SWOT Analysis / TOWS Matrix for Nikken Kogaku (Japan)
Based on various researches at Oak Spring University , Nikken Kogaku is operating in a macro-environment that has been destablized by – wage bills are increasing, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings,
challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nikken Kogaku can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nikken Kogaku, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nikken Kogaku 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 Nikken Kogaku can be done for the following purposes –
1. Strategic planning of Nikken Kogaku
2. Improving business portfolio management of Nikken Kogaku
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 Nikken Kogaku
Strengths of Nikken Kogaku | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nikken Kogaku are -
Successful track record of launching new products
– Nikken Kogaku has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nikken Kogaku 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.
Sustainable margins compare to other players in Construction - Raw Materials industry
– Nikken Kogaku has clearly differentiated products in the market place. This has enabled Nikken Kogaku to fetch slight price premium compare to the competitors in the Construction - Raw Materials industry. The sustainable margins have also helped Nikken Kogaku to invest into research and development (R&D) and innovation.
Innovation driven organization
– Nikken Kogaku is one of the most innovative firm in Construction - Raw Materials sector.
Highly skilled collaborators
– Nikken Kogaku has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Construction - Raw Materials industry. Secondly the value chain collaborators of Nikken Kogaku have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Construction - Raw Materials
– Nikken Kogaku 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 Nikken Kogaku in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Nikken Kogaku 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.
Digital Transformation in Construction - Raw Materials industry
- digital transformation varies from industry to industry. For Nikken Kogaku digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nikken Kogaku 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.
Effective Research and Development (R&D)
– Nikken Kogaku has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nikken Kogaku staying ahead in the Construction - Raw Materials industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Nikken Kogaku 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 Construction - Raw Materials industry
– Nikken Kogaku is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Diverse revenue streams
– Nikken Kogaku is present in almost all the verticals within the Construction - Raw Materials industry. This has provided Nikken Kogaku 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.
High brand equity
– Nikken Kogaku has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nikken Kogaku to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses of Nikken Kogaku | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nikken Kogaku are -
High operating costs
– Compare to the competitors, Nikken Kogaku 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 Nikken Kogaku lucrative customers.
Products dominated business model
– Even though Nikken Kogaku 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. Nikken Kogaku should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– From the outside it seems that Nikken Kogaku needs to have more collaboration between its sales team and marketing team. Sales professionals in the Construction - Raw Materials industry have deep experience in developing customer relationships. Marketing department at Nikken Kogaku can leverage the sales team experience to cultivate customer relationships as Nikken Kogaku is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Nikken Kogaku is dominated by functional specialists. It is not different from other players in the Construction - Raw Materials industry, but Nikken Kogaku needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nikken Kogaku to focus more on services in the Construction - Raw Materials industry rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nikken Kogaku is slow explore the new channels of communication. These new channels of communication can help Nikken Kogaku 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, Nikken Kogaku 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.
Workers concerns about automation
– As automation is fast increasing in the Construction - Raw Materials industry, Nikken Kogaku 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.
Skills based hiring in Construction - Raw Materials industry
– The stress on hiring functional specialists at Nikken Kogaku 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, Nikken Kogaku 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 Construction - Raw Materials industry using digital technology.
Need for greater diversity
– Nikken Kogaku 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 Nikken Kogaku, 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.
Nikken Kogaku Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nikken Kogaku are -
Building a culture of innovation
– managers at Nikken Kogaku 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 Construction - Raw Materials industry.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nikken Kogaku can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Creating value in data economy
– The success of analytics program of Nikken Kogaku has opened avenues for new revenue streams for the organization in Construction - Raw Materials industry. This can help Nikken Kogaku to build a more holistic ecosystem for Nikken Kogaku products in the Construction - Raw Materials industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Nikken Kogaku 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 Nikken Kogaku to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nikken Kogaku to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Construction - Raw Materials industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nikken Kogaku 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. Nikken Kogaku 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nikken Kogaku can use these opportunities to build new business models that can help the communities that Nikken Kogaku operates in. Secondly it can use opportunities from government spending in Construction - Raw Materials sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nikken Kogaku to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Nikken Kogaku to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nikken Kogaku 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.
Better consumer reach
– The expansion of the 5G network will help Nikken Kogaku to increase its market reach. Nikken Kogaku 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.
Developing new processes and practices
– Nikken Kogaku 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.
Buying journey improvements
– Nikken Kogaku can improve the customer journey of consumers in the Construction - Raw Materials 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nikken Kogaku is facing challenges because of the dominance of functional experts in the organization. Nikken Kogaku 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nikken Kogaku 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 Nikken Kogaku to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Nikken Kogaku External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nikken Kogaku are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nikken Kogaku 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 Nikken Kogaku prominent markets.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Construction - Raw Materials industry are lowering. It can presents Nikken Kogaku 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 Nikken Kogaku.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nikken Kogaku 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.
High dependence on third party suppliers
– Nikken Kogaku 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Nikken Kogaku 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.
Regulatory challenges
– Nikken Kogaku 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.
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 Nikken Kogaku business can come under increasing regulations regarding data privacy, data security, 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.
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. Nikken Kogaku needs to understand the core reasons impacting the Construction - Raw Materials industry. This will help it in building a better workplace.
Easy access to finance
– Easy access to finance in Construction - Raw Materials industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nikken Kogaku can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Nikken Kogaku in the Construction - Raw Materials sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Nikken Kogaku is facing in Construction - Raw Materials sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Nikken Kogaku Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nikken Kogaku 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 Nikken Kogaku 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 Nikken Kogaku 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 Nikken Kogaku 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 Nikken Kogaku needs to make to build a sustainable competitive advantage.