Sonocom (7902) SWOT Analysis / TOWS Matrix / MBA Resources
Printing Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Sonocom (Japan)
Based on various researches at Oak Spring University , Sonocom is operating in a macro-environment that has been destablized by – increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, there is backlash against globalization, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sonocom can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sonocom, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sonocom 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 Sonocom can be done for the following purposes –
1. Strategic planning of Sonocom
2. Improving business portfolio management of Sonocom
3. Assessing feasibility of the new initiative in Japan
4. Making a Printing Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sonocom
Strengths of Sonocom | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sonocom are -
Ability to lead change in Printing Services
– Sonocom is one of the leading players in the Printing Services industry in Japan. Over the years it has not only transformed the business landscape in the Printing Services industry in Japan but also across the existing markets. The ability to lead change has enabled Sonocom in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High switching costs
– The high switching costs that Sonocom 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.
Ability to recruit top talent
– Sonocom is one of the leading players in the Printing Services 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.
Organizational Resilience of Sonocom
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sonocom does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Sonocom has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Printing Services industry. Secondly the value chain collaborators of Sonocom have helped the firm to develop new products and bring them quickly to the marketplace.
Innovation driven organization
– Sonocom is one of the most innovative firm in Printing Services sector.
Operational resilience
– The operational resilience strategy of Sonocom comprises – understanding the underlying the factors in the Printing Services 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.
Successful track record of launching new products
– Sonocom has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sonocom 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 brand equity
– Sonocom has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sonocom to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Sonocom 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.
Superior customer experience
– The customer experience strategy of Sonocom in Printing Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Sonocom 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.
Weaknesses of Sonocom | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sonocom are -
Aligning sales with marketing
– From the outside it seems that Sonocom needs to have more collaboration between its sales team and marketing team. Sales professionals in the Printing Services industry have deep experience in developing customer relationships. Marketing department at Sonocom can leverage the sales team experience to cultivate customer relationships as Sonocom is planning to shift buying processes online.
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 Sonocom supply chain. Even after few cautionary changes, Sonocom is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sonocom vulnerable to further global disruptions in South East Asia.
Skills based hiring in Printing Services industry
– The stress on hiring functional specialists at Sonocom 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.
Capital Spending Reduction
– Even during the low interest decade, Sonocom 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 Printing Services industry using digital technology.
High cash cycle compare to competitors
Sonocom has a high cash cycle compare to other players in the Printing Services industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Low market penetration in new markets
– Outside its home market of Japan, Sonocom needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– From the 10K / annual statement of Sonocom, it seems that company is thinking out the frontier risks that can impact Printing Services 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.
High dependence on Sonocom ‘s star products
– The top 2 products and services of Sonocom still accounts for major business revenue. This dependence on star products in Printing Services industry has resulted into insufficient focus on developing new products, even though Sonocom has relatively successful track record of launching new products.
Increasing silos among functional specialists
– The organizational structure of Sonocom is dominated by functional specialists. It is not different from other players in the Printing Services industry, but Sonocom needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sonocom to focus more on services in the Printing Services industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Sonocom is just above the Printing Services 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.
Lack of clear differentiation of Sonocom products
– To increase the profitability and margins on the products, Sonocom needs to provide more differentiated products than what it is currently offering in the marketplace.
Sonocom Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sonocom are -
Buying journey improvements
– Sonocom can improve the customer journey of consumers in the Printing Services 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 Sonocom can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sonocom 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 Sonocom to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Printing Services industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sonocom 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. Sonocom 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.
Developing new processes and practices
– Sonocom can develop new processes and procedures in Printing 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.
Using analytics as competitive advantage
– Sonocom has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Printing Services sector. This continuous investment in analytics has enabled Sonocom to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sonocom to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Sonocom to increase its market reach. Sonocom 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.
Use of Bitcoin and other crypto currencies for transactions in Printing Services industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sonocom in the Printing Services industry. Now Sonocom can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Printing Services industry, but it has also influenced the consumer preferences. Sonocom can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Sonocom can use the latest technology developments to improve its manufacturing and designing process in Printing Services 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sonocom is facing challenges because of the dominance of functional experts in the organization. Sonocom can utilize new technology in the field of Printing Services industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, 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 Sonocom 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.
Creating value in data economy
– The success of analytics program of Sonocom has opened avenues for new revenue streams for the organization in Printing Services industry. This can help Sonocom to build a more holistic ecosystem for Sonocom products in the Printing Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Threats Sonocom External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sonocom are -
Easy access to finance
– Easy access to finance in Printing Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sonocom can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Sonocom.
Shortening product life cycle
– it is one of the major threat that Sonocom is facing in Printing Services sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Regulatory challenges
– Sonocom 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 Printing Services industry regulations.
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. Sonocom 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 acceleration in Forth Industrial Revolution
– Sonocom has witnessed rapid integration of technology during Covid-19 in the Printing Services industry. As one of the leading players in the industry, Sonocom needs to keep up with the evolution of technology in the Printing 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sonocom 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 Sonocom prominent markets.
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 Sonocom in the Printing Services sector and impact the bottomline 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 Sonocom in Printing Services industry. The Printing Services 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.
Increasing wage structure of Sonocom
– 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 Sonocom.
Consumer confidence and its impact on Sonocom 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 Printing Services industry and other sectors.
Environmental challenges
– Sonocom 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. Sonocom can take advantage of this fund but it will also bring new competitors in the Printing Services industry.
Weighted SWOT Analysis of Sonocom Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sonocom 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 Sonocom 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 Sonocom 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 Sonocom 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 Sonocom needs to make to build a sustainable competitive advantage.