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 – increasing commodity prices, increasing transportation and logistics costs, technology disruption, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization, geopolitical disruptions,
wage bills are increasing, increasing government debt because of Covid-19 spendings, 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 -
Organizational Resilience of Nippon Steel & Sumitomo Metal
– The covid-19 pandemic has put organizational resilience at the centre of everthing Nippon Steel & Sumitomo Metal does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
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.
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.
Highly skilled collaborators
– Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal have helped the firm to develop new products and bring them quickly to the marketplace.
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.
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.
Low bargaining power of suppliers
– Suppliers of Nippon Steel & Sumitomo Metal in the sector have low bargaining power. Nippon Steel & Sumitomo Metal has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Nippon Steel & Sumitomo Metal to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Nippon Steel & Sumitomo Metal is one of the most innovative firm in sector.
Analytics focus
– Nippon Steel & Sumitomo Metal 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.
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.
Effective Research and Development (R&D)
– Nippon Steel & Sumitomo Metal has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Nippon Steel & Sumitomo Metal staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
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.
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 -
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.
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.
Need for greater diversity
– Nippon Steel & Sumitomo Metal 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.
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.
Skills based hiring in industry
– The stress on hiring functional specialists at Nippon Steel & Sumitomo Metal 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Nippon Steel & Sumitomo Metal is slow explore the new channels of communication. These new channels of communication can help Nippon Steel & Sumitomo Metal to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
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.
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.
Slow to strategic competitive environment developments
– As Nippon Steel & Sumitomo Metal is one of the leading players in the industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
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.
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 -
Leveraging digital technologies
– Nippon Steel & Sumitomo Metal 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.
Loyalty marketing
– Nippon Steel & Sumitomo Metal 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.
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.
Using analytics as competitive advantage
– Nippon Steel & Sumitomo Metal 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 Nippon Steel & Sumitomo Metal to build a competitive advantage using analytics. The analytics driven competitive advantage can help Nippon Steel & Sumitomo Metal to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Nippon Steel & Sumitomo Metal to increase its market reach. Nippon Steel & Sumitomo Metal 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.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Nippon Steel & Sumitomo Metal 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. Nippon Steel & Sumitomo Metal 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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Nippon Steel & Sumitomo Metal is facing challenges because of the dominance of functional experts in the organization. Nippon Steel & Sumitomo Metal 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.
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 -
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.
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.
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.
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.
Regulatory challenges
– Nippon Steel & Sumitomo Metal 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.
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 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 wage structure of Nippon Steel & Sumitomo Metal
– 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 Nippon Steel & Sumitomo Metal.
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.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Nippon Steel & Sumitomo Metal 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. 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.
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.
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.