SWOT Lesson and Overview



SWOT AnalysisSWOT analysis is a tool for auditing an organization and its environment. SWOT analysis is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal SWOT factors. Opportunities and threats are external SWOT factors. A strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a positive external factor. A threat is a negative external factor.We should aim to turn our weaknesses into strengths, and our threats into opportunities. Then finally, SWOT will give managers options to match internal strengths with external opportunities. SWOT is that simple. The outcome should be an increase in ‘value’ for customers – which hopefully will improve our competitive advantage.The main purpose of SWOT analysis has to be to add value to our products and services so that we can recruit new customers, retain loyal customers, and extend products and services to customer segments over the long-term. If undertaken successfully, we can then increase our Return On Investment (ROI).Simple rules for successful SWOT analysis.Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.SWOT analysis should distinguish between where your organization is today, and where it could be in the future.SWOT should always be specific. Avoid grey areas.Always apply SWOT in relation to your competition i.e. better than or worse than your competition.Keep your SWOT short and simple. Avoid complexity and over analysisSWOT analysis is subjective.Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It’s that simple. Below are some examples of SWOT analysis. In SWOT, strengths and weaknesses are internal factors.For example:A SWOT strength could be:Your specialist marketing expertise.A new, innovative product or service.Location of your business.Quality processes and procedures.Any other aspect of your business that adds value to your product or service.A SWOT weakness could be:Lack of marketing expertise.Undifferentiated products or services (i.e. in relation to your competitors).Location of your business.Poor quality goods or services.Damaged reputation.In SWOT, opportunities and threats are external factors.For example:A SWOT opportunity could be:A developing market such as the Internet.Mergers, joint ventures or strategic alliances.Moving into new market segments that offer improved profits.A new international market.A market vacated by an ineffective competitor.A SWOT threat could be:A new competitor in your home market.Price wars with competitors.A competitor has a new, innovative product or petitors have superior access to channels of distribution.Taxation is introduced on your product or service.A word of caution – SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors. So use SWOT as guide and not a prescription.SWOT Analysis Whole FoodsCompany HistoryIn 1980 twenty-five year old college dropout John Mackey and twenty-one year old Rene Lawson Hardy created the Whole Food Company (WFC) in Austin, Texas. It was born with the idea to provide a grocery store featuring good, wholesome food; not a "health food" store filled with pills and potions. Sales doubled each year for the first four years. This SWOT analysis is about Whole Foods.They have an amazing website with blogs, recipes, sale items, tips, podcasts and more. The website is well designed and explains the Whole Foods concept very well.They are supported by complementary industries such as: Health Industry, Health Insurance Companies, Health Care Specialists, Fitness Centers and Wellness Programs.Whole Foods has a commitment to selling high quality natural and organic products, satisfying and delighting its customers, and caring about their communities and environment. These three factors, in large part, are why customers are attracted to the brand.They have a hip image and attract younger, more affluent shoppers.Their reputation for having the largest selection of organic, healthy, locally grown foods of any supermarket worldwide makes them attractive to customers.WeaknessesRight now the US government subsidizes (provides money to support) the corn growers industry, but not the organic farmer-therefore companies not utilizing organic ingredients can grow more food cheaper and faster.The number of organic food farmers is growing, but slowly and the supply chain for organic foods is underdeveloped and cannot meet the needs of the American food system.They are known as "whole paycheck" because some of the foods are higher priced than other grocery stores.OpportunitiesThe commitment to high quality natural and organic foods leads to higher prices than non-organic and natural foods. As the world is becoming more aware of how important it is to eat healthy, Whole Foods need to be there to pull those consumers in to the stores. Many consumers have the misconception that healthy foods are more expensive then other foods, when in fact they do provide a store brand that is comparable in price to other grocery chains. Whole Foods needs to change the attitudes of those consumers.During a time when the economy is in a downturn, Whole Foods has to find a cost effective way to give a little something back to customers that do buy on a regular basis and try to get new customers in the same tactic. Making a free rewards card–after so much bought or points accumulated a customer can get a discount on the next purchase or get something free from the store.They could sponsor more town events (not just in-store events) to increase recognition of the brand name and make customers more aware of the products they offer.They need to promote and build brand identity with organic foods, eventually leading to the idea that when people think "organic" they will think "Whole Foods."ThreatsWhole Foods has increased competition from existing supermarkets that are re-branding in order to compete with them-Wal-Mart, HEB Central Market (Texas, Mexico) Wegman’s (New York), and Publix (Southern US). These stores have copied the atmospherics and some of the food items sold by Whole Foods.The economic situation in the US is a threat due to Americans’ desire to save money and that means groceries. Food is expensive and Americans’ don’t see the cost effectiveness of purchasing organic food.Any changes in government regulations on organic food would impact consumer spending even further.What a ride. Back in 1980, we started out with one small store in Austin, Texas. Today, we’re the world’s leader in natural and organic foods, with more than 270 stores in North America and the United Kingdom. What a long, strange trip it’s been. We still honor our original ideals, and we think that has a lot to do with our success. StrengthsWhole Foods Market (Whole Foods) owns and operates a chain of natural and organic foods supermarkets through several wholly-owned subsidiaries. The company’s supermarkets are located in the US, Canada, and the UK. It employs about 52,900 people.In 1984, Whole Foods Market began its expansion out of Austin. While continuing to open new stores from the ground up, they fueled rapid growth by acquiring other natural foods chains throughout the 90’s: Wellspring Grocery of North Carolina, Bread & Circus of Massachusetts and Rhode Island, Mrs. Gooch’s Natural Foods Markets of Los Angeles, Bread of Life of Northern California, Fresh Fields Markets on the East Coast and in the Midwest, Florida Bread of Life stores, Detroit area Merchant of Vino stores, and Nature’s Heartland of Boston. In 2001, Whole Foods moved into Manhattan, generating a good deal of interest from the media and financial industries. 2002 saw an expansion into Canada and in 2004, Whole Foods Market entered the United Kingdom with the acquisition of seven Fresh & Wild stores.The company recorded revenues of $7,953.9 million during the financial year (FY) ended September 2008, an increase of 20.7% over FY2007.They have had 25 years of double digit revenue growth.They are the undisputed $4.7B Organic Supermarket Industry Leader.Originally, health food stores were small, expensive, and didn’t carry a large variety of products, Whole Foods changed all of this and they became the founding firm of this industry.They offer catering, seasonal products and recipes, in-store events such as cooking classes, free tours around the store for customers with food allergies.Disclaimer: This case study has been compiled from information freely available from public sources. It is merely intended to be used for educational purposes only. ................
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