Rakuten: Business Environment Analysis Using SWOT and the Five Forces
Introduction
Rakuten, a leading Japanese e-commerce and online retail company, has expanded its business globally, encompassing various industries such as e-commerce, online travel, digital content, and fintech. This analysis will provide a comprehensive understanding of Rakuten’s business environment, strategy, and opportunities, and challenges using SWOT (Strengths, Weaknesses, Opportunities, and Threats) and Porter’s Five Forces analysis.
SWOT Analysis
Strengths
1. Diversified Business Portfolio: Rakuten’s diversified business portfolio, spanning various industries, allows it to mitigate risks and capitalize on growth opportunities.
2. Strong Brand Value: Rakuten has established itself as a strong brand in Japan and globally, which attracts customers and partners.
3. Technological Innovation: Rakuten has invested heavily in technological advancements, such as artificial intelligence (AI), blockchain, and big data analytics, which has improved its operational efficiency and enhanced customer experience.
4. Strategic Partnerships: Rakuten has formed strategic partnerships with global companies, such as Walmart and Tencent, strengthening its market position and expanding its customer base.
Weaknesses
1. Dependence on the Japanese Market: Despite its global expansion, Rakuten still heavily relies on the Japanese market, making it vulnerable to economic fluctuations within the country.
2. Limited Physical Presence: Rakuten lags behind competitors such as Amazon in terms of physical presence, with limited brick-and-mortar stores.
3. High Competition: Rakuten faces intense competition from established global players such as Amazon, Alibaba, and eBay, affecting its market share and growth potential.
Opportunities
1. Expansion into Emerging Markets: There is a vast potential for growth in emerging markets like India, Southeast Asia, and Africa, where e-commerce and internet penetration are rapidly expanding.
2. Investments in New Technologies: Rakuten can capitalize on new technologies, such as augmented reality (AR), virtual reality (VR), and the Internet of Things (IoT) to enhance its product offerings and customer experience.
3. Strengthening Fintech Services: Rakuten can leverage its existing fintech services and develop new services to cater to the growing demand for digital payment solutions and financial services.
Threats
1. Increasing Competition: As mentioned earlier, Rakuten faces intense competition from global and local players in various markets, which can affect its profitability and growth.
2. Regulatory Changes: Changes in regulations, especially in the fintech and e-commerce sectors, can impact Rakuten’s business operations and create additional compliance costs.
3. Cybersecurity Risks: As an online business, Rakuten is vulnerable to cyberattacks and data breaches, which can lead to customer distrust and financial losses.
Porter’s Five Forces Analysis
1. Competitive Rivalry (High): The e-commerce and online retail industry is highly competitive, with established players such as Amazon, Alibaba, and eBay dominating the market. Rakuten needs to continuously innovate and differentiate itself to maintain its market position.
2. Threat of New Entrants (Moderate): While the initial cost of entering the e-commerce market is relatively low, establishing a strong brand presence and customer base is challenging, offering some level of protection for Rakuten.
3. Bargaining Power of Suppliers (Low): Rakuten has a vast supplier network, reducing the bargaining power of individual suppliers. Moreover, the company can switch suppliers relatively easily if needed.
4. Bargaining Power of Buyers (High): Consumers have numerous options for online shopping and can easily switch between platforms. Rakuten must focus on maintaining customer satisfaction and loyalty to mitigate this risk.
5. Threat of Substitute Products (Moderate): Although brick-and-mortar stores and other online platforms can be considered substitutes, the growing trend of e-commerce and online shopping has solidified the market position of companies like Rakuten.
Conclusion
Rakuten’s diversified business portfolio, strong brand value, and technological innovation serve as key strengths in the competitive e-commerce landscape. However, its heavy reliance on the Japanese market and limited physical presence pose challenges. The company can capitalize on opportunities in emerging markets, new technologies, and fintech services to bolster its growth and market position. By strategically addressing competition and evolving consumer preferences, Rakuten can continue to thrive in the global business environment.