SWOT Analysis / TOWS Matrix for Nihon Kogyo (Japan)
Based on various researches at Oak Spring University , Nihon Kogyo is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, there is increasing trade war between United States & China, geopolitical disruptions, increasing energy prices, increasing household debt because of falling income levels, increasing transportation and logistics costs, cloud computing is disrupting traditional business models,
increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nihon Kogyo can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nihon Kogyo, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nihon Kogyo 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 Nihon Kogyo can be done for the following purposes –
1. Strategic planning of Nihon Kogyo
2. Improving business portfolio management of Nihon Kogyo
3. Assessing feasibility of the new initiative in Japan
4. Making a Construction - Raw Materials sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nihon Kogyo
Strengths of Nihon Kogyo | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nihon Kogyo are -
Digital Transformation in Construction - Raw Materials industry
- digital transformation varies from industry to industry. For Nihon Kogyo digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nihon Kogyo 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
– Nihon Kogyo has one of the best training and development program in Capital Goods 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.
Superior customer experience
– The customer experience strategy of Nihon Kogyo in Construction - Raw Materials industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Nihon Kogyo 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 Nihon Kogyo is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Nihon Kogyo emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Nihon Kogyo in the Capital Goods sector have low bargaining power. Nihon Kogyo has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nihon Kogyo to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Nihon Kogyo
– The covid-19 pandemic has put organizational resilience at the centre of everthing Nihon Kogyo does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy of Nihon Kogyo comprises – understanding the underlying the factors in the Construction - Raw Materials 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.
Innovation driven organization
– Nihon Kogyo is one of the most innovative firm in Construction - Raw Materials sector.
Ability to lead change in Construction - Raw Materials
– Nihon Kogyo is one of the leading players in the Construction - Raw Materials industry in Japan. Over the years it has not only transformed the business landscape in the Construction - Raw Materials industry in Japan but also across the existing markets. The ability to lead change has enabled Nihon Kogyo in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Successful track record of launching new products
– Nihon Kogyo has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nihon Kogyo 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 Nihon Kogyo 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
– Nihon Kogyo is one of the leading players in the Construction - Raw Materials 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.
Weaknesses of Nihon Kogyo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nihon Kogyo are -
Interest costs
– Compare to the competition, Nihon Kogyo 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.
Slow decision making process
– As mentioned earlier in the report, Nihon Kogyo has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Construction - Raw Materials industry over the last five years. Nihon Kogyo 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.
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 Nihon Kogyo supply chain. Even after few cautionary changes, Nihon Kogyo is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nihon Kogyo vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, Nihon Kogyo has high operating costs in the Construction - Raw Materials industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Nihon Kogyo lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nihon Kogyo is slow explore the new channels of communication. These new channels of communication can help Nihon Kogyo to provide better information regarding Construction - Raw Materials products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners in Construction - Raw Materials industry
– because of the regulatory requirements in Japan, Nihon Kogyo 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 Construction - Raw Materials industry.
Products dominated business model
– Even though Nihon Kogyo has some of the most successful models in the Construction - Raw Materials industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Nihon Kogyo should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Nihon Kogyo 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.
No frontier risks strategy
– From the 10K / annual statement of Nihon Kogyo, it seems that company is thinking out the frontier risks that can impact Construction - Raw Materials 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.
Employees’ less understanding of Nihon Kogyo strategy
– From the outside it seems that the employees of Nihon Kogyo 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.
Slow to strategic competitive environment developments
– As Nihon Kogyo is one of the leading players in the Construction - Raw Materials industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Construction - Raw Materials industry in last five years.
Nihon Kogyo Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nihon Kogyo are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nihon Kogyo is facing challenges because of the dominance of functional experts in the organization. Nihon Kogyo can utilize new technology in the field of Construction - Raw Materials industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Construction - Raw Materials industry, but it has also influenced the consumer preferences. Nihon Kogyo can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nihon Kogyo 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 Nihon Kogyo to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Nihon Kogyo 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nihon Kogyo can use these opportunities to build new business models that can help the communities that Nihon Kogyo operates in. Secondly it can use opportunities from government spending in Construction - Raw Materials sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nihon Kogyo 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.
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. Nihon Kogyo can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Nihon Kogyo 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.
Better consumer reach
– The expansion of the 5G network will help Nihon Kogyo to increase its market reach. Nihon Kogyo 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.
Using analytics as competitive advantage
– Nihon Kogyo has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in Construction - Raw Materials sector. This continuous investment in analytics has enabled Nihon Kogyo to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nihon Kogyo to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions in Construction - Raw Materials industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Nihon Kogyo in the Construction - Raw Materials industry. Now Nihon Kogyo 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 Nihon Kogyo has opened avenues for new revenue streams for the organization in Construction - Raw Materials industry. This can help Nihon Kogyo to build a more holistic ecosystem for Nihon Kogyo products in the Construction - Raw Materials industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Nihon Kogyo can develop new processes and procedures in Construction - Raw Materials 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.
Threats Nihon Kogyo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nihon Kogyo are -
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 Nihon Kogyo 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, Nihon Kogyo may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Construction - Raw Materials sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nihon Kogyo in Construction - Raw Materials industry. The Construction - Raw Materials 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.
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.
Regulatory challenges
– Nihon Kogyo 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 Construction - Raw Materials industry regulations.
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 Nihon Kogyo in the Construction - Raw Materials sector and impact the bottomline 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. Nihon Kogyo 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction - Raw Materials industry are lowering. It can presents Nihon Kogyo with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Construction - Raw Materials sector.
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 Nihon Kogyo.
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. Nihon Kogyo needs to understand the core reasons impacting the Construction - Raw Materials industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Nihon Kogyo 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.
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.
Stagnating economy with rate increase
– Nihon Kogyo 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 Construction - Raw Materials industry.
Weighted SWOT Analysis of Nihon Kogyo Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nihon Kogyo 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 Nihon Kogyo 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 Nihon Kogyo 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 Nihon Kogyo 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 Nihon Kogyo needs to make to build a sustainable competitive advantage.
