Swot Analysis

INDEX

INTRODUCTION 2-3

SITUATION ANALYSIS 4-5

AIM OF SWOT 6

APPLICATION OF SWOT 6-7

CASE STUDY 8-12

CONCLUSION 13

BIBLIOGRAPHY 14

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INTRODUCTION TO SWOT

The SWOT analysis is an extremely useful tool for understanding and decision-making

for all sorts of situations in business and organizations. SWOT is an acronym for

Strengths, Weaknesses, Opportunities, and Threats. Information about the origins and

inventors of SWOT analysis is below. The SWOT analysis headings provide a good

framework for reviewing strategy, position and direction of a company or business

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proposition, or any other idea. It involves specifying the objective of the business

venture or project and identifying the internal and external factors that are favorable and

unfavorable to achieve that objective. The technique is credited to Albert Humphrey, who

led a convention at Stanford University in the 1960s and 1970s using data from Fortune

500 companies

Identification of SWOTs is essential because subsequent steps in the process of planning

for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the

SWOTs. If the objective is NOT attainable a different objective must be selected and the

process repeated. SWOT analysis can be used for all sorts of decision-making, and the

SWOT template enables proactive thinking, rather than relying on habitual or instinctive

reactions.

Modern SWOT analysis in business and marketing situations is normally structured so

that a 2x2 matrix grid can be produced, according to two pairs of dimensions.

Strengths and Weaknesses, are 'mapped' or 'graphed' against Opportunities and

Threats.

The origins of the SWOT analysis technique is credited by Albert Humphrey, who led a

research project at Stanford University in the 1960s and 1970s using data from many top

companies.

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The goal was to identify why corporate planning failed. The resulting research identified

a number of key areas and the tool used to explore each of the critical areas was

called SOFT analysis.  Humphrey and the original research team used the categories

“What is good in the present is Satisfactory, good in the future is an Opportunity; bad in

the present is a Fault and bad in the future is a Threat.”

SITUATION ANALYSIS

The internal factors may be viewed as strengths or weaknesses depending upon their

impact on the organization's objectives. What may represent strengths with respect to one

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objective may be weaknesses for another objective. The factors may include all of

the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The

external factors may include macroeconomic matters, technological change, legislation,

and socio-cultural changes, as well as changes in the marketplace or competitive position.

The results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For

example, it may tend to persuade companies to compile lists rather than think about what

is actually important in achieving objectives. It also presents the resulting lists

uncritically and without clear prioritization so that, for example, weak opportunities may

appear to balance strong threats.

It is prudent not to eliminate too quickly any candidate SWOT entry. The importance of

individual SWOTs will be revealed by the value of the strategies it generates. A SWOT

item that produces valuable strategies is important. A SWOT item that generates no

strategies is not important.

AIM OF SWOT ANALYSIS

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The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective. These come from within the company's unique

value chain. SWOT analysis groups key pieces of information into two main categories:

Internal factors – The strengths and weaknesses internal to the organization.

External factors – The opportunities and threats presented by the external

environment to the organization.

APPLICATION OF SWOT ANALYSIS

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SWOT analysis is a powerful model for many different situations. The SWOT tool is not

just for business and marketing. Here are some examples of what a SWOT analysis can

be used to assess:

a company (its position in the market, commercial viability, etc)

a method of sales distribution

a product or brand

a business idea

a strategic option, such as entering a new market or launching a new product

a opportunity to make an acquisition

a potential partnership

changing a supplier

outsourcing a service, activity or resource

project planning and project management

an investment opportunity

personal financial planning

personal career development - direction, choice, change, etc.

education and qualifications planning and decision-making

life-change - downshifting, relocation.

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CASE STUDY

INTRODUCTION

McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff

employees started as a restaurant level employee. In addition, 67,000 McDonalds

restaurant managers and assistant managers were promoted from restaurant staff. Fortune

Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities."

McDonalds invests more than $1 billion annually in training its staff, and every year

more than 250,000 employees graduate from McDonald's training facility, Hamburger

University.

Strengths

The business is ranked number one in Fortune Magazine's 2008 list of most admired food

service companies.

One of the world's most recognizable logos (the Golden Arches) and spokes character

(Ronald McDonald the clown). According to the Packard Children's Hospital's Center for

Healthy Weight children age 3 to 5 were given food in the McDonalds packaging and

then given the same food without the packaging, and they preferred the food in the

McDonald's packaging every single time.

McDonalds is a community oriented, socially responsible company. They run Ronald

McDonald House facilities, which provide room and board, food and sibling support at a

cost of only $10 a day for families with children needing extensive hospital care. Ronald

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McDonald Houses are located in more than 259 local communities worldwide, and

Ronald McDonald Care Mobile programs offers cost effective medical, dental and

education services to children. They also sponsor Olympic athletes.

They are a global company operating more than 23,500 restaurants in 109 countries. By

being spread out in different regions, this gives them the ability to weather economic

fluctuations which are localized by country. They can also operate effectively in an

economic downturn due to the social need to seek out comfort foods.

They successfully and easily adapt their global restaurants to appeal to the cultural

differences. For example, they serve lamb burgers in India and in the Middle East, they

provide separate entrances for families and single women.

Approximately 85% of McDonald's restaurant businesses world-wide are owned and

operated by franchisees. All franchisees are independent, full-time operators and

McDonald's was named Entrepreneur's number-one franchise in 1997. They have global

locations in all major airports, and cities, along the highways, tourist locations, theme

parks and inside Wal-Mart.

They have an efficient, assembly line style of food preparation. In addition they have a

systemization and duplication of all their food prep processes in every restaurant.

McDonald's uses only 100% pure USDA inspected beef, no fillers or additives.

Additionally the produce is farm fresh. McDonald's serves 100% farm raised chicken no

fillers or additives and only grade-A eggs. McDonald's foods are purchased from only

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certified and inspected suppliers. McDonalds works closely with ranchers, growers and

suppliers to ensure food quality and freshness.

McDonalds only serves name brand processed items such as Dannon Yogurt, Kraft

Cheese, Nestle Chocolate, Dasani Water, Newman's Own Salad Dressings, Heinz

Ketchup, Minute Maid Juice.

McDonald's takes food safety very seriously. More than 2000 inspections checks are

performed at every stage of the food process. McDonalds are required to run through 72

safety protocols every day to ensure the food is maintained in a clean contaminate free

environment.

McDonald's was the first restaurant of its type to provide consumers with nutrition

information. Nutrition information is printed on all packaging and more recently added to

the McDonald's Internet site. McDonalds offers salads, fruit, roasted chicken, bottled

water and other low fat and calorie conscious alternatives.

Weaknesses

Their test marketing for pizza failed to yield a substantial product. Leaving them much

less able to compete with fast food pizza chains.

High employee turnover in their restaurants leads to more money being spent on training.

They have yet to capitalize on the trend towards organic foods.

McDonald's have problems with fluctuations in operating and net profits which

ultimately impact investor relations. Operating profit was $3,984 million (2005) $4,433

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million (2006) and $3,879 million (2007). Net profits were $2,602 million (2005), $3,544

million (2006) and $2,395 million (2007).

Opportunities

In today's health conscious societies the introduction of a healthy hamburger is a great

opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA

approval on marketing a low fat low calorie hamburger with low calorie combo

alternatives. Currently McDonald's and its competition health choice items do not include

hamburgers.

They have industrial, Formica restaurant settings; they could provide more upscale

restaurant settings, like the one they have in New York City on Broadway, to appeal to a

more upscale target market.

Provide optional allergen free food items, such as gluten free and peanut free.

In 2008 the business directed efforts at the breakfast, chicken, beverage and convenience

categories. For example, hot specialist coffees not only secure sales, but also mean that

restaurants get increasing numbers of customer visits. In 2009 McDonald's saw the full

benefits of a venture into beverages.

Threats

They are a benchmark for creating "cradle to grave" marketing. They entice children as

young as one year old into their restaurants with special meals, toys, playgrounds and

popular movie character tie-ins. Children grow up eating and enjoying McDonalds and

then continue into adulthood. They have been criticized by many parent advocate groups

for their marketing practices towards children which are seen as marginally ethical.

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They have been sued multiple times for having "unhealthy" food, allegedly with addictive

additives, contributing to the obesity epidemic in America. In 2004, Michael Spulock

filmed the documentary Super Size Me, where he went on an all McDonalds diet for 30

days and wound up getting cirrhosis of the liver. This documentary was a direct attack on

the QSR industry as a whole and blamed them for America's obesity epidemic. Due in

part to the documentary, McDonalds no longer pushes the super size option at the dive

thru window.

Any contamination of the food supply, especially e-coli.

Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC and any mid-

range sit-down restaurants.

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CONCLUSION

It is not simply enough to identify the strengths, weaknesses, opportunities, and threats of

a company. In applying the SWOT analysis it is necessary to minimize or avoid both

weaknesses and threats. Weaknesses should be looked at in order to convert them into

strengths. Likewise, threats should be converted into opportunities. Lastly, strengths and

opportunities should be matched to optimize the potential of a firm. Applying SWOT in

this fashion can obtain leverage for a company .

SWOT analysis can be extremely beneficial to those who objectively analyze their

company. The marketing manager should have rough outline of potential marketing

activities that can be used to take advantage of capabilities and convert weaknesses and

threats. However, at this stage, there will likely be many potential directions for the

managers to pursue. Due to the limited resources that most firms have, it is difficult to

accomplish everything at once. The manager must prioritize all marketing activities and

develop specific goals and objectives for the marketing plan.

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BIBLIOGRAPHY

www.google.com

www.swotmatrix.com

The swot analysis by Lawrence G. Fine

www.marketingteacher.com

www.wikipedia.org

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