Fast Retailing DRC (6288) SWOT Analysis / TOWS Matrix / MBA Resources
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Fast Retailing DRC (Hong Kong)
Based on various researches at Oak Spring University , Fast Retailing DRC is operating in a macro-environment that has been destablized by – there is backlash against globalization, increasing household debt because of falling income levels, technology disruption, digital marketing is dominated by two big players Facebook and Google, cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Fast Retailing DRC
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Fast Retailing DRC can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fast Retailing DRC, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fast Retailing DRC 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 Fast Retailing DRC can be done for the following purposes –
1. Strategic planning of Fast Retailing DRC
2. Improving business portfolio management of Fast Retailing DRC
3. Assessing feasibility of the new initiative in Hong Kong
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fast Retailing DRC
Strengths of Fast Retailing DRC | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fast Retailing DRC are -
Low bargaining power of suppliers
– Suppliers of Fast Retailing DRC in the sector have low bargaining power. Fast Retailing DRC has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Fast Retailing DRC to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in industry
– Fast Retailing DRC has clearly differentiated products in the market place. This has enabled Fast Retailing DRC to fetch slight price premium compare to the competitors in the industry. The sustainable margins have also helped Fast Retailing DRC to invest into research and development (R&D) and innovation.
Training and development
– Fast Retailing DRC 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.
Innovation driven organization
– Fast Retailing DRC is one of the most innovative firm in sector.
Ability to lead change in
– Fast Retailing DRC is one of the leading players in the industry in Hong Kong. Over the years it has not only transformed the business landscape in the industry in Hong Kong but also across the existing markets. The ability to lead change has enabled Fast Retailing DRC 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
– Fast Retailing DRC has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fast Retailing DRC 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.
Operational resilience
– The operational resilience strategy of Fast Retailing DRC 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.
Analytics focus
– Fast Retailing DRC 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 Hong Kong 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.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Fast Retailing DRC digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Fast Retailing DRC 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.
Effective Research and Development (R&D)
– Fast Retailing DRC has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Fast Retailing DRC staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management in the industry
– Fast Retailing DRC is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Cross disciplinary teams
– Horizontal connected teams at the Fast Retailing DRC 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.
Weaknesses of Fast Retailing DRC | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Fast Retailing DRC are -
Employees’ less understanding of Fast Retailing DRC strategy
– From the outside it seems that the employees of Fast Retailing DRC 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.
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 Fast Retailing DRC supply chain. Even after few cautionary changes, Fast Retailing DRC is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Fast Retailing DRC vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative at Fast Retailing DRC, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. Fast Retailing DRC has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on Fast Retailing DRC ‘s star products
– The top 2 products and services of Fast Retailing DRC still accounts for major business revenue. This dependence on star products in industry has resulted into insufficient focus on developing new products, even though Fast Retailing DRC has relatively successful track record of launching new products.
Aligning sales with marketing
– From the outside it seems that Fast Retailing DRC 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 Fast Retailing DRC can leverage the sales team experience to cultivate customer relationships as Fast Retailing DRC is planning to shift buying processes online.
High bargaining power of channel partners in industry
– because of the regulatory requirements in Hong Kong, Fast Retailing DRC 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.
Slow to strategic competitive environment developments
– As Fast Retailing DRC 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.
Capital Spending Reduction
– Even during the low interest decade, Fast Retailing DRC 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.
No frontier risks strategy
– From the 10K / annual statement of Fast Retailing DRC, 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.
Low market penetration in new markets
– Outside its home market of Hong Kong, Fast Retailing DRC needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Fast Retailing DRC is dominated by functional specialists. It is not different from other players in the industry, but Fast Retailing DRC needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Fast Retailing DRC to focus more on services in the industry rather than just following the product oriented approach.
Fast Retailing DRC Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Fast Retailing DRC are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Fast Retailing DRC 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 Fast Retailing DRC 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, Fast Retailing DRC can use these opportunities to build new business models that can help the communities that Fast Retailing DRC operates in. Secondly it can use opportunities from government spending in sector.
Learning at scale
– Online learning technologies has now opened space for Fast Retailing DRC 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.
Leveraging digital technologies
– Fast Retailing DRC can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Developing new processes and practices
– Fast Retailing DRC 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.
Better consumer reach
– The expansion of the 5G network will help Fast Retailing DRC to increase its market reach. Fast Retailing DRC 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.
Creating value in data economy
– The success of analytics program of Fast Retailing DRC has opened avenues for new revenue streams for the organization in industry. This can help Fast Retailing DRC to build a more holistic ecosystem for Fast Retailing DRC products in the industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Loyalty marketing
– Fast Retailing DRC 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fast Retailing DRC 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Fast Retailing DRC can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Fast Retailing DRC 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. Fast Retailing DRC 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.
Buying journey improvements
– Fast Retailing DRC 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fast Retailing DRC 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.
Threats Fast Retailing DRC External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Fast Retailing DRC are -
Shortening product life cycle
– it is one of the major threat that Fast Retailing DRC is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fast Retailing DRC 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 Fast Retailing DRC prominent markets.
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 Fast Retailing DRC.
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 Fast Retailing DRC business can come under increasing regulations regarding data privacy, data security, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Fast Retailing DRC in the sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Fast Retailing DRC with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Fast Retailing DRC 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.
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.
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. Fast Retailing DRC needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Regulatory challenges
– Fast Retailing DRC 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Fast Retailing DRC 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
– Fast Retailing DRC 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. Fast Retailing DRC can take advantage of this fund but it will also bring new competitors in the industry.
Technology acceleration in Forth Industrial Revolution
– Fast Retailing DRC has witnessed rapid integration of technology during Covid-19 in the industry. As one of the leading players in the industry, Fast Retailing DRC 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.
Weighted SWOT Analysis of Fast Retailing DRC Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Fast Retailing DRC 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 Fast Retailing DRC 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 Fast Retailing DRC 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 Fast Retailing DRC 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 Fast Retailing DRC needs to make to build a sustainable competitive advantage.