Nippon Steel & Sumitomo Metal (NSSMY) SWOT Analysis / TOWS Matrix / MBA Resources
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Nippon Steel & Sumitomo Metal (United States)
Based on various researches at Oak Spring University , Nippon Steel & Sumitomo Metal is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, increasing commodity prices, geopolitical disruptions, competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, challanges to central banks by blockchain based private currencies, digital marketing is dominated by two big players Facebook and Google,
banking and financial system is disrupted by Bitcoin and other crypto currencies, wage bills are increasing, etc
Introduction to SWOT Analysis of Nippon Steel & Sumitomo Metal
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Nippon Steel & Sumitomo Metal can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Nippon Steel & Sumitomo Metal, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal can be done for the following purposes –
1. Strategic planning of Nippon Steel & Sumitomo Metal
2. Improving business portfolio management of Nippon Steel & Sumitomo Metal
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 Nippon Steel & Sumitomo Metal
Strengths of Nippon Steel & Sumitomo Metal | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Nippon Steel & Sumitomo Metal are -
Superior customer experience
– The customer experience strategy of Nippon Steel & Sumitomo Metal in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High brand equity
– Nippon Steel & Sumitomo Metal has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Nippon Steel & Sumitomo Metal to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in
– Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Nippon Steel & Sumitomo Metal digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Nippon Steel & Sumitomo Metal 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.
Sustainable margins compare to other players in industry
– Nippon Steel & Sumitomo Metal has clearly differentiated products in the market place. This has enabled Nippon Steel & Sumitomo Metal to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Nippon Steel & Sumitomo Metal to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Nippon Steel & Sumitomo Metal has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal 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.
Operational resilience
– The operational resilience strategy of Nippon Steel & Sumitomo Metal 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.
Ability to recruit top talent
– Nippon Steel & Sumitomo Metal 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.
Training and development
– Nippon Steel & Sumitomo Metal has one of the best training and development program in 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.
Strong track record of project management in the industry
– Nippon Steel & Sumitomo Metal 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
– Nippon Steel & Sumitomo Metal is present in almost all the verticals within the industry. This has provided Nippon Steel & Sumitomo Metal 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.
Weaknesses of Nippon Steel & Sumitomo Metal | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nippon Steel & Sumitomo Metal are -
Lack of clear differentiation of Nippon Steel & Sumitomo Metal products
– To increase the profitability and margins on the products, Nippon Steel & Sumitomo Metal needs to provide more differentiated products than what it is currently offering in the marketplace.
Aligning sales with marketing
– From the outside it seems that Nippon Steel & Sumitomo Metal needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department at Nippon Steel & Sumitomo Metal can leverage the sales team experience to cultivate customer relationships as Nippon Steel & Sumitomo Metal is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Nippon Steel & Sumitomo Metal is dominated by functional specialists. It is not different from other players in the industry, but Nippon Steel & Sumitomo Metal needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Nippon Steel & Sumitomo Metal to focus more on services in the industry rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of United States, Nippon Steel & Sumitomo Metal needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on Nippon Steel & Sumitomo Metal ‘s star products
– The top 2 products and services of Nippon Steel & Sumitomo Metal still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Nippon Steel & Sumitomo Metal has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal lucrative customers.
Employees’ less understanding of Nippon Steel & Sumitomo Metal strategy
– From the outside it seems that the employees of Nippon Steel & Sumitomo Metal 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.
Products dominated business model
– Even though Nippon Steel & Sumitomo Metal has some of the most successful models in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. Nippon Steel & Sumitomo Metal 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 industry, Nippon Steel & Sumitomo Metal 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.
No frontier risks strategy
– From the 10K / annual statement of Nippon Steel & Sumitomo Metal, it seems that company is thinking out the frontier risks that can impact 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.
Slow decision making process
– As mentioned earlier in the report, Nippon Steel & Sumitomo Metal 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. Nippon Steel & Sumitomo Metal 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.
Nippon Steel & Sumitomo Metal Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Nippon Steel & Sumitomo Metal are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Nippon Steel & Sumitomo Metal can use these opportunities to build new business models that can help the communities that Nippon Steel & Sumitomo Metal operates in. Secondly it can use opportunities from government spending in sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Nippon Steel & Sumitomo Metal 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.
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 Nippon Steel & Sumitomo Metal in the industry. Now Nippon Steel & Sumitomo Metal can target international markets with far fewer capital restrictions requirements than the existing system.
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 Nippon Steel & Sumitomo Metal 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.
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. Nippon Steel & Sumitomo Metal can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Nippon Steel & Sumitomo Metal can use the latest technology developments to improve its manufacturing and designing process in 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal has opened avenues for new revenue streams for the organization in industry. This can help Nippon Steel & Sumitomo Metal to build a more holistic ecosystem for Nippon Steel & Sumitomo Metal products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Nippon Steel & Sumitomo Metal 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.
Buying journey improvements
– Nippon Steel & Sumitomo Metal 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Nippon Steel & Sumitomo Metal can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal to hire the very best people irrespective of their geographical location.
Threats Nippon Steel & Sumitomo Metal External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Nippon Steel & Sumitomo Metal are -
Environmental challenges
– Nippon Steel & Sumitomo Metal 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. Nippon Steel & Sumitomo Metal can take advantage of this fund but it will also bring new competitors in the industry.
Consumer confidence and its impact on Nippon Steel & Sumitomo Metal demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in industry and other sectors.
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. Nippon Steel & Sumitomo Metal 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.
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 Nippon Steel & Sumitomo Metal in the sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Nippon Steel & Sumitomo Metal is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Nippon Steel & Sumitomo Metal 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.
High dependence on third party suppliers
– Nippon Steel & Sumitomo Metal 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.
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 Nippon Steel & Sumitomo Metal business can come under increasing regulations regarding data privacy, data security, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Nippon Steel & Sumitomo Metal with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Nippon Steel & Sumitomo Metal needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal prominent markets.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Nippon Steel & Sumitomo Metal 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.
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 Nippon Steel & Sumitomo Metal.
Weighted SWOT Analysis of Nippon Steel & Sumitomo Metal Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal needs to make to build a sustainable competitive advantage.
