Introduction of Softbank

Softbank Group Corp. is a Japanese multinational conglomerate holding

company headquartered in Minato, Tokyo, and focused on investment management.

The Group primarily invests in companies operating in the technology, energy, and

financial sectors. It also runs the Vision Fund, the world's largest technology-focused

venture capital fund, with over $100 billion in capital, backed by sovereign wealth

funds from countries in the Middle East.

The company is known for the leadership of its founder and largest

shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications,

e-commerce, information technology, finance, media and marketing, and other

areas.

Softbank was ranked in the Forbes Global 2000 list as the 36th largest public

company in the world and the second-largest publicly traded company

in Japan after Toyota.

The logo of Softbank is based on the flag of the Kaientai, a naval trading company

founded in 1865, near the end of the Tokugawa shogunate, by Sakamoto Ryōma.

Although Softbank does not affiliate itself to any traditional keiretsu, it has close ties

with Mizuho Financial Group, its primary lender.

Vision & Strategy

Vision

To become the world’s most essential corporate group

The SoftBank Group’s aim to contribute to people’s happiness through the

Information Revolution, and to become “the corporate group needed most by people

around the world.” To achieve its vision, SoftBank will continue to concentrate its

operations in the information industry, and advance the Information Revolution with

leading technologies essential to the times and superior business models.

Strategic synergy group

The SoftBank Group will create an autonomous and synergistic eco-system that can

self-evolve and self-propagate through collaborations between our group companies.

Risk Factors

SoftBank Group Corp. (“SBG”) is a strategic investment holding company that

manages an investment portfolio formed through investments, made either directly

or through investment funds, in a large number of companies. The investment

portfolio encompasses SBG’s subsidiaries and associates (“Group companies”) and

investments not included in the former (collectively, “portfolio companies,” including

Group companies). These portfolio companies operate in a wide range of markets

globally. Accordingly, a variety of risks accompany the execution of SBG’s investment

activities and the portfolio companies’ business activities. The major risks that SBG

believes could significantly affect investors’ investment decisions as of June 23, 2021

are outlined below. However, these risks do not include all the risks that SBG and

portfolio companies could face and additional risks may arise in the future. Forward-

looking statements were determined as of June 23, 2021, unless otherwise stated.
Tokyo-Based Telecom Company

SoftBank got its start in 1981 in Tokyo. Founded as a telecommunications company,

SoftBank now has a hand in a number of different areas, including e-commerce,

finance, broadband, marketing, and more. 1 The company has a portfolio including

SoftBank BB, GungHo Online Entertainment, IDC Frontier, and more. In recent

years, it has gone on a spending spree, buying up numerous smaller companies and

initiating investments in many others. In July of 2016, for instance, SoftBank

purchased UK-based chip manufacturer ARM for £24 billion, with an eye toward

continuing to develop the Internet of Things. In 2017, SoftBank announced that it

would buy two additional robotics companies from Alphabet. First, it bought up

Boston Dynamics, the developer of the iconic Big Dog robot, and then it bought

Schaft, a less well-known robotics outfit.

Masayoshi Son

SoftBank is headed by chair and CEO Masayoshi Son. Son has established himself as

an assertive and confident player in the international tech scene. With about $100

billion to invest on companies developing the technology of the future, Son has

ample room to explore a variety of new areas. According to The Economic Times,

Son has strong opinions about the future of SoftBank and has put forth a conception

of a 300-year plan for the company, with the end goal being to build the most

valuable firm in the world. The key to Son's future investments is SoftBank's Vision

Fund, dedicated to M&A deals like those listed above.

The list of acquisitions continues to grow. Back in April of 2017, Son was behind the

$5.5-billion venture into Didi Chuxing, the massive ride-sharing company out of

China. Describing the acquisition as a "big bang," Son went on to say that he

believes "the next big bang is going to be even bigger. To be ready for that, we

need to set the foundation, and that foundation is SoftBank Vision Fund.

Given the vast amounts of capital that Son already has at his disposal, some

outsiders are wondering what he aims to do. Some analysts have concerns that

Son's investments may flood capital into the tech sector, prompting inflated

valuations, excessive lists of competitors,a nd ultimately hindering the process of

technological development

SWOT Analysis of Softbank

Strengths of Softbank – Internal Strategic Factors

As one of the leading companies in its industry, Softbank has numerous strengths

that enable it to thrive in the market place. These strengths not only help it to

protect the market share in existing markets but also help in penetrating new

markets. Successful track record of developing new products – product innovation.

 Highly successful at Go to Market strategies for its products.

 Automation of activities brought consistency of quality to Softbank products

and has enabled the company to scale up and scale down based on the

demand conditions in the market.

 Successful track record of integrating complimentary firms through mergers &

acquisition. It has successfully integrated number of technology companies in

 the past few years to streamline its operations and to build a reliable supply

chain.

 Strong distribution network – Over the years Softbank has built a reliable

distribution network that can reach majority of its potential market.

 Good Returns on Capital Expenditure – Softbank is relatively successful at

execution of new projects and generated good returns on capital expenditure

by building new revenue streams.

 Strong dealer community – It has built a culture among distributor & dealers

where the dealers not only promote company’s products but also invest in

training the sales team to explain to the customer how he/she can extract the

maximum benefits out of the products.

 High level of customer satisfaction – the company with its dedicated customer

relationship management department has able to achieve a high level of

customer satisfaction among present customers and good brand equity

among the potential customers.

Weakness of SoftBank – Internal Strategic Factors

Weakness are the areas where SoftBank can improve upon. Strategy is about

making choices and weakness are the areas where a company can improve using

SWOT analysis and build on its competitive advantage and strategic positioning.

 High attrition rate in work force – compare to other organizations in the

industry SoftBank has a higher attrition rate and have to spend a lot more

compare to its competitors on training and development of its employees.

 The profitability ratio and Net Contribution % of SoftBank are below the

industry average.

 Not very good at product demand forecasting leading to higher rate of missed

opportunities compare to its competitors. One of the reason why the days

inventory is high compare to its competitors is that SoftBank is not very good

at demand forecasting thus end up keeping higher inventory both in-house

and in channel.

 Investment in Research and Development is below the fastest growing

players in the industry. Even though SoftBank is spending above the industry

average on Research and Development, it has not been able to compete with

the leading players in the industry in terms of innovation. It has come across

as a mature firm looking forward to bring out products based on tested

features in the market.

 Financial planning is not done properly and efficiently. The current asset ratio

and liquid asset ratios suggest that the company can use the cash more

efficiently than what it is doing at present.

 Need more investment in new technologies. Given the scale of expansion and

different geographies the company is planning to expand into, SoftBank

needs to put more money in technology to integrate the processes across the

board. Right now the investment in technologies is not at par with the vision

of the company.

 There are gaps in the product range sold by the company. This lack of choice

can give a new competitor a foothold in the market.

Opportunities for SoftBank – External Strategic Factors

 Decreasing cost of transportation because of lower shipping prices can also

bring down the cost of SoftBank’s products thus providing an opportunity to

the company - either to boost its profitability or pass on the benefits to the

customers to gain market share.

 The new technology provides an opportunity to SoftBank to practices

differentiated pricing strategy in the new market. It will enable the firm to

maintain its loyal customers with great service and lure new customers

through other value oriented propositions.

 Lower inflation rate – The low inflation rate bring more stability in the market,

enable credit at lower interest rate to the customers of SoftBank.

 Stable free cash flow provides opportunities to invest in adjacent product

segments. With more cash in bank the company can invest in new

technologies as well as in new products segments. This should open a

window of opportunity for SoftBank in other product categories.

 Economic uptick and increase in customer spending, after years of recession

and slow growth rate in the industry, is an opportunity for SoftBank to

capture new customers and increase its market share.

 Opening up of new markets because of government agreement – the

adoption of new technology standard and government free trade agreement

has provided SoftBank an opportunity to enter a new emerging market.

  Organization’s core competencies can be a success in similar other products

field. A comparative example could be - GE healthcare research helped it in

developing better Oil drilling machines.

 Government green drive also opens an opportunity for procurement of

SoftBank products by the state as well as federal government contractors.

Threats SoftBank Facing - External Strategic Factors

 Changing consumer buying behavior from online channel could be a threat to

the existing physical infrastructure driven supply chain model.

 Shortage of skilled workforce in certain global market represents a threat to

steady growth of profits for SoftBank   in those markets.

 No regular supply of innovative products – Over the years the company has

developed numerous products but those are often response to the

development by other players. Secondly the supply of new products is not

regular thus leading to high and low swings in the sales number over period

of time.

 New environment regulations under Paris agreement (2016) could be a threat

to certain existing product categories .

 Rising raw material can pose a threat to the SoftBank profitability.

 Growing strengths of local distributors also presents a threat in some markets

as the competition is paying higher margins to the local distributors.

  Intense competition – Stable profitability has increased the number of players

in the industry over last two years which has put downward pressure on not

only profitability but also on overall sales.

 Imitation of the counterfeit and low quality product is also a threat to

SoftBank’s product especially in the emerging markets and low income

markets.

Limitations of SWOT Analysis for SoftBank

Although the SWOT analysis is widely used as a strategic planning tool, the analysis

does have its share of limitations.

 Certain capabilities or factors of an organization can be both a strength and

weakness at the same time. This is one of the major limitations of SWOT

analysis . For example changing environmental regulations can be both a

threat to company it can also be an opportunity in a sense that it will enable

the company to be on a level playing field or at advantage to competitors if it

able to develop the products faster than the competitors.

 SWOT does not show how to achieve a competitive advantage, so it must not

be an end in itself.

 The matrix is only a starting point for a discussion on how proposed

strategies could be implemented. It provided an evaluation window but not

an implementation plan based on strategic competitiveness of SoftBank

 SWOT is a static assessment - analysis of status quo with few prospective

changes. As circumstances, capabilities, threats, and strategies change, the

 dynamics of a competitive environment may not be revealed in a single

matrix.

 SWOT analysis may lead the firm to overemphasize a single internal or

external factor in formulating strategies. There are interrelationships among

the key internal and external factors that SWOT does not reveal that may be

important

in devising strategies.

Weighted SWOT Analysis of SoftBank

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate

managers decided to provide weightage to each internal strength and weakness of

the firm. Organizations also assess the likelihood of events taking place in the

coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic

SWOT analysis because with Weighted SWOT Analysis SoftBank managers can focus

on the most critical factors and discount the non-important one. It also solves the

long list problem where organizations ends up making a long list but none of the

factors deemed too critical.

Limitation of Weighted SWOT analysis of SoftBank

This approach also suffers from one major drawback - it focus on individual

importance of factor rather than how they are collectively important and impact the

business holistically.