Based on various researches at Oak Spring University , Sumitomo Mitsui Trust Holdings PK is operating in a macro-environment that has been destablized by – geopolitical disruptions, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, technology disruption,
central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Sumitomo Mitsui Trust Holdings PK
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Sumitomo Mitsui Trust Holdings PK can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sumitomo Mitsui Trust Holdings PK, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK can be done for the following purposes –
1. Strategic planning of Sumitomo Mitsui Trust Holdings PK
2. Improving business portfolio management of Sumitomo Mitsui Trust Holdings PK
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 Sumitomo Mitsui Trust Holdings PK
Strengths of Sumitomo Mitsui Trust Holdings PK | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sumitomo Mitsui Trust Holdings PK are -
Learning organization
- Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Sumitomo Mitsui Trust Holdings PK emphasize – knowledge, initiative, and innovation.
Training and development
– Sumitomo Mitsui Trust Holdings PK 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.
Organizational Resilience of Sumitomo Mitsui Trust Holdings PK
– The covid-19 pandemic has put organizational resilience at the centre of everthing Sumitomo Mitsui Trust Holdings PK does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Diverse revenue streams
– Sumitomo Mitsui Trust Holdings PK is present in almost all the verticals within the industry. This has provided Sumitomo Mitsui Trust Holdings PK 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.
Cross disciplinary teams
– Horizontal connected teams at the Sumitomo Mitsui Trust Holdings PK 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.
Operational resilience
– The operational resilience strategy of Sumitomo Mitsui Trust Holdings PK 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.
Sustainable margins compare to other players in industry
– Sumitomo Mitsui Trust Holdings PK has clearly differentiated products in the market place. This has enabled Sumitomo Mitsui Trust Holdings PK to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Sumitomo Mitsui Trust Holdings PK to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Sumitomo Mitsui Trust Holdings PK in industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Sumitomo Mitsui Trust Holdings PK digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sumitomo Mitsui Trust Holdings PK 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.
Innovation driven organization
– Sumitomo Mitsui Trust Holdings PK is one of the most innovative firm in sector.
Highly skilled collaborators
– Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in
– Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Sumitomo Mitsui Trust Holdings PK | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Sumitomo Mitsui Trust Holdings PK are -
Slow to strategic competitive environment developments
– As Sumitomo Mitsui Trust Holdings PK 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.
Slow decision making process
– As mentioned earlier in the report, Sumitomo Mitsui Trust Holdings PK 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. Sumitomo Mitsui Trust Holdings PK 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 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 Sumitomo Mitsui Trust Holdings PK supply chain. Even after few cautionary changes, Sumitomo Mitsui Trust Holdings PK is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Sumitomo Mitsui Trust Holdings PK vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Sumitomo Mitsui Trust Holdings PK 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.
Capital Spending Reduction
– Even during the low interest decade, Sumitomo Mitsui Trust Holdings PK has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring in industry
– The stress on hiring functional specialists at Sumitomo Mitsui Trust Holdings PK 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 dependence on Sumitomo Mitsui Trust Holdings PK ‘s star products
– The top 2 products and services of Sumitomo Mitsui Trust Holdings PK still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Sumitomo Mitsui Trust Holdings PK has relatively successful track record of launching new products.
Workers concerns about automation
– As automation is fast increasing in the industry, Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK is dominated by functional specialists. It is not different from other players in the industry, but Sumitomo Mitsui Trust Holdings PK needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sumitomo Mitsui Trust Holdings PK to focus more on services in the industry rather than just following the product oriented approach.
Compensation and incentives
– The revenue per employee of Sumitomo Mitsui Trust Holdings PK is just above the industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Products dominated business model
– Even though Sumitomo Mitsui Trust Holdings PK 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. Sumitomo Mitsui Trust Holdings PK should strive to include more intangible value offerings along with its core products and services.
Sumitomo Mitsui Trust Holdings PK Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Sumitomo Mitsui Trust Holdings PK are -
Learning at scale
– Online learning technologies has now opened space for Sumitomo Mitsui Trust Holdings PK 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.
Building a culture of innovation
– managers at Sumitomo Mitsui Trust Holdings PK 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 industry.
Using analytics as competitive advantage
– Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sumitomo Mitsui Trust Holdings PK to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sumitomo Mitsui Trust Holdings PK can use these opportunities to build new business models that can help the communities that Sumitomo Mitsui Trust Holdings PK operates in. Secondly it can use opportunities from government spending in sector.
Leveraging digital technologies
– Sumitomo Mitsui Trust Holdings PK 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.
Manufacturing automation
– Sumitomo Mitsui Trust Holdings PK 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sumitomo Mitsui Trust Holdings PK 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.
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. Sumitomo Mitsui Trust Holdings PK 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. Sumitomo Mitsui Trust Holdings PK 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sumitomo Mitsui Trust Holdings PK can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Sumitomo Mitsui Trust Holdings PK 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.
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 Sumitomo Mitsui Trust Holdings PK in the industry. Now Sumitomo Mitsui Trust Holdings PK can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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. Sumitomo Mitsui Trust Holdings PK can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Sumitomo Mitsui Trust Holdings PK External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Sumitomo Mitsui Trust Holdings PK are -
Consumer confidence and its impact on Sumitomo Mitsui Trust Holdings PK 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.
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. Sumitomo Mitsui Trust Holdings PK can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Sumitomo Mitsui Trust Holdings PK 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.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Sumitomo Mitsui Trust Holdings PK 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.
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. Sumitomo Mitsui Trust Holdings PK 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
– Sumitomo Mitsui Trust Holdings PK 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.
Stagnating economy with rate increase
– Sumitomo Mitsui Trust Holdings PK 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Sumitomo Mitsui Trust Holdings PK in industry. The industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Sumitomo Mitsui Trust Holdings PK 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. Sumitomo Mitsui Trust Holdings PK can take advantage of this fund but it will also bring new competitors in the industry.
Shortening product life cycle
– it is one of the major threat that Sumitomo Mitsui Trust Holdings PK is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, 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 Sumitomo Mitsui Trust Holdings PK in the sector and impact the bottomline of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK prominent markets.
Weighted SWOT Analysis of Sumitomo Mitsui Trust Holdings PK Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK 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 Sumitomo Mitsui Trust Holdings PK needs to make to build a sustainable competitive advantage.