Sanken Electric Co Ltd (6707) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Sanken Electric Co Ltd (Japan)

Based on various researches at Oak Spring University , Sanken Electric Co Ltd is operating in a macro-environment that has been destablized by – there is backlash against globalization, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , etc

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Introduction to SWOT Analysis of Sanken Electric Co Ltd

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

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

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

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Strengths of Sanken Electric Co Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Sanken Electric Co Ltd are -

Low bargaining power of suppliers

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

Successful track record of launching new products

– Sanken Electric Co Ltd has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sanken Electric 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.

High brand equity

– Sanken Electric Co Ltd has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sanken Electric Co Ltd to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Diverse revenue streams

– Sanken Electric Co Ltd is present in almost all the verticals within the Semiconductors industry. This has provided Sanken Electric Co Ltd a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.

Operational resilience

– The operational resilience strategy of Sanken Electric Co Ltd comprises – understanding the underlying the factors in the Semiconductors 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.

Organizational Resilience of Sanken Electric Co Ltd

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

Cross disciplinary teams

– Horizontal connected teams at the Sanken Electric 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.

Innovation driven organization

– Sanken Electric Co Ltd is one of the most innovative firm in Semiconductors sector.

Analytics focus

– Sanken Electric 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 Semiconductors 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.

Ability to recruit top talent

– Sanken Electric Co Ltd is one of the leading players in the Semiconductors 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.

Highly skilled collaborators

– Sanken Electric 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 Semiconductors industry. Secondly the value chain collaborators of Sanken Electric Co Ltd have helped the firm to develop new products and bring them quickly to the marketplace.

Sustainable margins compare to other players in Semiconductors industry

– Sanken Electric Co Ltd has clearly differentiated products in the market place. This has enabled Sanken Electric Co Ltd to fetch slight price premium compare to the competitors in the Semiconductors industry. The sustainable margins have also helped Sanken Electric Co Ltd to invest into research and development (R&D) and innovation.

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Weaknesses of Sanken Electric Co Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Sanken Electric Co Ltd are -

Low market penetration in new markets

– Outside its home market of Japan, Sanken Electric Co Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.

Interest costs

– Compare to the competition, Sanken Electric 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.

Skills based hiring in Semiconductors industry

– The stress on hiring functional specialists at Sanken Electric 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.

Compensation and incentives

– The revenue per employee of Sanken Electric Co Ltd is just above the Semiconductors 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.

Slow to strategic competitive environment developments

– As Sanken Electric Co Ltd is one of the leading players in the Semiconductors industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Semiconductors industry in last five years.

High operating costs

– Compare to the competitors, Sanken Electric Co Ltd has high operating costs in the Semiconductors industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sanken Electric Co Ltd lucrative customers.

Workers concerns about automation

– As automation is fast increasing in the Semiconductors industry, Sanken Electric 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.

High bargaining power of channel partners in Semiconductors industry

– because of the regulatory requirements in Japan, Sanken Electric 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 Semiconductors industry.

Aligning sales with marketing

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

Increasing silos among functional specialists

– The organizational structure of Sanken Electric Co Ltd is dominated by functional specialists. It is not different from other players in the Semiconductors industry, but Sanken Electric Co Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sanken Electric Co Ltd to focus more on services in the Semiconductors industry rather than just following the product oriented approach.

Slow decision making process

– As mentioned earlier in the report, Sanken Electric 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 Semiconductors industry over the last five years. Sanken Electric 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.

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Sanken Electric Co Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Sanken Electric Co Ltd are -

Finding new ways to collaborate

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

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Sanken Electric Co Ltd can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Use of Bitcoin and other crypto currencies for transactions in Semiconductors industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sanken Electric Co Ltd in the Semiconductors industry. Now Sanken Electric Co Ltd can target international markets with far fewer capital restrictions requirements than the existing system.

Leveraging digital technologies

– Sanken Electric 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.

Loyalty marketing

– Sanken Electric Co 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 Sanken Electric 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 Semiconductors industry.

Learning at scale

– Online learning technologies has now opened space for Sanken Electric 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.

Better consumer reach

– The expansion of the 5G network will help Sanken Electric Co Ltd to increase its market reach. Sanken Electric 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 Sanken Electric 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 Semiconductors industry, and it will provide faster access to the consumers.

Changes in consumer behavior post Covid-19

– consumer behavior has changed in the Semiconductors industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sanken Electric 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. Sanken Electric 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Sanken Electric 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 Sanken Electric Co Ltd to hire the very best people irrespective of their geographical location.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sanken Electric Co Ltd can use these opportunities to build new business models that can help the communities that Sanken Electric Co Ltd operates in. Secondly it can use opportunities from government spending in Semiconductors sector.

Redefining models of collaboration and team work

– As explained in the weaknesses section, Sanken Electric Co Ltd is facing challenges because of the dominance of functional experts in the organization. Sanken Electric Co Ltd can utilize new technology in the field of Semiconductors industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.

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Threats Sanken Electric Co Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Sanken Electric Co Ltd are -

Learning curve for new practices

– As the technology based on artificial intelligence and machine learning platform is getting complex, Sanken Electric 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 Semiconductors 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.

Stagnating economy with rate increase

– Sanken Electric 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 Semiconductors industry.

Increasing wage structure of Sanken Electric 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 Sanken Electric Co Ltd.

Environmental challenges

– Sanken Electric 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. Sanken Electric Co Ltd can take advantage of this fund but it will also bring new competitors in the Semiconductors industry.

Consumer confidence and its impact on Sanken Electric 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 Semiconductors industry and other sectors.

Regulatory challenges

– Sanken Electric 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 Semiconductors industry regulations.

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 Sanken Electric Co Ltd in the Semiconductors sector and impact the bottomline of the organization.

Backlash against dominant players

– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Sanken Electric Co Ltd business can come under increasing regulations regarding data privacy, data security, etc.

Technology acceleration in Forth Industrial Revolution

– Sanken Electric Co Ltd has witnessed rapid integration of technology during Covid-19 in the Semiconductors industry. As one of the leading players in the industry, Sanken Electric Co Ltd needs to keep up with the evolution of technology in the Semiconductors 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.

Shortening product life cycle

– it is one of the major threat that Sanken Electric Co Ltd is facing in Semiconductors 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 Sanken Electric Co Ltd in Semiconductors industry. The Semiconductors 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.

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. Sanken Electric 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.

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Weighted SWOT Analysis of Sanken Electric Co Ltd Template, Example

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

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