Based on various researches at Oak Spring University , Itochu Techno-Solutions Corp is operating in a macro-environment that has been destablized by – increasing energy prices, increasing transportation and logistics costs, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, supply chains are disrupted by pandemic , increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China,
increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Itochu Techno-Solutions Corp
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Itochu Techno-Solutions Corp can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Itochu Techno-Solutions Corp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp can be done for the following purposes –
1. Strategic planning of Itochu Techno-Solutions Corp
2. Improving business portfolio management of Itochu Techno-Solutions Corp
3. Assessing feasibility of the new initiative in United States
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Itochu Techno-Solutions Corp
Strengths of Itochu Techno-Solutions Corp | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Itochu Techno-Solutions Corp are -
High switching costs
– The high switching costs that Itochu Techno-Solutions Corp 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.
High brand equity
– Itochu Techno-Solutions Corp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Itochu Techno-Solutions Corp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Itochu Techno-Solutions Corp 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 industry. The technology infrastructure of United States 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.
Ability to lead change in
– Itochu Techno-Solutions Corp is one of the leading players in the industry in United States. Over the years it has not only transformed the business landscape in the industry in United States but also across the existing markets. The ability to lead change has enabled Itochu Techno-Solutions Corp 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
– Itochu Techno-Solutions Corp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Itochu Techno-Solutions Corp 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.
Effective Research and Development (R&D)
– Itochu Techno-Solutions Corp has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Itochu Techno-Solutions Corp staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in industry
– Itochu Techno-Solutions Corp has clearly differentiated products in the market place. This has enabled Itochu Techno-Solutions Corp to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Itochu Techno-Solutions Corp to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Itochu Techno-Solutions Corp is one of the leading players in the industry in United States. It is in a position to attract the best talent available in United States. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy of Itochu Techno-Solutions Corp comprises – understanding the underlying the factors in the 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.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Itochu Techno-Solutions Corp digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Itochu Techno-Solutions Corp 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.
Learning organization
- Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Itochu Techno-Solutions Corp emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Itochu Techno-Solutions Corp has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive industry. Secondly the value chain collaborators of Itochu Techno-Solutions Corp have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses of Itochu Techno-Solutions Corp | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Itochu Techno-Solutions Corp are -
Low market penetration in new markets
– Outside its home market of United States, Itochu Techno-Solutions Corp needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Itochu Techno-Solutions Corp is slow explore the new channels of communication. These new channels of communication can help Itochu Techno-Solutions Corp to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High cash cycle compare to competitors
Itochu Techno-Solutions Corp has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on Itochu Techno-Solutions Corp ‘s star products
– The top 2 products and services of Itochu Techno-Solutions Corp still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Itochu Techno-Solutions Corp has relatively successful track record of launching new products.
Employees’ less understanding of Itochu Techno-Solutions Corp strategy
– From the outside it seems that the employees of Itochu Techno-Solutions Corp 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.
Skills based hiring in industry
– The stress on hiring functional specialists at Itochu Techno-Solutions Corp 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.
High bargaining power of channel partners in industry
– because of the regulatory requirements in United States, Itochu Techno-Solutions Corp 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 industry.
Increasing silos among functional specialists
– The organizational structure of Itochu Techno-Solutions Corp is dominated by functional specialists. It is not different from other players in the industry, but Itochu Techno-Solutions Corp needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Itochu Techno-Solutions Corp to focus more on services in the industry rather than just following the product oriented approach.
Slow decision making process
– As mentioned earlier in the report, Itochu Techno-Solutions Corp has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Itochu Techno-Solutions Corp 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 operating costs
– Compare to the competitors, Itochu Techno-Solutions Corp has high operating costs in the industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Itochu Techno-Solutions Corp lucrative customers.
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 Itochu Techno-Solutions Corp supply chain. Even after few cautionary changes, Itochu Techno-Solutions Corp is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Itochu Techno-Solutions Corp vulnerable to further global disruptions in South East Asia.
Itochu Techno-Solutions Corp Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Itochu Techno-Solutions Corp are -
Developing new processes and practices
– Itochu Techno-Solutions Corp can develop new processes and procedures in 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
– Itochu Techno-Solutions Corp has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in sector. This continuous investment in analytics has enabled Itochu Techno-Solutions Corp to build a competitive advantage using analytics. The analytics driven competitive advantage can help Itochu Techno-Solutions Corp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Itochu Techno-Solutions Corp has opened avenues for new revenue streams for the organization in industry. This can help Itochu Techno-Solutions Corp to build a more holistic ecosystem for Itochu Techno-Solutions Corp products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in industry, but it has also influenced the consumer preferences. Itochu Techno-Solutions Corp can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Itochu Techno-Solutions Corp 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.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Itochu Techno-Solutions Corp in the industry. Now Itochu Techno-Solutions Corp can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Itochu Techno-Solutions Corp can improve the customer journey of consumers in the 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, Itochu Techno-Solutions Corp is facing challenges because of the dominance of functional experts in the organization. Itochu Techno-Solutions Corp can utilize new technology in the field of 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, Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Itochu Techno-Solutions Corp can use these opportunities to build new business models that can help the communities that Itochu Techno-Solutions Corp operates in. Secondly it can use opportunities from government spending in sector.
Learning at scale
– Online learning technologies has now opened space for Itochu Techno-Solutions Corp 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Itochu Techno-Solutions Corp in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the industry, and it will provide faster access to the consumers.
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 Itochu Techno-Solutions Corp 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.
Threats Itochu Techno-Solutions Corp External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Itochu Techno-Solutions Corp are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp prominent markets.
Technology acceleration in Forth Industrial Revolution
– Itochu Techno-Solutions Corp has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Itochu Techno-Solutions Corp needs to keep up with the evolution of technology in the 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.
Regulatory challenges
– Itochu Techno-Solutions Corp 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 industry regulations.
Stagnating economy with rate increase
– Itochu Techno-Solutions Corp 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 industry.
Shortening product life cycle
– it is one of the major threat that Itochu Techno-Solutions Corp is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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. Itochu Techno-Solutions Corp needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Itochu Techno-Solutions Corp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Itochu Techno-Solutions Corp in the sector and impact the bottomline of the organization.
Increasing wage structure of Itochu Techno-Solutions Corp
– 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 Itochu Techno-Solutions Corp.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Itochu Techno-Solutions Corp may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of sector.
High dependence on third party suppliers
– Itochu Techno-Solutions Corp 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.
Weighted SWOT Analysis of Itochu Techno-Solutions Corp Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp 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 Itochu Techno-Solutions Corp needs to make to build a sustainable competitive advantage.