Nichiryoku (7578) SWOT Analysis / TOWS Matrix / MBA Resources
Personal Services
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Nichiryoku (Japan)
Based on various researches at Oak Spring University , Nichiryoku is operating in a macro-environment that has been destablized by – technology disruption, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, there is increasing trade war between United States & China, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices,
central banks are concerned over increasing inflation, 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 Nichiryoku can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nichiryoku, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nichiryoku 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 Nichiryoku can be done for the following purposes –
1. Strategic planning of Nichiryoku
2. Improving business portfolio management of Nichiryoku
3. Assessing feasibility of the new initiative in Japan
4. Making a Personal Services sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Nichiryoku
Strengths of Nichiryoku | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nichiryoku are -
Ability to recruit top talent
– Nichiryoku is one of the leading players in the Personal 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.
Successful track record of launching new products
– Nichiryoku has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nichiryoku 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.
Cross disciplinary teams
– Horizontal connected teams at the Nichiryoku 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.
Ability to lead change in Personal Services
– Nichiryoku is one of the leading players in the Personal Services industry in Japan. Over the years it has not only transformed the business landscape in the Personal Services industry in Japan but also across the existing markets. The ability to lead change has enabled Nichiryoku in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Personal Services industry
– Nichiryoku has clearly differentiated products in the market place. This has enabled Nichiryoku to fetch slight price premium compare to the competitors in the Personal Services industry. The sustainable margins have also helped Nichiryoku to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Nichiryoku has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nichiryoku staying ahead in the Personal Services industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Superior customer experience
– The customer experience strategy of Nichiryoku in Personal Services industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Nichiryoku is one of the most innovative firm in Personal Services sector.
Organizational Resilience of Nichiryoku
– The covid-19 pandemic has put organizational resilience at the centre of everthing Nichiryoku does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Nichiryoku is present in almost all the verticals within the Personal Services industry. This has provided Nichiryoku 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.
Operational resilience
– The operational resilience strategy of Nichiryoku comprises – understanding the underlying the factors in the Personal 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.
Learning organization
- Nichiryoku 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 Nichiryoku is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Nichiryoku emphasize – knowledge, initiative, and innovation.
Weaknesses of Nichiryoku | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nichiryoku are -
No frontier risks strategy
– From the 10K / annual statement of Nichiryoku, it seems that company is thinking out the frontier risks that can impact Personal 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 operating costs
– Compare to the competitors, Nichiryoku has high operating costs in the Personal Services industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Nichiryoku lucrative customers.
Products dominated business model
– Even though Nichiryoku has some of the most successful models in the Personal Services industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Nichiryoku should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the Personal Services industry, Nichiryoku 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.
Increasing silos among functional specialists
– The organizational structure of Nichiryoku is dominated by functional specialists. It is not different from other players in the Personal Services industry, but Nichiryoku needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nichiryoku to focus more on services in the Personal Services industry rather than just following the product oriented approach.
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 Nichiryoku supply chain. Even after few cautionary changes, Nichiryoku is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Nichiryoku vulnerable to further global disruptions in South East Asia.
Slow to strategic competitive environment developments
– As Nichiryoku is one of the leading players in the Personal Services industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Personal Services industry in last five years.
Aligning sales with marketing
– From the outside it seems that Nichiryoku needs to have more collaboration between its sales team and marketing team. Sales professionals in the Personal Services industry have deep experience in developing customer relationships. Marketing department at Nichiryoku can leverage the sales team experience to cultivate customer relationships as Nichiryoku is planning to shift buying processes online.
High dependence on Nichiryoku ‘s star products
– The top 2 products and services of Nichiryoku still accounts for major business revenue. This dependence on star products in Personal Services industry has resulted into insufficient focus on developing new products, even though Nichiryoku has relatively successful track record of launching new products.
Interest costs
– Compare to the competition, Nichiryoku 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.
Lack of clear differentiation of Nichiryoku products
– To increase the profitability and margins on the products, Nichiryoku needs to provide more differentiated products than what it is currently offering in the marketplace.
Nichiryoku Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nichiryoku are -
Leveraging digital technologies
– Nichiryoku 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.
Developing new processes and practices
– Nichiryoku can develop new processes and procedures in Personal 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.
Loyalty marketing
– Nichiryoku 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nichiryoku 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nichiryoku in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Personal Services industry, and it will provide faster access to the consumers.
Learning at scale
– Online learning technologies has now opened space for Nichiryoku 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, Nichiryoku can use these opportunities to build new business models that can help the communities that Nichiryoku operates in. Secondly it can use opportunities from government spending in Personal Services sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nichiryoku 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 Nichiryoku to hire the very best people irrespective of their geographical location.
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. Nichiryoku can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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 Nichiryoku 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nichiryoku 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 Nichiryoku has opened avenues for new revenue streams for the organization in Personal Services industry. This can help Nichiryoku to build a more holistic ecosystem for Nichiryoku products in the Personal Services industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Building a culture of innovation
– managers at Nichiryoku 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 Personal Services industry.
Threats Nichiryoku External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nichiryoku are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to Personal Services industry are lowering. It can presents Nichiryoku with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the Personal Services sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nichiryoku 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 Nichiryoku prominent markets.
Increasing wage structure of Nichiryoku
– 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 Nichiryoku.
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 Nichiryoku business can come under increasing regulations regarding data privacy, data security, etc.
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 Nichiryoku in the Personal Services sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Nichiryoku has witnessed rapid integration of technology during Covid-19 in the Personal Services industry. As one of the leading players in the industry, Nichiryoku needs to keep up with the evolution of technology in the Personal 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.
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.
Easy access to finance
– Easy access to finance in Personal Services industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nichiryoku 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. Nichiryoku 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.
High dependence on third party suppliers
– Nichiryoku 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nichiryoku may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Personal Services sector.
Regulatory challenges
– Nichiryoku 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 Personal Services industry regulations.
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 Nichiryoku.
Weighted SWOT Analysis of Nichiryoku Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nichiryoku 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 Nichiryoku 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 Nichiryoku 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 Nichiryoku 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 Nichiryoku needs to make to build a sustainable competitive advantage.