Sotsu (3711) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Sotsu (Japan)

Based on various researches at Oak Spring University , Sotsu is operating in a macro-environment that has been destablized by – wage bills are increasing, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, technology disruption, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, etc

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Introduction to SWOT Analysis of Sotsu

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sotsu can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sotsu, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sotsu 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 Sotsu can be done for the following purposes –
1. Strategic planning of Sotsu
2. Improving business portfolio management of Sotsu
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 Sotsu

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Strengths of Sotsu | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Sotsu are -

Effective Research and Development (R&D)

– Sotsu has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Sotsu staying ahead in the Motion Pictures industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

Training and development

– Sotsu has one of the best training and development program in Services 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.

Superior customer experience

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

Diverse revenue streams

– Sotsu is present in almost all the verticals within the Motion Pictures industry. This has provided Sotsu 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.

Organizational Resilience of Sotsu

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

Sustainable margins compare to other players in Motion Pictures industry

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

Digital Transformation in Motion Pictures industry

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

Strong track record of project management in the Motion Pictures industry

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

Ability to recruit top talent

– Sotsu 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.

Operational resilience

– The operational resilience strategy of Sotsu 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.

Successful track record of launching new products

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

Low bargaining power of suppliers

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

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Weaknesses of Sotsu | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Sotsu are -

Skills based hiring in Motion Pictures industry

– The stress on hiring functional specialists at Sotsu 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.

Low market penetration in new markets

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

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 Sotsu supply chain. Even after few cautionary changes, Sotsu is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sotsu vulnerable to further global disruptions in South East Asia.

Capital Spending Reduction

– Even during the low interest decade, Sotsu has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Motion Pictures industry using digital technology.

Employees’ less understanding of Sotsu strategy

– From the outside it seems that the employees of Sotsu 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.

Slow to harness new channels of communication

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

High dependence on Sotsu ‘s star products

– The top 2 products and services of Sotsu 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 Sotsu has relatively successful track record of launching new products.

Interest costs

– Compare to the competition, Sotsu 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.

Products dominated business model

– Even though Sotsu 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. Sotsu should strive to include more intangible value offerings along with its core products and services.

Aligning sales with marketing

– From the outside it seems that Sotsu 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 Sotsu can leverage the sales team experience to cultivate customer relationships as Sotsu is planning to shift buying processes online.

Lack of clear differentiation of Sotsu products

– To increase the profitability and margins on the products, Sotsu needs to provide more differentiated products than what it is currently offering in the marketplace.

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Sotsu Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Sotsu are -

Lowering marketing communication costs

– 5G expansion will open new opportunities for Sotsu 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.

Loyalty marketing

– Sotsu 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.

Better consumer reach

– The expansion of the 5G network will help Sotsu to increase its market reach. Sotsu 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.

Manufacturing automation

– Sotsu can use the latest technology developments to improve its manufacturing and designing process in Motion Pictures sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.

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. Sotsu can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.

Increase in government spending

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

Redefining models of collaboration and team work

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

Harnessing reconfiguration of the global supply chains

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

Using analytics as competitive advantage

– Sotsu has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Motion Pictures sector. This continuous investment in analytics has enabled Sotsu to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sotsu to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Learning at scale

– Online learning technologies has now opened space for Sotsu 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 Sotsu 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 Sotsu to hire the very best people irrespective of their geographical location.

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 Sotsu in the Motion Pictures industry. Now Sotsu can target international markets with far fewer capital restrictions requirements than the existing system.

Buying journey improvements

– Sotsu 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.

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Threats Sotsu External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Sotsu 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 Sotsu.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Sotsu 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 Sotsu 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.

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.

Technology acceleration in Forth Industrial Revolution

– Sotsu has witnessed rapid integration of technology during Covid-19 in the Motion Pictures industry. As one of the leading players in the industry, Sotsu needs to keep up with the evolution of technology in the Motion Pictures 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.

Stagnating economy with rate increase

– Sotsu 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.

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

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Sotsu 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 Sotsu prominent markets.

Regulatory challenges

– Sotsu 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 Motion Pictures industry regulations.

Shortening product life cycle

– it is one of the major threat that Sotsu is facing in Motion Pictures 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, Sotsu 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.

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. Sotsu can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

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 Sotsu in the Motion Pictures sector and impact the bottomline of the organization.

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Weighted SWOT Analysis of Sotsu Template, Example

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

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