Towa Food Service (3329) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for Towa Food Service (Japan)

Based on various researches at Oak Spring University , Towa Food Service is operating in a macro-environment that has been destablized by – increasing commodity prices, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing energy prices, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, etc

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Introduction to SWOT Analysis of Towa Food Service

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Towa Food Service can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Towa Food Service, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Towa Food Service 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 Towa Food Service can be done for the following purposes –
1. Strategic planning of Towa Food Service
2. Improving business portfolio management of Towa Food Service
3. Assessing feasibility of the new initiative in Japan
4. Making a Restaurants sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Towa Food Service

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Strengths of Towa Food Service | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Towa Food Service are -

Strong track record of project management in the Restaurants industry

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

High brand equity

– Towa Food Service has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Towa Food Service to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Sustainable margins compare to other players in Restaurants industry

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

Superior customer experience

– The customer experience strategy of Towa Food Service in Restaurants industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Effective Research and Development (R&D)

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

Training and development

– Towa Food Service 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.

Innovation driven organization

– Towa Food Service is one of the most innovative firm in Restaurants sector.

Ability to recruit top talent

– Towa Food Service is one of the leading players in the Restaurants 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.

Learning organization

- Towa Food Service is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Towa Food Service is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Towa Food Service emphasize – knowledge, initiative, and innovation.

High switching costs

– The high switching costs that Towa Food Service 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.

Successful track record of launching new products

– Towa Food Service has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Towa Food Service 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 Towa Food Service in the Services sector have low bargaining power. Towa Food Service has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Towa Food Service to manage not only supply disruptions but also source products at highly competitive prices.

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Weaknesses of Towa Food Service | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Towa Food Service are -

Need for greater diversity

– Towa Food Service 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.

Workers concerns about automation

– As automation is fast increasing in the Restaurants industry, Towa Food Service 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.

Low market penetration in new markets

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

High bargaining power of channel partners in Restaurants industry

– because of the regulatory requirements in Japan, Towa Food Service 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 Restaurants industry.

High operating costs

– Compare to the competitors, Towa Food Service has high operating costs in the Restaurants industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Towa Food Service lucrative customers.

Aligning sales with marketing

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

Compensation and incentives

– The revenue per employee of Towa Food Service is just above the Restaurants industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.

Skills based hiring in Restaurants industry

– The stress on hiring functional specialists at Towa Food Service 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.

Lack of clear differentiation of Towa Food Service products

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

Capital Spending Reduction

– Even during the low interest decade, Towa Food Service 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 Restaurants industry using digital technology.

Employees’ less understanding of Towa Food Service strategy

– From the outside it seems that the employees of Towa Food Service 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.

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Towa Food Service Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The opportunities of Towa Food Service are -

Buying journey improvements

– Towa Food Service can improve the customer journey of consumers in the Restaurants 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.

Redefining models of collaboration and team work

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

Finding new ways to collaborate

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

Developing new processes and practices

– Towa Food Service can develop new processes and procedures in Restaurants 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.

Increase in government spending

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

Creating value in data economy

– The success of analytics program of Towa Food Service has opened avenues for new revenue streams for the organization in Restaurants industry. This can help Towa Food Service to build a more holistic ecosystem for Towa Food Service products in the Restaurants industry by providing – data insight services, data privacy related products, data based consulting services, 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 Towa Food Service 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.

Building a culture of innovation

– managers at Towa Food Service 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 Restaurants industry.

Loyalty marketing

– Towa Food Service 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.

Identify volunteer opportunities

– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Towa Food Service can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Better consumer reach

– The expansion of the 5G network will help Towa Food Service to increase its market reach. Towa Food Service 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 Restaurants industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Towa Food Service 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. Towa Food Service 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.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Towa Food Service in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Restaurants industry, and it will provide faster access to the consumers.

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Threats Towa Food Service External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats of Towa Food Service are -

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 Towa Food Service business can come under increasing regulations regarding data privacy, data security, etc.

Increasing wage structure of Towa Food Service

– 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 Towa Food Service.

Learning curve for new practices

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

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. Towa Food Service 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.

Stagnating economy with rate increase

– Towa Food Service 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 Restaurants 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 Towa Food Service in the Restaurants sector and impact the bottomline of the organization.

Regulatory challenges

– Towa Food Service 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 Restaurants industry regulations.

Consumer confidence and its impact on Towa Food Service 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 Restaurants industry and other sectors.

Technology acceleration in Forth Industrial Revolution

– Towa Food Service has witnessed rapid integration of technology during Covid-19 in the Restaurants industry. As one of the leading players in the industry, Towa Food Service needs to keep up with the evolution of technology in the Restaurants 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 Towa Food Service is facing in Restaurants 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for Towa Food Service in Restaurants industry. The Restaurants 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.

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.

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Weighted SWOT Analysis of Towa Food Service Template, Example

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

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