NEC Corporation SWOT & PESTLE Analysis
COMPANY PROFILE -NEC Corporation
Business Sector :Information Technology Services
Operating Geography :Tokyo, Japan, Asia
About NEC Corporation :
Established as Nippon Electric Company, Japan's first joint venture company with foreign capital investments in association with US organization Western Electric Company (now Alcatel- Lucent) on 17th July, 1899, NEC has now become one of the leaders in Information technology service providers in Japan and with its 303 subsidiaries located in 169 countries it provides global information and communication services to its international clients. The company has 4 business segments namely Public Business which includes system integration, maintenance and support, outsourcing/cloud services and system equipment for public, healthcare, government and media.NEC employs 109,390 employees globally and possesses 9 state-of-the-art R&D facilities with 1000 researchers in India, China, USA, Japan and Singapore.
NEC Corporation Revenue :
¥2,844,447 million (FY ended 31st March 2018) (year-on-year growth of 6.7%)
¥2,665,035 million (FY ended 31st March 2017)
Competitive Analysis of NEC Corporation
| 1. Strong presence of Public Business segment in Japanese Market 2. Strong track record across business areas 3. Highly skilled workforce 4. Leaders in advanced technologies 5. Strong capital structure | 1. Low share in global ICT market 2. Declining Network Service Business 3. Lack of speed and execution capabilities |
| 1. Mid-term Management Plan 2020 2. Opportunities in Global IP Telephony Market 3. Growth potential for NEC's Global Safety Business 4. South East Asian online retail market 5. Opportunity in value chain innovation | 1. Risk related to Japan's economic condition 2. Financial Market condition 3. Intensive competition to NECs business segments. |
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Detailed SWOT Analysis of NEC Corporation
Strength
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Weakness
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Opportunity
1. Mid-term Management Plan 2020: NEC designed a Mid-term management plan for year 2020 in which they are planning to reform their profit structure in order to drive NEC back again to growth. The Management designed to integrate in business units to provide value creation to their business and society through ICT enabled solutions. NEC management has decided to reform their profit structure by reducing their fixed costs so that they can invests in growing business units. The plan consists of reforming their telecom carrier and energy business which had underperformed against expectations. To get back to the growth path the management has charted planes to leverage growing Japanese ICT market and to focus more on their global safety business. The management is planning to leverage their technological capabilities to deploy Smart and Safer city project globally to align its profits and earning with creating value for the society. The company is expecting an increase of 43.53% in its operating profit in 3rd financial quarter in 2018 to ¥60 billion yen from ¥41.8 billion yen in the 3rd quarter of the 2017 and target of reaching ¥150 billion in 3rd fiscal quarter of 2019, as on 31st March, 2017.
2. Opportunities in Global IP Telephony Market: According to leading industry research, the global IP telephony market is expected to grow by a CAGR rate of approximately 9% from 2017-2023 to USD 52 billion, NEC has a huge opportunity for their Network Business segment to cash in as this segment of NEC is consistently underperforming against expectations. Additionally the growing adoption of emergent technologies in different industry vertical including BFSI, healthcare, and retail will drive the growth of Enterprise IP telephony in global and regional markets.
3. Growth potential for NECs Global Safety business: NECs management as a part of their Mid-term Management Plan 2020 amalgamating their technology and solutions with social value creation process. NEC has successfully tested and deployed facial recognition system for UK's New South Wales police department who mounted the technology through CCTV camera for targeted suspects and increasing security measures of the city. This technology was also helpful in the UEFA Champions League 2017 for overall security of the stadium. NEC also participated in 2 pilot projects related to facial recognition projects in Dallas Airport to streamline the boarding process with security and improve their security systems efficiency. With increasing awareness of cyber security and security through information system, there is a huge potential for NEC to churn out healthy revenue and secure their global market share.
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Threat
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References used in NEC Corporation Analysis Report
1. NEC Corp. Reviews- https://www.nec.com/en/global/ir/library/annual/2018/pdf/review.pdf
2. NEC Corporate Management- https://www.nec.com/en/global/ir/corporate/management.html
3. Opportunities in Japan’s ICT sector-https://www.allianceexperts.com/en/knowledge/countries/asia/opportunities-japans-ict-sector/
4. IT firms eye new markets in Japan, China and Germany- https://www.business-standard.com/article/companies/it-firms-eye-new-markets-in-japan-china-germany-117052000716_1.html
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NEC Corporation SWOT and PESTLE analysis has been conducted by Rizul Agarwal and reviewed by senior analysts from Barakaat Consulting.
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