NEC Corporation SWOT & PESTLE Analysis

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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Political

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Economic

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Social

1. Social value creation through R&D: NEC while charting out their Mid-term Management Plan 2020 as of March 2018, specifically emphasized on being a social value creator. NEC with its exemplifying R&D capabilities is looking forward to create safe and smart cities in order to realize their goal of social value innovator by leveraging on technologies like facial recognition systems, fingerprint verification systems, biometric authentication systems, artificial intelligence, IoT in order to create devices and infrastructure that will help cities transforming into a smart and safer city where each individual can exhibit his potential and realize their dreams. They had recently deployed FRS in the CCTV cameras which were mounted on the New Wales Police cars for targeted identification of any disturbing elements and in UEFA Champions league 2017 in U.K. NEC is seeking huge opportunity in FRS and safety systems in upcoming "Summer Olympics" in Tokyo in 2020.

2. Human Resource development to support innovation: NEC in its R&D divisions promotes development of skills and human personnel in order to create social and sustainable solutions through value creating innovation for its customers and society. It allows communication exchange between R&D and operational divisions to develop skills for promoting commercialization of technologies. NEC understands that in order to create cutting-edge technologies it needs to retain the existing workforce and needs to hire additional skilled workforce to meet its targets for 2020. Moreover, NEC is taking measures to promote compliance with the Human Rights policies. Non-compliance would lead to excessive criticism from clients, customers, stakeholder and investors which would lead to degrading operating condition for NEC.

3. Using digital technologies to address social issues such as food water and energy efficiency: Digital technologies can be effectively leveraged to address social issues plaguing the environment and the population globally. NEC with its enterprise business unit has announced to use emergent technologies like AI and IoT to eliminate various social issues related to food security, energy consumption, and volatility in human resources due to shortage of labor, changing consumption patterns in the form of cashless economy, enhancing customer experience and shunting fraudulent transactions using internet banking as of March 2018.

Technological

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Legal

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Environmental

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