real swot analysis
TRANSCRIPT
REAL SWOT ANALYSIS
SWOT ANALYSIS
What is SWOT Analysis?
A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats and is a simple and powerful way to analyze your company's present marketing situation.
The best way to understand SWOT is to look at an actual example: AMT is a computer store in a medium-sized market in the United States. Lately it has suffered through a steady business decline caused mainly by increasing competition from larger office products stores with national brand names. The following is the SWOT analysis included in its marketing plan.
STRENTH:
Knowledge. Our competitors are retailers, pushing boxes. We know systems, networks, connectivity, programming, all the VARs, and data management.
Relationship selling. We get to know our customers, one by one. Our direct sales force maintains a relationship.
History. We've been in our town forever. We have loyalty of customers and vendors. We are local.
WEAKNESSES:
Costs. The chain stores have better economics. Their per-unit costs of selling are quite low. They aren't offering what we offer in terms of knowledgeable selling, but their cost per square foot and per dollar of sales are much lower.
Price and volume. The major stores pushing boxes can afford to sell for less. Their component costs are less and they have volume buying with the main vendors.
Brand power. Take one look at their full page advertising, in color, in the Sunday paper. We can't match that. We don't have the national name that flows into national advertising.
OPPORTUNITIES:
Local area networks. LANs are becoming commonplace in small business, and even in home offices. Businesses today assume LANs as part of normal office work. This is an opportunity for us because LANs are much more knowledge and service intensive than the standard off-the-shelf PC.
The Internet. The increasing opportunities of the Internet offer us another area of strength in comparison to the box-on-the-shelf major chain stores. Our customers want more help with the Internet, and we are in a better position to give it to them.
Training. The major stores don't provide training, but as systems become more complicated, with LAN and Internet usage, training is more in demand. This is particularly true of our main target markets.
Service. As our target market needs more service, our competitors are less likely than ever to provide it. Their business model doesn't include service, just selling the boxes.
THREATS :
The computer as appliance. Volume buying and selling of computers as products in boxes, supposedly not needing support, training, connectivity services, etc. As people think of the computer in those terms, they think they need our service orientation less.
The larger price-oriented store. When we have huge advertisements of low prices in the newspaper, our customers think we are not giving them good value.
SWOT analysis is a simple framework for generating strategic alternatives from a situation analysis. It is applicable to either the corporate level or the business unit level and frequently appears in marketing plans. SWOT (sometimes referred to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The SWOT framework was described in the late 1960's by Edmund P. Learned, C. Roland Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text and Cases (Homewood, IL: Irwin, 1969). The General Electric Growth Council used this form of analysis in the 1980's. Because it concentrates on the issues that potentially have the most impact, the SWOT analysis is useful when a very limited amount of time is available to address a complex strategic situation.
The following diagram shows how a SWOT analysis fits into a strategic situation analysis.
Situation Analysis
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Internal Analysis
External Analysis
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Strengths Weaknesses
Opportunities Threats
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SWOT Profile
The internal and external situation analysis can produce a large amount of information, much of which may not be highly relevant. The SWOT analysis can serve as an interpretative filter to reduce the information to a manageable quantity of key issues. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats.
Internal Analysis:
The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses. Factors should be evaluated across the organization in areas such as:
Company culture Company image Organizational structure Key staff Access to natural resources Position on the experience curve Operational efficiency Operational capacity Brand awareness Market share Financial resources Exclusive contracts Patents and trade secrets
The SWOT analysis summarizes the internal factors of the firm as a list of strengths and weaknesses.
External Analysis:
An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment may be related to:
Customers Competitors Market trends Suppliers Partners Social changes New technology Economic environment Political and regulatory environment
The last four items in the above list are macro-environmental variables, and are addressed in a PEST analysis. The SWOT analysis summarizes the external environmental factors as a list of opportunities and threats.
How to Perform a SWOT Analysis?
A SWOT Analysis is an integral part of a marketing plan and can also be part of a business plan. Knowing what a SWOT Analysis is and how to perform one is very important.
Conclusion:
SWOT helps a company to se itself for better and for worse. Companies are inherently insular and inward looking SWOT’s are a means by which a company can better understand what it does very well and where its shortcomings are. SWOT’s will help the company size up the competitive landscape and get some insight into the vagaries of the marketplace.
SWOT analysis has been a framework of choice among many managers for along time because of its simplicity and its portrayal of the essence of sound strategy formulation - matching a firm’s opportunities and threats wit its strengths and weaknesses. Central to making SWOT analysis effective is accurate internal analysis – the identification of specific strengths and weaknesses around which sound strategy can be built.
SWOT ANALYSIS OF PEPSI-CO
The following table shows the internal and external factors affecting the market opportunities for PepsiCo. This SWOT analysis also shows PepsiCo's internal strengths such as their experienced management team, a competitive product line, a global marketing realm, and the continuous efforts by their research and development to research trends in the industry and to be creative in exploiting those trends. Some possible opportunities noted in the SWOT analysis are the growing markets for specialized ethnic foods and healthier food products. Another opportunity is that the income of consumers is high enabling them to be less price sensitive, and convenience is becoming evermore important not only to the United States but to many countries around the world.
Although PepsiCo has much strength, a few weaknesses lie in the fact that the company is so large and could possibly lose focus or have internal conflict problems. A few of the threats PepsiCo must stay aware of are the ease of reliability of its product line, the almost pure competition in pricing for its products, and the quickness of technological advances causing existing products to be no longer the most advanced.
Internal Factors
Strengths
Weaknesses
Management
Experienced, broad base of interests and knowledge
Large size may lead to conflicting interests
Product Line
Unique, tastes good, competitive price, and convenient
New one calorie products have no existing customer base, generic brands can make similar drinks - cheaper
Marketing
Diverse, and global awareness
May lose focus, may not be segmented enough
Personnel
International, diverse positions
Possible conflicts due to so many people, possible trouble staying focused
Finance
High sales revenue, high sale growth, large capital base
High expenses, may have trouble balancing cash-flows of such a large operation
Manufacturing
Low costs and liabilities due to outsourcing of bottling
Lose control and quality standards
Research & Development
Continuous efforts to research trends an reinforce creativity
May concentrate too much on existing products, intra-preneuralship may not be welcomed
External Factors
Opportunities
Threats
Consumer/Social
Huge market in the healthy products and growing market for specialized foods for ethnic groups
More expensive products than Coke, such a high price may limit lower income families from buying a Pepsi product
Competitive
Distinctive name, product and packaging in with regards to its markets
Not entirely patentable, constant replicability by competitors
Technological
Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency
Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced
Economic
Consumer income is high, more tend to eat out, convenience is important to U.S.
Very elastic demand, almost pure competition
Legal/Regulatory
High U.S. Food & Drug Administration standards eliminate overnight competitors
SWOT ANALYSIS OF PEPSI IN PAKISTAN
STRENTH
1. Company Image:
It also is a reputable org. and is well known all over the world. Perception of producing a high quality product.
2. Quality Conscious:
They maintain a high quality as Pepsi Cola International collect sample from its different production facilities and send them for lab test in Tokyo.
3. Good Relation with Franchise:
Throughout its history it has a good relation with franchisers working in different areas of the world where they have the production facilities.
4. Production Capacity:
It has the highest production capacity i.e. 60,000 cases per day is not only in Pakistan but also in South Asia.
5. Market Share:
It has a highest market share i.e. 62% in Pakistan and leading a far step head from its competitors.
6. Large No. of diversity businesses:
This is also its main strength as it ahs diversity in many businesses such as
i. Pepsi beverages
ii. Pepsi foods
iii. Pepsi Restaurants.
7. High Tech Culture:
The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database an they use computers as business tools for analysis and quick decision making.
8. Sponsorships:
They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim Akram, and Waqar Younas etc. Also sponsor social activates programs like music etc.
WEAKNESS
1. Decline in taste:
During the last years, it was published in Financial post that there has been big complaints from the customers with regard to the bad taste that they experienced during the span of six months.
2. Political Franchises:
Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political support from a political party which is in opposition. In; their era in government less taxes are imposed on them but relation increases as they come in opposition. So the selection is not appropriate as this thing is harmful to their image as well as the strategies.
3. Short term Approach:
They have a lack of emphasis on this in their advertising such as currently when they losses the bid for official drink in the 96 cricket world cup. They started a campaign in which they highlight the factor such as “nothing official about it”.
4. Weak Distribution:
They lack behind in catering the rural areas and just concentrating in the urban areas.
5. Low consumer knowledge:
Unable to maximize local consumer knowledge.
6. Lack of soft drink:
Lack of soft drink “know-how” as a result of diversified business units and generalist managers
OPPORTUNITIES
1. Increase Population:
As almost in all over the world growth rate is increasing which in turn increases the demand of products and necessities and especially in Asia the market is growing at a faster rate as compare to other continents. So they have to attract new entrants.
2. Changing social trend:
As in all over the world people are rushing towards fast food and beverage because of life which has become much faster, it provide the company a favor to capture this fast moving market with its take away product.
3. Diversification:
They may enter in garments business in order to promote their brand mane, by making sports cloths fro players which represent their name by wearing their clothes.
4. Distribution of snack foods:
Opportunity to distribute Pepsi snack foods in the future.
THREATS
1. Imitators:
They also have a problem of imitators as receives complaints from customers that they find take product in disguised of Pepsi’s product.
2. Government Regulation:
They face problem if government employ taxes on them which force them to raise the price of their product.
3. Corporation’s shortage problem:
Again this is also a serious threat from it suppliers as if supplier is unhappy with the company. He may reduce the supply and exploit the company. This action will surely affect the production process.
4. Non-carbonated substitutes:
Non-carbonated substitutes, such as juices and tea brands are maintaining a strong foothold in the market.
5. Political instability:
The big threat to Pepsi in Pakistan is Political instability and civil unrest.
6. Threat of labor strikes:
External threat of labor strikes and power outages in Pakistan.
SWOT MATRIX (TOWS MATRIX)
What is a SWOT Matrix (TOWS Matrix)?
The SWOT Matrix illustrates how management can match the opportunity by facing your institution with its own strength and weekness to yield four sets of possible strategic alternatives. The SWOT Matrix framework lends itself to brainstorming to create alternative strategies that you might not otherwise consider.
How to Perform a SWOT Matrix (TOWS Matrix)?
A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is shown below:
SWOT / TOWS Matrix
Strengths
Weaknesses
Opportunities
S-O strategies
W-O strategies
Threats
S-T strategies
W-T strategies
Basically four main strategies are proposed:
S-O strategies pursue opportunities that are a good fit to the companies’ strengths. These strategies are based on institutional strengths to take advantage of market opportunities.
W-O strategies overcome weaknesses to pursue opportunities. These strategies are based on overcoming institutional weaknesses to take advantage of market opportunities.
S-T strategies identify ways that the firm can use its strengths to reduce its vulnerability to external threats. These strategies are based on institutional strengths to avoid market threats.
W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats. These strategies are based on overcoming/minimizing institutional weaknesses to avoid market threats.
TOWS MATRIX OF PEPSI
We have discussed SWOT analysis of Pepsi-Co in our previous topic now here we are going to discuss the TOWS Matrix of Pepsi-Co, keeping in mind its SWOT analysis. Following is the detailed analysis of Pepsi-Cola TOWS matrix:
‘WT’ ANALYSIS
One weakness that Pepsi posses is that it has very strong taste it really feels that something highly toxic going inside the body, where as the same product of the coke is not much strong.
They also have a problem of imitators as receives complaints from customers that they find take product in disguised of Pepsi’s product. During the last years, it was published in financial post that there has been big complaints from the customers with regard to the bad taste that they experienced during the span of six months. If they soon pay no attention towards that this will create a big problem for them.
Large size may lead to conflicting interests.
New one calorie products have no existing customer base; generic brands can make similar drinks – cheaper. It is also big threat for any company people may like or dislike new launching product.
Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong political support from a political party which is in opposition. In; their era in government less taxes are imposed on them but relation increases as they come in opposition. So the selection is not appropriate as this thing is harmful to their image as well as the strategies. So this may become a big threat for the Pepsi.
‘WO’ ANALYSIS
They have a lack of emphasis on this in their advertising such as currently when they losses the bid for official drink in the 96 cricket world cup. They started a campaign in which they highlight the factor such as “nothing official about it”. If they don’t focus on sudden changing’s in their advertising then they can convert this weakness into opportunity.
They lack behind in catering the rural areas and just concentrating in the urban areas. They should try to increase their distributions and also focus on capturing rural areas; this will become a big opportunity for them.
The other big weakness on Pepsi is that they don’t pay any attention towards garments. They may enter in garments business in order to promote their brand name, by making sports cloths fro players which represent their name by wearing their clothes. That must increase the customer and income of the Pepsi.
High expenses may have trouble balancing cash-flows of such a large operation. The staff may show dishonesty. They should try to pay much attention towards their cash flow, and audit there statements on regular basis.
‘ST’ ANALYSIS
In many countries Pepsi had more expensive products than Coke; such a high price may limit a lower income family from buying a Pepsi product, therefore which is a big threat for Pepsi that may Pepsi have to face in the future.
In foreign countries Pepsi have many branches with different flavors as compare to Pakistan, which has only 2 or 3 Pepsi products. Non-carbonated substitutes, such as juices and tea brands are maintaining a strong foothold in the market. Pepsi has a big threat from COKE, which are its main competitor from about 100 years.
Pepsi is a foreign company therefore they have a big threat every time on them of Political instability and civil unrest.
The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database and they use computers as business tools for analysis and quick decision making. Computer breakdowns, viruses and hackers can reduce efficiency, and must constantly update products or other competitors will be more advanced.
Continuous efforts to research trends an reinforce creativity, if they fail in their efforts then there is a big threat for the company. The competitors may get benefit by their plans.
‘SO’ ANALYSIS
The whole culture and business operating environment at Pepsi-Cola-West Asia has quick access to a centralized database and they use computers as business tools for analysis and quick decision making. Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency and that will become such a big opportunity for Pepsi.
It has the highest production capacity i.e. 60,000 cases per day is not only in Pakistan but also in South Asia. Established network of 45 distributors each supplying 1,100 retailers. High per capita soft drink consumption – average of 22 servings compared to 5 for Pakistan. At will become such a big opportunity. Due to large production the product of Pepsi is always available in the market and that will become useful to attract taste lovers customers.
Large No. of diversity businesses is also its main strength as it ahs diversity in many businesses such as Pepsi beverages, Pepsi foods, Pepsi Restaurants, and due to large number of diversity they can capture more customer, therefore it will become such a big opportunity for Pepsi.
Pepsi is also a reputable organization, and is well known all over the world. Perception of producing a high quality product and strength can become a big opportunity for Pepsi if they use it in well arranged manner, such as advertising more and also by conducting concerts to attract more customers.
They maintain a high quality as Pepsi Cola International collect sample from its different production facilities and send them for lab test in Tokyo, if they show test reports on label of there products this will also attract customers.
They mainly use celebrities in their advertising campaigning like Imran Khan, Wasim Akram, and Waqar Younas etc. Also sponsor social activates programmed like music etc. this will become such a big opportunity to build such a large number of customers. So we can say that it is one of the big strength that may become a big opportunity for Pepsi.
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Coca Cola
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SWOT Analysis
Strengths WeaknessesInternal -Popularity
-well known-branding obvious and easily recognized-A lot of finance-customer loyalty-International Trade
-Word of mouth -lack of popularity of many Coca Cola’s brands -Most unknown and rarely seen -result of low profile or non-existent advertising -health issues
Threats OpportunitiesExternal -changing health-consciousness
attitude -legal issues -Health ministers-competition (Pepsi)
-many successful brands to pursue-advertise its less popular products-buy out competition. -More Brand recognition
Strengths- Coca Cola is an extremely recognizable company. Popularity is one of its superior strengths that is virtually incomparable. Coca Cola is known very well worldwide. It's branding is obvious and easily recognized. Things like, logos and promos shown on t-shirts, hats, and collectible memorabilia. Without a doubt, no beverage company compares to Coca Cola's social popularity status. Some people buy coke, not only because of its taste, but because it is widely accepted and they feel like they are part of something so big and unifying. At the other end of the spectrum, certain individuals choose not to drink coke, based solely on rebelling from the world's idea that coke is something of such great power. Overwhelming is the best word to describe Coca Cola's popularity. It is scary to think that its popularity has been constantly growing over the years and the possibility that there is still room to grow. If you speak the words “Coca Cola”, it would definitely be recognized all around the
world. Money is another thing that is a strength of the company. Coca Cola deals with massive amounts of money all year. Like all businesses, they have had their ups and downs financially, but they have done well in this compartment and will continue to do well and improve. The money they are earning is substantially better than most beverage companies, and with that money, they put back into their own company so that they can improve. Another strength that is very important to Coca Cola is customer loyalty. The 80/20 rule comes into effect in this situation. Eighty percent of their profit comes from 20% of their loyal customers. Many people/families are extremely loyal to Coca Cola. It would not be rare to constantly find bottles and cases of a product such as coke in a house. It seems that some people would drink coke religiously like some people would drink water and milk. This is an improbable feat. Customers will continually purchase these products, and will probably do so for a very long time. If two parents were avid Coca Cola drinkers, this will be passed down do their children as they grow loyal to the company. With Coca Cola’s ability to sell their product all over the world, customers will continue to buy what they know and what they like…Coca Cola products. Weaknesses- Coca Cola is a very successful company, with limited weaknesses. However they do have a variety of weaknesses that need to be addressed if they want to rise to the next level. Word of mouth is probably a strength and weakness of every company. While many people have good things to say, there are many individuals who are against Coca Cola as a company, and the products in which they produce. Word of mouth unfortunately is something that is very hard to control. While people will have their opinions, you have to try to sway their negative views. If bad comments and views are put out to people who have yet to try Coca Cola products, then that could produce a lost customer which shows why word of mouth is a weakness. Another aspect that could be viewed as a weakness is the lack of popularity of many of Coca Cola’s drinks. Many drinks that they produce are extremely popular such as Coke and Sprite but this company has approximately 400 different drink types. Most are unknown and rarely seen for available purchase. These drinks do not probably taste bad, but are rather a result of low profile or non existent advertising. This is a weakness that needs to be looked at when analyzing their company. Another weakness that has been greatly publicized is the health issues that surround some of their products. It is known that a popular product like coke is not very beneficial to your body and your health. With today’s constant shift to health products, some products could possibly loose customers. This new focus on weight and health could be a problem for the product that are labeled detrimental to you health. Opportunities- Coca Cola has a few opportunities in its business. It has many successful brands that it should continue to exploit and pursue. Coca Cola also has the opportunity to advertise its less popular products. With a large income it has the available money to put some of these other beverages on the market. This could be very beneficial to the company if they could start selling these other products to the same extent that they do with their main products. Another opportunity that we have seen being put to use before is the ability for Coca Cola to buy out their competition.
This opportunity rarely presents itself in the world of business. However, with Coca Cola’s power and success, such a task is not impossible. Coca Cola has bought out a countless number of drink brands. An easy way to turn their profit into your profit is too buy out their company. Even though this may cost a vast amount of money initially, in the long run, if all goes to plan, it results in a large profit. Also, the company will no longer need to worry about this product being part of the competition. Brand recognition is the significant factor affecting Cokes competitive position. Coca Cola is known well throughout 90% of the world population today. Now Coca Cola wants to get there brand name known even better and possibly get closer and closer to 100%. It is an opportunity that most companies will ever dream of, and would be a supreme accomplishment. Coca Cola has an opportunity to continue to widen the gap between them and their competitors. Threats- Despite the fact that Coca Cola dominates its market, it still has to deal with many threats. Even though Coca Cola and Pepsi control nearly 40% of the entire beverage market, the changing health-consciousness attitude of the market could have a serious effect on Coca Cola. This definitely needs to be viewed as a dominant threat. In today’s world, people are constantly trying to change their eating and drinking habits. This could directly affect the sale of Coca Cola’s products. Another possible issue is the legal side of things. There are always issues with a company of such supreme wealth and popularity. Somebody is always trying to find fault with the best and take them down. Coca Cola has to be careful with lawsuits. Health minister could also be looked at as a threat. Again, some people may try to exploit the unhealthy side of Coca Cola’s products and could threaten the status and success of sales. Other threats are of course the competition. Coca Cola’s main competition being Pepsi, sells a very similar drink. Coca Cola needs to be careful that Pepsi does not grow to be a more successful drink. Other product such as juices, coffee, and milk are threats. These other beverage options could take precedent in some people’s minds over Coca Cola’s beverages and this could threaten the potential success it presents again.
Nestle waterSWOT ANALYSIS
Strengths:
• High Quality Obtained By The Usage Of A Special Production Process.
• Own Industrial Laboratories That Perform Constant Control For Physical-chemical And Bacteriological Parameters.
• Daily Sensor Water Analysis for Flavor, Color And Odor.
• Great And Neutral Taste Which Suits All The Family
• Safety And Purity From The Source To The Consumer
• Produced Locally, Close To The Consumer.
Weakness:
• Nestle Pure Life Is Relatively Expensive Than Other Brands.
Opportunities:
• Water Is An Essential Part Of Life And Everyone Prefers To Drink Safe And Healthy Water.
• Nestle Is A Trusted Brand For Providing Good Quality Products.
Threats:
• Tough Competition From Aquafina And Kinley.
Low Entry Barrier
– Economical Uncertaint
