduction to SWOT Analysis of Avex Group Holdings

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Avex Group Holdings can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Avex Group Holdings, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Avex Group Holdings 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Avex Group Holdings can be done for the following purposes –
1. Strategic planning of Avex Group Holdings
2. Improving business portfolio management of Avex Group Holdings
3. Assessing feasibility of the new initiative in Japan
4. Making a Motion Pictures sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Avex Group Holdings

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Strengths of Avex Group Holdings | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Avex Group Holdings are -

Strong track record of project management in the Motion Pictures industry

– Avex Group Holdings is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

Cross disciplinary teams

– Horizontal connected teams at the Avex Group Holdings 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.

Low bargaining power of suppliers

– Suppliers of Avex Group Holdings in the Services sector have low bargaining power. Avex Group Holdings has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Avex Group Holdings to manage not only supply disruptions but also source products at highly competitive prices.

Operational resilience

– The operational resilience strategy of Avex Group Holdings comprises – understanding the underlying the factors in the Motion Pictures 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.

Superior customer experience

– The customer experience strategy of Avex Group Holdings in Motion Pictures industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Ability to recruit top talent

– Avex Group Holdings is one of the leading players in the Motion Pictures 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.

High switching costs

– The high switching costs that Avex Group Holdings 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.

Organizational Resilience of Avex Group Holdings

– The covid-19 pandemic has put organizational resilience at the centre of everthing Avex Group Holdings does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.

Highly skilled collaborators

– Avex Group Holdings has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Motion Pictures industry. Secondly the value chain collaborators of Avex Group Holdings have helped the firm to develop new products and bring them quickly to the marketplace.

Analytics focus

– Avex Group Holdings 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 Motion Pictures 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.

Digital Transformation in Motion Pictures industry

- digital transformation varies from industry to industry. For Avex Group Holdings digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Avex Group Holdings 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.

Successful track record of launching new products

– Avex Group Holdings has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Avex Group Holdings 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.

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Weaknesses of Avex Group Holdings | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Avex Group Holdings are -

Slow to harness new channels of communication

– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Avex Group Holdings is slow explore the new channels of communication. These new channels of communication can help Avex Group Holdings to provide better information regarding Motion Pictures products and services. It can also build an online community to further reach out to potential customers.

Employees’ less understanding of Avex Group Holdings strategy

– From the outside it seems that the employees of Avex Group Holdings don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

Ability to respond to the competition

– As the decision making is very deliberative at Avex Group Holdings, in the dynamic environment of Motion Pictures industry it has struggled to respond to the nimble upstart competition. Avex Group Holdings has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Aligning sales with marketing

– From the outside it seems that Avex Group Holdings needs to have more collaboration between its sales team and marketing team. Sales professionals in the Motion Pictures industry have deep experience in developing customer relationships. Marketing department at Avex Group Holdings can leverage the sales team experience to cultivate customer relationships as Avex Group Holdings is planning to shift buying processes online.

High cash cycle compare to competitors

Avex Group Holdings has a high cash cycle compare to other players in the Motion Pictures industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.

No frontier risks strategy

– From the 10K / annual statement of Avex Group Holdings, it seems that company is thinking out the frontier risks that can impact Motion Pictures 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.

Slow decision making process

– As mentioned earlier in the report, Avex Group Holdings has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Motion Pictures industry over the last five years. Avex Group Holdings 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.

Products dominated business model

– Even though Avex Group Holdings has some of the most successful models in the Motion Pictures industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Avex Group Holdings should strive to include more intangible value offerings along with its core products and services.

High dependence on Avex Group Holdings ‘s star products

– The top 2 products and services of Avex Group Holdings still accounts for major business revenue. This dependence on star products in Motion Pictures industry has resulted into insufficient focus on developing new products, even though Avex Group Holdings has relatively successful track record of launching new products.

Compensation and incentives

– The revenue per employee of Avex Group Holdings is just above the Motion Pictures 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.

Skills based hiring in Motion Pictures industry

– The stress on hiring functional specialists at Avex Group Holdings 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.

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Avex Group Holdings Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Avex Group Holdings are -

Creating value in data economy

– The success of analytics program of Avex Group Holdings has opened avenues for new revenue streams for the organization in Motion Pictures industry. This can help Avex Group Holdings to build a more holistic ecosystem for Avex Group Holdings products in the Motion Pictures industry by providing – data insight services, data privacy related products, data based consulting services, etc.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Avex Group Holdings can use these opportunities to build new business models that can help the communities that Avex Group Holdings operates in. Secondly it can use opportunities from government spending in Motion Pictures sector.

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 Avex Group Holdings 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.

Learning at scale

– Online learning technologies has now opened space for Avex Group Holdings 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, Avex Group Holdings 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 Avex Group Holdings to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Low interest rates

– Even though inflation is raising its head in most developed economies, Avex Group Holdings 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 Avex Group Holdings in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Motion Pictures industry, and it will provide faster access to the consumers.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Motion Pictures industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Avex Group Holdings 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. Avex Group Holdings 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.

Buying journey improvements

– Avex Group Holdings can improve the customer journey of consumers in the Motion Pictures 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.

Leveraging digital technologies

– Avex Group Holdings 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.

Finding new ways to collaborate

– Covid-19 has not only transformed business models of companies in Motion Pictures industry, but it has also influenced the consumer preferences. Avex Group Holdings can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Building a culture of innovation

– managers at Avex Group Holdings 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 Motion Pictures industry.

Use of Bitcoin and other crypto currencies for transactions in Motion Pictures industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Avex Group Holdings in the Motion Pictures industry. Now Avex Group Holdings can target international markets with far fewer capital restrictions requirements than the existing system.

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Threats Avex Group Holdings External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Avex Group Holdings are -

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 Avex Group Holdings.

Increasing wage structure of Avex Group Holdings

– 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 Avex Group Holdings.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Avex Group Holdings 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 Avex Group Holdings prominent markets.

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. Avex Group Holdings needs to understand the core reasons impacting the Motion Pictures industry. This will help it in building a better workplace.

Stagnating economy with rate increase

– Avex Group Holdings 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 Motion Pictures industry.

Environmental challenges

– Avex Group Holdings 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. Avex Group Holdings can take advantage of this fund but it will also bring new competitors in the Motion Pictures 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. Avex Group Holdings 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 Avex Group Holdings is facing in Motion Pictures sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Avex Group Holdings in Motion Pictures industry. The Motion Pictures 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.

Consumer confidence and its impact on Avex Group Holdings 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 Motion Pictures industry and other sectors.

Easy access to finance

– Easy access to finance in Motion Pictures industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Avex Group Holdings 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

– Avex Group Holdings 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.

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Avex Group Holdings may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Motion Pictures sector.

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Weighted SWOT Analysis of Avex Group Holdings Template, Example

Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Avex Group Holdings 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 Avex Group Holdings 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 Avex Group Holdings 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 Avex Group Holdings 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 Avex Group Holdings needs to make to build a sustainable competitive advantage.

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