SWOT Analysis / TOWS Matrix for Sumitomo Precision Product (Japan)
Based on various researches at Oak Spring University , Sumitomo Precision Product is operating in a macro-environment that has been destablized by – geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China, increasing commodity prices, digital marketing is dominated by two big players Facebook and Google,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Sumitomo Precision Product
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sumitomo Precision Product can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sumitomo Precision Product, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sumitomo Precision Product 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 Sumitomo Precision Product can be done for the following purposes –
1. Strategic planning of Sumitomo Precision Product
2. Improving business portfolio management of Sumitomo Precision Product
3. Assessing feasibility of the new initiative in Japan
4. Making a Aerospace & Defense sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sumitomo Precision Product
Strengths of Sumitomo Precision Product | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sumitomo Precision Product are -
Ability to lead change in Aerospace & Defense
– Sumitomo Precision Product is one of the leading players in the Aerospace & Defense industry in Japan. Over the years it has not only transformed the business landscape in the Aerospace & Defense industry in Japan but also across the existing markets. The ability to lead change has enabled Sumitomo Precision Product in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Sumitomo Precision Product 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.
Strong track record of project management in the Aerospace & Defense industry
– Sumitomo Precision Product is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Sumitomo Precision Product
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sumitomo Precision Product does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Sumitomo Precision Product in the Capital Goods sector have low bargaining power. Sumitomo Precision Product has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sumitomo Precision Product to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Aerospace & Defense industry
- digital transformation varies from industry to industry. For Sumitomo Precision Product digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sumitomo Precision Product 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.
High brand equity
– Sumitomo Precision Product has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sumitomo Precision Product to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Successful track record of launching new products
– Sumitomo Precision Product has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sumitomo Precision Product 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.
Analytics focus
– Sumitomo Precision Product 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 Aerospace & Defense 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.
Superior customer experience
– The customer experience strategy of Sumitomo Precision Product in Aerospace & Defense industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy of Sumitomo Precision Product comprises – understanding the underlying the factors in the Aerospace & Defense 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.
Innovation driven organization
– Sumitomo Precision Product is one of the most innovative firm in Aerospace & Defense sector.
Weaknesses of Sumitomo Precision Product | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sumitomo Precision Product are -
High cash cycle compare to competitors
Sumitomo Precision Product has a high cash cycle compare to other players in the Aerospace & Defense industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Japan, Sumitomo Precision Product needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Sumitomo Precision Product is dominated by functional specialists. It is not different from other players in the Aerospace & Defense industry, but Sumitomo Precision Product needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sumitomo Precision Product to focus more on services in the Aerospace & Defense industry rather than just following the product oriented approach.
Need for greater diversity
– Sumitomo Precision Product has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Sumitomo Precision Product products
– To increase the profitability and margins on the products, Sumitomo Precision Product needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sumitomo Precision Product is slow explore the new channels of communication. These new channels of communication can help Sumitomo Precision Product to provide better information regarding Aerospace & Defense products and services. It can also build an online community to further reach out to potential customers.
Ability to respond to the competition
– As the decision making is very deliberative at Sumitomo Precision Product, in the dynamic environment of Aerospace & Defense industry it has struggled to respond to the nimble upstart competition. Sumitomo Precision Product has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Sumitomo Precision Product ‘s star products
– The top 2 products and services of Sumitomo Precision Product still accounts for major business revenue. This dependence on star products in Aerospace & Defense industry has resulted into insufficient focus on developing new products, even though Sumitomo Precision Product has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that Sumitomo Precision Product needs to have more collaboration between its sales team and marketing team. Sales professionals in the Aerospace & Defense industry have deep experience in developing customer relationships. Marketing department at Sumitomo Precision Product can leverage the sales team experience to cultivate customer relationships as Sumitomo Precision Product is planning to shift buying processes online.
High bargaining power of channel partners in Aerospace & Defense industry
– because of the regulatory requirements in Japan, Sumitomo Precision Product 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 Aerospace & Defense industry.
Employees’ less understanding of Sumitomo Precision Product strategy
– From the outside it seems that the employees of Sumitomo Precision Product 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.
Sumitomo Precision Product Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sumitomo Precision Product are -
Using analytics as competitive advantage
– Sumitomo Precision Product has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Aerospace & Defense sector. This continuous investment in analytics has enabled Sumitomo Precision Product to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sumitomo Precision Product to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sumitomo Precision Product can use these opportunities to build new business models that can help the communities that Sumitomo Precision Product operates in. Secondly it can use opportunities from government spending in Aerospace & Defense sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sumitomo Precision Product 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.
Leveraging digital technologies
– Sumitomo Precision Product 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 Aerospace & Defense industry, but it has also influenced the consumer preferences. Sumitomo Precision Product can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Sumitomo Precision Product can improve the customer journey of consumers in the Aerospace & Defense 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.
Better consumer reach
– The expansion of the 5G network will help Sumitomo Precision Product to increase its market reach. Sumitomo Precision Product 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Aerospace & Defense industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sumitomo Precision Product 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. Sumitomo Precision Product 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.
Building a culture of innovation
– managers at Sumitomo Precision Product 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 Aerospace & Defense industry.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Sumitomo Precision Product 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.
Developing new processes and practices
– Sumitomo Precision Product can develop new processes and procedures in Aerospace & Defense 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.
Creating value in data economy
– The success of analytics program of Sumitomo Precision Product has opened avenues for new revenue streams for the organization in Aerospace & Defense industry. This can help Sumitomo Precision Product to build a more holistic ecosystem for Sumitomo Precision Product products in the Aerospace & Defense industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sumitomo Precision Product 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 Sumitomo Precision Product to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Sumitomo Precision Product External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sumitomo Precision Product are -
Environmental challenges
– Sumitomo Precision Product 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. Sumitomo Precision Product can take advantage of this fund but it will also bring new competitors in the Aerospace & Defense industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sumitomo Precision Product 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 Sumitomo Precision Product prominent markets.
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. Sumitomo Precision Product 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.
High dependence on third party suppliers
– Sumitomo Precision Product 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.
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. Sumitomo Precision Product needs to understand the core reasons impacting the Aerospace & Defense industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Sumitomo Precision Product has witnessed rapid integration of technology during Covid-19 in the Aerospace & Defense industry. As one of the leading players in the industry, Sumitomo Precision Product needs to keep up with the evolution of technology in the Aerospace & Defense 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sumitomo Precision Product may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Aerospace & Defense 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Aerospace & Defense industry are lowering. It can presents Sumitomo Precision Product with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Aerospace & Defense sector.
Shortening product life cycle
– it is one of the major threat that Sumitomo Precision Product is facing in Aerospace & Defense sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
Consumer confidence and its impact on Sumitomo Precision Product 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 Aerospace & Defense industry and other sectors.
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 Sumitomo Precision Product business can come under increasing regulations regarding data privacy, data security, etc.
Weighted SWOT Analysis of Sumitomo Precision Product Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sumitomo Precision Product 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 Sumitomo Precision Product 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 Sumitomo Precision Product 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 Sumitomo Precision Product 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 Sumitomo Precision Product needs to make to build a sustainable competitive advantage.