SWOT Analysis / TOWS Matrix for Shinhokoku Steel (Japan)
Based on various researches at Oak Spring University , Shinhokoku Steel is operating in a macro-environment that has been destablized by – competitive advantages are harder to sustain because of technology dispersion, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy, geopolitical disruptions, there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs,
technology disruption, digital marketing is dominated by two big players Facebook and Google, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Shinhokoku Steel can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shinhokoku Steel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shinhokoku Steel 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 Shinhokoku Steel can be done for the following purposes –
1. Strategic planning of Shinhokoku Steel
2. Improving business portfolio management of Shinhokoku Steel
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 Shinhokoku Steel
Strengths of Shinhokoku Steel | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shinhokoku Steel are -
Strong track record of project management in the Iron & Steel industry
– Shinhokoku Steel is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Shinhokoku Steel is one of the most innovative firm in Iron & Steel sector.
High brand equity
– Shinhokoku Steel has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Shinhokoku Steel to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Shinhokoku Steel is one of the leading players in the Iron & Steel 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.
Successful track record of launching new products
– Shinhokoku Steel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Shinhokoku Steel 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 Shinhokoku Steel in the Basic Materials sector have low bargaining power. Shinhokoku Steel has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shinhokoku Steel to manage not only supply disruptions but also source products at highly competitive prices.
Superior customer experience
– The customer experience strategy of Shinhokoku Steel in Iron & Steel industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Diverse revenue streams
– Shinhokoku Steel is present in almost all the verticals within the Iron & Steel industry. This has provided Shinhokoku Steel 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 Shinhokoku Steel
– The covid-19 pandemic has put organizational resilience at the centre of everthing Shinhokoku Steel does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
High switching costs
– The high switching costs that Shinhokoku Steel 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
– Shinhokoku Steel has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Iron & Steel industry. Secondly the value chain collaborators of Shinhokoku Steel have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Iron & Steel industry
– Shinhokoku Steel has clearly differentiated products in the market place. This has enabled Shinhokoku Steel to fetch slight price premium compare to the competitors in the Iron & Steel industry. The sustainable margins have also helped Shinhokoku Steel to invest into research and development (R&D) and innovation.
Weaknesses of Shinhokoku Steel | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Shinhokoku Steel are -
Increasing silos among functional specialists
– The organizational structure of Shinhokoku Steel is dominated by functional specialists. It is not different from other players in the Iron & Steel industry, but Shinhokoku Steel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Shinhokoku Steel to focus more on services in the Iron & Steel industry rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the Iron & Steel industry, Shinhokoku Steel 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.
Need for greater diversity
– Shinhokoku Steel 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.
Slow to strategic competitive environment developments
– As Shinhokoku Steel is one of the leading players in the Iron & Steel industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Iron & Steel industry in last five years.
High cash cycle compare to competitors
Shinhokoku Steel 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.
Skills based hiring in Iron & Steel industry
– The stress on hiring functional specialists at Shinhokoku Steel 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.
Interest costs
– Compare to the competition, Shinhokoku Steel 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.
High operating costs
– Compare to the competitors, Shinhokoku Steel has high operating costs in the Iron & Steel industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shinhokoku Steel lucrative customers.
Low market penetration in new markets
– Outside its home market of Japan, Shinhokoku Steel needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High bargaining power of channel partners in Iron & Steel industry
– because of the regulatory requirements in Japan, Shinhokoku Steel 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 Iron & Steel industry.
Ability to respond to the competition
– As the decision making is very deliberative at Shinhokoku Steel, in the dynamic environment of Iron & Steel industry it has struggled to respond to the nimble upstart competition. Shinhokoku Steel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Shinhokoku Steel Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Shinhokoku Steel are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Shinhokoku Steel can use these opportunities to build new business models that can help the communities that Shinhokoku Steel operates in. Secondly it can use opportunities from government spending in Iron & Steel sector.
Learning at scale
– Online learning technologies has now opened space for Shinhokoku Steel 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.
Using analytics as competitive advantage
– Shinhokoku Steel has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Iron & Steel sector. This continuous investment in analytics has enabled Shinhokoku Steel to build a competitive advantage using analytics. The analytics driven competitive advantage can help Shinhokoku Steel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Shinhokoku Steel 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 Shinhokoku Steel to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Shinhokoku Steel can improve the customer journey of consumers in the Iron & Steel 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shinhokoku Steel 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
– Shinhokoku Steel 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.
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 Shinhokoku Steel in the Iron & Steel industry. Now Shinhokoku Steel can target international markets with far fewer capital restrictions requirements than the existing system.
Creating value in data economy
– The success of analytics program of Shinhokoku Steel has opened avenues for new revenue streams for the organization in Iron & Steel industry. This can help Shinhokoku Steel to build a more holistic ecosystem for Shinhokoku Steel products in the Iron & Steel industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Shinhokoku Steel 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 Shinhokoku Steel 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.
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. Shinhokoku Steel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shinhokoku Steel is facing challenges because of the dominance of functional experts in the organization. Shinhokoku Steel can utilize new technology in the field of Iron & Steel industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Shinhokoku Steel External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Shinhokoku Steel are -
Increasing wage structure of Shinhokoku Steel
– 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 Shinhokoku Steel.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shinhokoku Steel 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 Shinhokoku Steel business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Shinhokoku Steel 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.
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. Shinhokoku Steel needs to understand the core reasons impacting the Iron & Steel industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Shinhokoku Steel 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 Iron & Steel industry.
Regulatory challenges
– Shinhokoku Steel 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.
Shortening product life cycle
– it is one of the major threat that Shinhokoku Steel is facing in Iron & Steel sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Shinhokoku Steel 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.
Environmental challenges
– Shinhokoku Steel 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. Shinhokoku Steel can take advantage of this fund but it will also bring new competitors in the Iron & Steel industry.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shinhokoku Steel 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 Shinhokoku Steel prominent markets.
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. Shinhokoku Steel 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.
Weighted SWOT Analysis of Shinhokoku Steel Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Shinhokoku Steel 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 Shinhokoku Steel 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 Shinhokoku Steel 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 Shinhokoku Steel 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 Shinhokoku Steel needs to make to build a sustainable competitive advantage.