Kinki Sharyo Co Ltd (7122) SWOT Analysis / TOWS Matrix / MBA Resources
Railroads
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Kinki Sharyo Co Ltd (Japan)
Based on various researches at Oak Spring University , Kinki Sharyo Co Ltd is operating in a macro-environment that has been destablized by – increasing transportation and logistics costs, talent flight as more people leaving formal jobs, there is backlash against globalization, central banks are concerned over increasing inflation, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption,
there is increasing trade war between United States & China, increasing energy prices, etc
Introduction to SWOT Analysis of Kinki Sharyo Co Ltd
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Kinki Sharyo Co Ltd can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Kinki Sharyo Co Ltd, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Kinki Sharyo 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.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Kinki Sharyo Co Ltd can be done for the following purposes –
1. Strategic planning of Kinki Sharyo Co Ltd
2. Improving business portfolio management of Kinki Sharyo Co Ltd
3. Assessing feasibility of the new initiative in Japan
4. Making a Railroads sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Kinki Sharyo Co Ltd
Strengths of Kinki Sharyo Co Ltd | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Kinki Sharyo Co Ltd are -
Training and development
– Kinki Sharyo Co Ltd has one of the best training and development program in Transportation 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.
Diverse revenue streams
– Kinki Sharyo Co Ltd is present in almost all the verticals within the Railroads industry. This has provided Kinki Sharyo 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.
High switching costs
– The high switching costs that Kinki Sharyo Co Ltd has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Highly skilled collaborators
– Kinki Sharyo 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 Railroads industry. Secondly the value chain collaborators of Kinki Sharyo Co Ltd have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Railroads
– Kinki Sharyo Co Ltd is one of the leading players in the Railroads industry in Japan. Over the years it has not only transformed the business landscape in the Railroads industry in Japan but also across the existing markets. The ability to lead change has enabled Kinki Sharyo Co Ltd in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Railroads industry
– Kinki Sharyo Co Ltd has clearly differentiated products in the market place. This has enabled Kinki Sharyo Co Ltd to fetch slight price premium compare to the competitors in the Railroads industry. The sustainable margins have also helped Kinki Sharyo Co Ltd to invest into research and development (R&D) and innovation.
Innovation driven organization
– Kinki Sharyo Co Ltd is one of the most innovative firm in Railroads sector.
Effective Research and Development (R&D)
– Kinki Sharyo Co Ltd has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Kinki Sharyo Co Ltd staying ahead in the Railroads industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Kinki Sharyo Co Ltd in Railroads industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Kinki Sharyo Co Ltd in the Transportation sector have low bargaining power. Kinki Sharyo Co Ltd has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Kinki Sharyo Co Ltd to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Railroads industry
- digital transformation varies from industry to industry. For Kinki Sharyo Co Ltd digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Kinki Sharyo Co Ltd has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Organizational Resilience of Kinki Sharyo Co Ltd
– The covid-19 pandemic has put organizational resilience at the centre of everthing Kinki Sharyo Co Ltd does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses of Kinki Sharyo Co Ltd | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kinki Sharyo Co Ltd are -
High cash cycle compare to competitors
Kinki Sharyo Co Ltd has a high cash cycle compare to other players in the Railroads industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High operating costs
– Compare to the competitors, Kinki Sharyo Co Ltd has high operating costs in the Railroads industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Kinki Sharyo Co Ltd lucrative customers.
No frontier risks strategy
– From the 10K / annual statement of Kinki Sharyo Co Ltd, it seems that company is thinking out the frontier risks that can impact Railroads 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.
Need for greater diversity
– Kinki Sharyo Co Ltd 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.
Compensation and incentives
– The revenue per employee of Kinki Sharyo Co Ltd is just above the Railroads 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.
Increasing silos among functional specialists
– The organizational structure of Kinki Sharyo Co Ltd is dominated by functional specialists. It is not different from other players in the Railroads industry, but Kinki Sharyo Co Ltd needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Kinki Sharyo Co Ltd to focus more on services in the Railroads industry rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Japan, Kinki Sharyo Co Ltd needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Workers concerns about automation
– As automation is fast increasing in the Railroads industry, Kinki Sharyo 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Kinki Sharyo Co Ltd is slow explore the new channels of communication. These new channels of communication can help Kinki Sharyo Co Ltd to provide better information regarding Railroads products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Kinki Sharyo Co Ltd products
– To increase the profitability and margins on the products, Kinki Sharyo Co Ltd needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of Kinki Sharyo Co Ltd strategy
– From the outside it seems that the employees of Kinki Sharyo Co Ltd 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.
Kinki Sharyo Co Ltd Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Kinki Sharyo Co Ltd are -
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Railroads industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Kinki Sharyo 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. Kinki Sharyo 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.
Developing new processes and practices
– Kinki Sharyo Co Ltd can develop new processes and procedures in Railroads 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.
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 Kinki Sharyo Co Ltd 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.
Use of Bitcoin and other crypto currencies for transactions in Railroads industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Kinki Sharyo Co Ltd in the Railroads industry. Now Kinki Sharyo Co Ltd can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Kinki Sharyo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Kinki Sharyo Co Ltd can use these opportunities to build new business models that can help the communities that Kinki Sharyo Co Ltd operates in. Secondly it can use opportunities from government spending in Railroads sector.
Building a culture of innovation
– managers at Kinki Sharyo 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 Railroads industry.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Kinki Sharyo 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 Railroads industry, and it will provide faster access to the consumers.
Loyalty marketing
– Kinki Sharyo 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.
Better consumer reach
– The expansion of the 5G network will help Kinki Sharyo Co Ltd to increase its market reach. Kinki Sharyo 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.
Buying journey improvements
– Kinki Sharyo Co Ltd can improve the customer journey of consumers in the Railroads 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.
Manufacturing automation
– Kinki Sharyo Co Ltd can use the latest technology developments to improve its manufacturing and designing process in Railroads 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Kinki Sharyo Co Ltd can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Kinki Sharyo Co Ltd External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Kinki Sharyo Co Ltd are -
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. Kinki Sharyo 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.
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. Kinki Sharyo Co Ltd needs to understand the core reasons impacting the Railroads industry. This will help it in building a better workplace.
Environmental challenges
– Kinki Sharyo 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. Kinki Sharyo Co Ltd can take advantage of this fund but it will also bring new competitors in the Railroads industry.
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 Kinki Sharyo Co Ltd in the Railroads sector and impact the bottomline of the organization.
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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Kinki Sharyo Co Ltd in Railroads industry. The Railroads 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.
Easy access to finance
– Easy access to finance in Railroads industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Kinki Sharyo Co Ltd can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Kinki Sharyo Co Ltd is facing in Railroads 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Kinki Sharyo 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 Railroads sector.
Consumer confidence and its impact on Kinki Sharyo 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 Railroads industry and other sectors.
Regulatory challenges
– Kinki Sharyo 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 Railroads industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Railroads industry are lowering. It can presents Kinki Sharyo Co Ltd with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Railroads sector.
Weighted SWOT Analysis of Kinki Sharyo Co Ltd Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Kinki Sharyo 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 Kinki Sharyo 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 Kinki Sharyo 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 Kinki Sharyo 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 Kinki Sharyo Co Ltd needs to make to build a sustainable competitive advantage.
