DLE (3686) SWOT Analysis / TOWS Matrix / MBA Resources

Introduction to SWOT Analysis

SWOT Analysis / TOWS Matrix for DLE (Japan)

Based on various researches at Oak Spring University , DLE is operating in a macro-environment that has been destablized by – cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, increasing commodity prices, talent flight as more people leaving formal jobs, challanges to central banks by blockchain based private currencies, wage bills are increasing, digital marketing is dominated by two big players Facebook and Google, etc

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Introduction to SWOT Analysis of DLE

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

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

The strengths of DLE are -

Highly skilled collaborators

– DLE has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Business Services industry. Secondly the value chain collaborators of DLE have helped the firm to develop new products and bring them quickly to the marketplace.

Effective Research and Development (R&D)

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

Successful track record of launching new products

– DLE has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. DLE 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.

High switching costs

– The high switching costs that DLE 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.

Diverse revenue streams

– DLE is present in almost all the verticals within the Business Services industry. This has provided DLE 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.

Low bargaining power of suppliers

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

Sustainable margins compare to other players in Business Services industry

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

Digital Transformation in Business Services industry

- digital transformation varies from industry to industry. For DLE digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. DLE 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.

Innovation driven organization

– DLE is one of the most innovative firm in Business Services sector.

Training and development

– DLE 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.

Cross disciplinary teams

– Horizontal connected teams at the DLE 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 Business Services industry

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

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

The weaknesses of DLE are -

Slow decision making process

– As mentioned earlier in the report, DLE has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Business Services industry over the last five years. DLE even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.

Increasing silos among functional specialists

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

Workers concerns about automation

– As automation is fast increasing in the Business Services industry, DLE 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.

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 DLE supply chain. Even after few cautionary changes, DLE is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left DLE vulnerable to further global disruptions in South East Asia.

Low market penetration in new markets

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

Ability to respond to the competition

– As the decision making is very deliberative at DLE, in the dynamic environment of Business Services industry it has struggled to respond to the nimble upstart competition. DLE has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.

Skills based hiring in Business Services industry

– The stress on hiring functional specialists at DLE 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.

Employees’ less understanding of DLE strategy

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

High dependence on DLE ‘s star products

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

Lack of clear differentiation of DLE products

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

Slow to strategic competitive environment developments

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

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

The opportunities of DLE are -

Use of Bitcoin and other crypto currencies for transactions in Business Services industry

– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for DLE in the Business Services industry. Now DLE can target international markets with far fewer capital restrictions requirements than the existing system.

Redefining models of collaboration and team work

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

Loyalty marketing

– DLE 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.

Building a culture of innovation

– managers at DLE 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 Business Services industry.

Leveraging digital technologies

– DLE 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.

Developing new processes and practices

– DLE can develop new processes and procedures in Business Services 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.

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. DLE can explore opportunities that can attract volunteers and are consistent with its mission and vision.

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 DLE 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.

Harnessing reconfiguration of the global supply chains

– As the trade war between US and China heats up in the coming years, DLE 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 DLE to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.

Using analytics as competitive advantage

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

Lowering marketing communication costs

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

Finding new ways to collaborate

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

Increase in government spending

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

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

The threats of DLE are -

Learning curve for new practices

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

Shortening product life cycle

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

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.

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 DLE in the Business Services sector and impact the bottomline of the organization.

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. DLE needs to understand the core reasons impacting the Business Services industry. This will help it in building a better workplace.

Technology acceleration in Forth Industrial Revolution

– DLE has witnessed rapid integration of technology during Covid-19 in the Business Services industry. As one of the leading players in the industry, DLE needs to keep up with the evolution of technology in the Business Services 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.

Easy access to finance

– Easy access to finance in Business Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. DLE 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 DLE 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 Business Services industry and other sectors.

Environmental challenges

– DLE 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. DLE can take advantage of this fund but it will also bring new competitors in the Business Services industry.

Increasing wage structure of DLE

– 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 DLE.

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. DLE 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.

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.

Stagnating economy with rate increase

– DLE 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 Business Services industry.

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Weighted SWOT Analysis of DLE Template, Example

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

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