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Company Situation Analysis

Company Situation Analysis. Questions to Answer:. How well is the present strategy working? What are the company’s SWOT? Are the prices and costs competitive? How strong is the competitive position? What strategic issues does the company face?. How Well Strategy Is Working.

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Company Situation Analysis

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  1. Company Situation Analysis

  2. Questions to Answer: • How well is the present strategy working? • What are the company’s SWOT? • Are the prices and costs competitive? • How strong is the competitive position? • What strategic issues does the company face?

  3. How Well Strategy Is Working • Based on competitive approach • Low-cost leader • Differentiation • Market niche

  4. How Well Strategy Is Working • Qualitative analysis • Completeness • Internal consistency • Rationale • Suitability to the situation • vs. Quantitative analysis • Achieving stated financial and strategic objectives • Whether considered an industry leader

  5. How Well Strategy Is Working • Indicators of performance • Market share • Attraction and retention of customers • Profit margins • Net profit and ROI • Credit rating • Sales growth • Trends in stock price • Image and reputation • Measures of continuous improvement

  6. SWOT • Strengths • Skill or important expertise • Valuable physical assets • Valuable human assets • Valuable organizational assets • Valuable intangible assets • Competitive capabilities • Position of market advantage • Alliances and cooperative ventures

  7. SWOT • Weaknesses • Deficiencies in skills or needed expertise • Lack of physical, organizational or intangible assets • Missing competitive capabilities in key areas

  8. SWOT • Opportunities • Not every industry opportunity is a company opportunity • Offer avenues for profitable growth • Offer potential for competitive advantage • Match well with company’s financial and organizational capabilities

  9. SWOT • Threats • Emergence of new products • Emergence of new technologies • Entry of new competitors • New regulations • Vulnerability to interest rate fluctuations • Vulnerability to FX rate fluctuations • Demographic shifts • Political upheaval

  10. SWOT Example: Panera, p. C85 • Strengths • An attractive and appealing menu (see case Exhibit 6)—Panera offers high quality food at a good price (the company delivers good value for the money); moreover, it has menu offerings for the more health/weight-conscious diner • Bread-baking expertise (definitely a core competence)—artisan breads are Panera’s signature product • Panera Bread is the nationwide leader in the bakery-café segment • Panera Bread has high ratings in customer satisfaction studies • A good brand name that management is continuing to strengthen

  11. SWOT Example: Panera, p. C85 • Strengths (cont.) • The fresh dough operations and sales of fresh dough to franchised stores is a source of revenue and profit (see case Exhibit 1 showing that fresh dough cost of sales to franchisees run well below the revenues from fresh dough sales to franchisees) • Initial success in catering—extends the company’s market reach • Has attracted good franchisees—sales at franchised stores run a bit higher than those at company-owned stores (see case Exhibit 2) • The financial strength to fund the company’s growth and expansion (see case Exhibit 1) without burdening the company’s balance sheet unduly with debt

  12. SWOT Example: Panera, p. C85 • Weaknesses • A less well-known brand name than some rivals (Applebee’s, Starbucks) • Sales at franchised stores run a bit higher than those at company-owned stores—why is this occurring? Are franchisees better operators?

  13. SWOT Example: Panera, p. C85 • Opportunities • Open more outlets, both company-owned and franchised—there is untapped growth potential in a number of suburban markets as shown in case Exhibit 3 • Open Panera Bread locations outside the U.S. as market opportunities in the U.S. begin to dry up

  14. SWOT Example: Panera, p. C85 • Threats • Rivals begin to imitate some of Panera’s menu offerings and/or dining ambience, thus stymieing to some extent Panera’s ability to clearly differentiate itself from rival chains • New rival restaurant chains grab the attention of consumers and draw some patrons away from Panera—in other words, competition from other restaurant chains (either those in the fast-casual segment or other restaurant categories) becomes more intense • Panera Bread begins to saturate the market with outlets, such that it becomes harder to find attractive locations for new stores and the company’s growth slows

  15. Company Competencies • Company competence • Product of experience and learning • Real proficiency • Consciously built and developed • Competitive capability • Valuable and beneficial to customers • Differentiate company from competitors • Enhances competitiveness

  16. Company Competencies • Core competence • Internal activities performed well • Central to competitiveness and profitability • Resides in people, not assets • Distinctive competence • Activities performed well compared to competitors • Basis for competitive advantage

  17. Distinctive Competence • Importance • Competitive capability provided • Cornerstone of strategy • Sustainable competitive advantage • Resource is hard to copy • Longevity of resource • Resource is competitively superior • Not easily trumped

  18. Differences in Costs • Items purchased from suppliers • Basic technology and age of plants • Economies of scale • Exposure to inflation and FX rates • Marketing, sales and promotion • Transportation and shipping • Forward channel distribution

  19. Value Chains • Activities that create value for the customer • Strategy critical • Based on core competencies • Benchmarking costs of key activities • “Best practices”

  20. Primary activities Purchases and inbound logistics Operations Outbound logistics Sales and marketing Service Support activities R & D, technology and systems development Human resources management General administration Value Chains

  21. Upstream Negotiate Integrate Train suppliers Use substitutes Make up the difference elsewhere Downstream Push to reduce markup Train distributors Develop more economical distribution strategy Make up the difference elsewhere Strategic Options

  22. Company Streamline Operations Reengineer processes and practices Eliminate cost activities Relocate activities geographically Outsourcing Technological improvements Innovation Simplify product design (Value Engineering) Achieve backward and forward savings Strategic Options

  23. Company’s Competitive Position • Competitive strength assessment • List industry’s key success factors • Rate firm and rivals on each factor • Sum individual ratings • Determine net advantage or disadvantage • Weighted vs. unweighted

  24. Company’s Strategic Issues • Whether current strategy is adequate to meet trends in competitive forces • Adjust to respond to driving forces of industry • Industry’s future key success factors • Vulnerability to efforts of rivals • Capitalize on strengths • Prioritize opportunities • Protection against threats and weaknesses

  25. Company’s Strategic Issues • Competitive advantage or disadvantage • Strong and weak spots in current strategy • Additional actions needed • Improve cost position • Capitalize on emerging opportunities • Strengthen competitive position

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