Hokuetsu Metal (5446) SWOT Analysis / TOWS Matrix / MBA Resources
Iron & Steel
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Hokuetsu Metal (Japan)
Based on various researches at Oak Spring University , Hokuetsu Metal is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, technology disruption, geopolitical disruptions, increasing household debt because of falling income levels, there is backlash against globalization, digital marketing is dominated by two big players Facebook and Google,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Hokuetsu Metal can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hokuetsu Metal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hokuetsu Metal 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 Hokuetsu Metal can be done for the following purposes –
1. Strategic planning of Hokuetsu Metal
2. Improving business portfolio management of Hokuetsu Metal
3. Assessing feasibility of the new initiative in Japan
4. Making a Iron & Steel sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hokuetsu Metal
Strengths of Hokuetsu Metal | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hokuetsu Metal are -
Superior customer experience
– The customer experience strategy of Hokuetsu Metal in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Hokuetsu Metal has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Hokuetsu Metal to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Iron & Steel industry
- digital transformation varies from industry to industry. For Hokuetsu Metal digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hokuetsu Metal 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.
Training and development
– Hokuetsu Metal has one of the best training and development program in Basic Materials 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.
Learning organization
- Hokuetsu Metal 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 Hokuetsu Metal is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Hokuetsu Metal emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Hokuetsu Metal in the Basic Materials sector have low bargaining power. Hokuetsu Metal has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hokuetsu Metal to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Hokuetsu Metal 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.
Ability to lead change in Iron & Steel
– Hokuetsu Metal is one of the leading players in the Iron & Steel industry in Japan. Over the years it has not only transformed the business landscape in the Iron & Steel industry in Japan but also across the existing markets. The ability to lead change has enabled Hokuetsu Metal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Hokuetsu Metal
– The covid-19 pandemic has put organizational resilience at the centre of everthing Hokuetsu Metal 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 Iron & Steel industry
– Hokuetsu Metal has clearly differentiated products in the market place. This has enabled Hokuetsu Metal to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped Hokuetsu Metal to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Hokuetsu Metal has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Hokuetsu Metal staying ahead in the Iron & Steel industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the Iron & Steel industry
– Hokuetsu Metal is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses of Hokuetsu Metal | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hokuetsu Metal are -
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 Hokuetsu Metal supply chain. Even after few cautionary changes, Hokuetsu Metal is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hokuetsu Metal vulnerable to further global disruptions in South East Asia.
Products dominated business model
– Even though Hokuetsu Metal has some of the most successful models in the Iron & Steel industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Hokuetsu Metal should strive to include more intangible value offerings along with its core products and services.
Capital Spending Reduction
– Even during the low interest decade, Hokuetsu Metal 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 Iron & Steel industry using digital technology.
No frontier risks strategy
– From the 10K / annual statement of Hokuetsu Metal, it seems that company is thinking out the frontier risks that can impact Iron & Steel 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.
Aligning sales with marketing
– From the outside it seems that Hokuetsu Metal needs to have more collaboration between its sales team and marketing team. Sales professionals in the Iron & Steel industry have deep experience in developing customer relationships. Marketing department at Hokuetsu Metal can leverage the sales team experience to cultivate customer relationships as Hokuetsu Metal is planning to shift buying processes online.
Lack of clear differentiation of Hokuetsu Metal products
– To increase the profitability and margins on the products, Hokuetsu Metal needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Hokuetsu Metal 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.
Increasing silos among functional specialists
– The organizational structure of Hokuetsu Metal is dominated by functional specialists. It is not different from other players in the Iron & Steel industry, but Hokuetsu Metal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Hokuetsu Metal to focus more on services in the Iron & Steel industry rather than just following the product oriented approach.
High cash cycle compare to competitors
Hokuetsu Metal has a high cash cycle compare to other players in the Iron & Steel industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Ability to respond to the competition
– As the decision making is very deliberative at Hokuetsu Metal, in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. Hokuetsu Metal has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the Iron & Steel industry, Hokuetsu Metal 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.
Hokuetsu Metal Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Hokuetsu Metal are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Iron & Steel industry, but it has also influenced the consumer preferences. Hokuetsu Metal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Creating value in data economy
– The success of analytics program of Hokuetsu Metal has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help Hokuetsu Metal to build a more holistic ecosystem for Hokuetsu Metal products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Hokuetsu Metal can use the latest technology developments to improve its manufacturing and designing process in Iron & Steel 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.
Leveraging digital technologies
– Hokuetsu Metal 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.
Building a culture of innovation
– managers at Hokuetsu Metal 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 Iron & Steel industry.
Use of Bitcoin and other crypto currencies for transactions in Iron & Steel industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Hokuetsu Metal in the Iron & Steel industry. Now Hokuetsu Metal can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Hokuetsu Metal 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 Hokuetsu Metal to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Hokuetsu Metal can develop new processes and procedures in Iron & Steel 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hokuetsu Metal in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Iron & Steel industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Hokuetsu Metal 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Hokuetsu Metal 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 Hokuetsu Metal can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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 Hokuetsu Metal 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.
Threats Hokuetsu Metal External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Hokuetsu Metal are -
Environmental challenges
– Hokuetsu Metal 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. Hokuetsu Metal can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.
Regulatory challenges
– Hokuetsu Metal 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 Iron & Steel industry regulations.
High dependence on third party suppliers
– Hokuetsu Metal 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.
Consumer confidence and its impact on Hokuetsu Metal 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 Iron & Steel industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hokuetsu Metal 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 Hokuetsu Metal prominent markets.
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.
Technology acceleration in Forth Industrial Revolution
– Hokuetsu Metal has witnessed rapid integration of technology during Covid-19 in the Iron & Steel industry. As one of the leading players in the industry, Hokuetsu Metal needs to keep up with the evolution of technology in the Iron & Steel 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.
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 Hokuetsu Metal in the Iron & Steel 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, Hokuetsu Metal may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Iron & Steel sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Hokuetsu Metal in Iron & Steel industry. The Iron & Steel 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.
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 Hokuetsu Metal business can come under increasing regulations regarding data privacy, data security, etc.
Shortening product life cycle
– it is one of the major threat that Hokuetsu Metal is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Hokuetsu Metal
– 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 Hokuetsu Metal.
Weighted SWOT Analysis of Hokuetsu Metal Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Hokuetsu Metal 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 Hokuetsu Metal 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 Hokuetsu Metal 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 Hokuetsu Metal 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 Hokuetsu Metal needs to make to build a sustainable competitive advantage.