OptoElectronics (6664) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for OptoElectronics (Japan)

Based on various researches at Oak Spring University , OptoElectronics is operating in a macro-environment that has been destablized by – there is increasing trade war between United States & China, wage bills are increasing, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, there is backlash against globalization, technology disruption, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, increasing energy prices, etc

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Introduction to SWOT Analysis of OptoElectronics

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

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

The strengths of OptoElectronics are -

Innovation driven organization

– OptoElectronics is one of the most innovative firm in Computer Peripherals sector.

High switching costs

– The high switching costs that OptoElectronics 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.

Operational resilience

– The operational resilience strategy of OptoElectronics comprises – understanding the underlying the factors in the Computer Peripherals 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.

Sustainable margins compare to other players in Computer Peripherals industry

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

Superior customer experience

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

Training and development

– OptoElectronics has one of the best training and development program in Technology 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.

Ability to recruit top talent

– OptoElectronics is one of the leading players in the Computer Peripherals 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.

Low bargaining power of suppliers

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

High brand equity

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

Strong track record of project management in the Computer Peripherals industry

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

Diverse revenue streams

– OptoElectronics is present in almost all the verticals within the Computer Peripherals industry. This has provided OptoElectronics 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 OptoElectronics

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

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

The weaknesses of OptoElectronics are -

Skills based hiring in Computer Peripherals industry

– The stress on hiring functional specialists at OptoElectronics 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.

Aligning sales with marketing

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

High cash cycle compare to competitors

OptoElectronics has a high cash cycle compare to other players in the Computer Peripherals 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 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 OptoElectronics supply chain. Even after few cautionary changes, OptoElectronics is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left OptoElectronics vulnerable to further global disruptions in South East Asia.

Products dominated business model

– Even though OptoElectronics has some of the most successful models in the Computer Peripherals industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. OptoElectronics should strive to include more intangible value offerings along with its core products and services.

High dependence on OptoElectronics ‘s star products

– The top 2 products and services of OptoElectronics still accounts for major business revenue. This dependence on star products in Computer Peripherals industry has resulted into insufficient focus on developing new products, even though OptoElectronics has relatively successful track record of launching new products.

Slow to strategic competitive environment developments

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

Employees’ less understanding of OptoElectronics strategy

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

Increasing silos among functional specialists

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

Interest costs

– Compare to the competition, OptoElectronics 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.

No frontier risks strategy

– From the 10K / annual statement of OptoElectronics, it seems that company is thinking out the frontier risks that can impact Computer Peripherals 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.

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

The opportunities of OptoElectronics are -

Using analytics as competitive advantage

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

Creating value in data economy

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

Lowering marketing communication costs

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

Redefining models of collaboration and team work

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

Loyalty marketing

– OptoElectronics 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.

Changes in consumer behavior post Covid-19

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

Finding new ways to collaborate

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

Remote work and new talent hiring opportunities

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

Buying journey improvements

– OptoElectronics can improve the customer journey of consumers in the Computer Peripherals 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 OptoElectronics to increase its market reach. OptoElectronics 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.

Low interest rates

– Even though inflation is raising its head in most developed economies, OptoElectronics 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.

Reforming the budgeting process

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

Developing new processes and practices

– OptoElectronics can develop new processes and procedures in Computer Peripherals 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.

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

The threats of OptoElectronics are -

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. OptoElectronics needs to understand the core reasons impacting the Computer Peripherals industry. This will help it in building a better workplace.

Stagnating economy with rate increase

– OptoElectronics 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 Computer Peripherals industry.

High dependence on third party suppliers

– OptoElectronics 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.

Trade war between China and United States

– The trade war between two of the biggest economies can hugely impact the opportunities for OptoElectronics in Computer Peripherals industry. The Computer Peripherals 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.

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 OptoElectronics in the Computer Peripherals sector and impact the bottomline of the organization.

Learning curve for new practices

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

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.

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. OptoElectronics 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.

Shortening product life cycle

– it is one of the major threat that OptoElectronics is facing in Computer Peripherals sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry to Computer Peripherals industry are lowering. It can presents OptoElectronics with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Computer Peripherals sector.

Easy access to finance

– Easy access to finance in Computer Peripherals industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. OptoElectronics can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.

Consumer confidence and its impact on OptoElectronics 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 Computer Peripherals industry and other sectors.

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Weighted SWOT Analysis of OptoElectronics Template, Example

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

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