Sakurai (7255) SWOT Analysis / TOWS Matrix / MBA Resources
Conglomerates
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Sakurai (Japan)
Based on various researches at Oak Spring University , Sakurai is operating in a macro-environment that has been destablized by – increasing commodity prices, wage bills are increasing, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sakurai can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sakurai, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sakurai 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 Sakurai can be done for the following purposes –
1. Strategic planning of Sakurai
2. Improving business portfolio management of Sakurai
3. Assessing feasibility of the new initiative in Japan
4. Making a Conglomerates sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sakurai
Strengths of Sakurai | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sakurai are -
Strong track record of project management in the Conglomerates industry
– Sakurai is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Effective Research and Development (R&D)
– Sakurai has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Sakurai staying ahead in the Conglomerates industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Sakurai in the Conglomerates sector have low bargaining power. Sakurai has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sakurai to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Sakurai is one of the most innovative firm in Conglomerates sector.
Diverse revenue streams
– Sakurai is present in almost all the verticals within the Conglomerates industry. This has provided Sakurai 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.
Ability to lead change in Conglomerates
– Sakurai is one of the leading players in the Conglomerates industry in Japan. Over the years it has not only transformed the business landscape in the Conglomerates industry in Japan but also across the existing markets. The ability to lead change has enabled Sakurai in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Learning organization
- Sakurai 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 Sakurai is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sakurai emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Sakurai has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Conglomerates industry. Secondly the value chain collaborators of Sakurai have helped the firm to develop new products and bring them quickly to the marketplace.
Successful track record of launching new products
– Sakurai has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sakurai 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
– Sakurai has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sakurai to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Sakurai
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sakurai does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Analytics focus
– Sakurai is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Conglomerates industry. The technology infrastructure of Japan is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses of Sakurai | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sakurai are -
Workers concerns about automation
– As automation is fast increasing in the Conglomerates industry, Sakurai 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 cash cycle compare to competitors
Sakurai has a high cash cycle compare to other players in the Conglomerates industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Capital Spending Reduction
– Even during the low interest decade, Sakurai 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 Conglomerates industry using digital technology.
Products dominated business model
– Even though Sakurai has some of the most successful models in the Conglomerates industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Sakurai should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Sakurai is one of the leading players in the Conglomerates industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Conglomerates industry in last five years.
High operating costs
– Compare to the competitors, Sakurai has high operating costs in the Conglomerates industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Sakurai lucrative customers.
Lack of clear differentiation of Sakurai products
– To increase the profitability and margins on the products, Sakurai needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Sakurai 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.
Low market penetration in new markets
– Outside its home market of Japan, Sakurai needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Sakurai ‘s star products
– The top 2 products and services of Sakurai still accounts for major business revenue. This dependence on star products in Conglomerates industry has resulted into insufficient focus on developing new products, even though Sakurai has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sakurai is slow explore the new channels of communication. These new channels of communication can help Sakurai to provide better information regarding Conglomerates products and services. It can also build an online community to further reach out to potential customers.
Sakurai Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sakurai are -
Creating value in data economy
– The success of analytics program of Sakurai has opened avenues for new revenue streams for the organization in Conglomerates industry. This can help Sakurai to build a more holistic ecosystem for Sakurai products in the Conglomerates industry by providing – data insight services, data privacy related products, data based consulting services, 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 Sakurai 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sakurai in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Conglomerates industry, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sakurai is facing challenges because of the dominance of functional experts in the organization. Sakurai can utilize new technology in the field of Conglomerates industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Sakurai to increase its market reach. Sakurai 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.
Building a culture of innovation
– managers at Sakurai 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 Conglomerates industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Sakurai 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.
Loyalty marketing
– Sakurai 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.
Learning at scale
– Online learning technologies has now opened space for Sakurai 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sakurai 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 Sakurai to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Sakurai can use the latest technology developments to improve its manufacturing and designing process in Conglomerates 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.
Use of Bitcoin and other crypto currencies for transactions in Conglomerates industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sakurai in the Conglomerates industry. Now Sakurai can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sakurai can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Sakurai External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sakurai are -
Increasing wage structure of Sakurai
– 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 Sakurai.
Technology acceleration in Forth Industrial Revolution
– Sakurai has witnessed rapid integration of technology during Covid-19 in the Conglomerates industry. As one of the leading players in the industry, Sakurai needs to keep up with the evolution of technology in the Conglomerates 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.
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. Sakurai needs to understand the core reasons impacting the Conglomerates industry. This will help it in building a better workplace.
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.
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 Sakurai business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sakurai may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Conglomerates sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sakurai in Conglomerates industry. The Conglomerates 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.
Shortening product life cycle
– it is one of the major threat that Sakurai is facing in Conglomerates sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Conglomerates industry are lowering. It can presents Sakurai with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Conglomerates sector.
Environmental challenges
– Sakurai 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. Sakurai can take advantage of this fund but it will also bring new competitors in the Conglomerates industry.
Easy access to finance
– Easy access to finance in Conglomerates industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sakurai can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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. Sakurai 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 Sakurai Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sakurai 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 Sakurai 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 Sakurai 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 Sakurai 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 Sakurai needs to make to build a sustainable competitive advantage.