Benefits of doing a swot analysis of a company

Currently, a parent firm is running “the business.”

These businesses typically rely on the goodwill of the parent firm. The venture may benefit from strong marketing resources thanks to the parent company’s bigger financial allocations for advertising. Its success may depend heavily on the parent company’s support in this regard. Strength for the firm comes from the equity capital contributed by the parent corporation. The company needs capital to be able to produce items and offer services to its customers. For the business to continue operating and to buy both current and fixed assets, an increase in capital is also required. The business posse’s twenty-three stores in Queensland, Victoria, and New South Wales. Chain stores remove the need for suppliers and other intermediaries between the final consumers and the manufacturers. Moreover, they also allow the business to specialize in a particular type of product and have a lower operational cost. There is a reduced risk of bad debt as the sales made based on cash at hand. If any of the branches have to be closed because of reduced sales or heavy losses, the general profitability of the organization is not affected because the losses of a single outlet are offset by the profits made by the other stores.

Weaknesses

Overpricing: clients are highly sensitive to pricing schemes and in the event that a company places unrealistic prices on products, consumers ignore their consumption until the prices are revised with an exception for necessities. Though consumers are attracted to quality, they usually prefer the most economical alternatives, and only spend large sums of money on commodities that are important and those that do not have substitutes. This is particularly true for consumers in a period of economic instability. The businesses overpriced goods will eventually result in a further decline in sales as it is likely that the current price for the products on sale exceeds the clients’ willingness and ability to pay. An analysis of the company’s operations also reveals poor customer service. Clients are vital stakeholders in organizations and their view of the company’s products and services should be a great concern for any business and its managers (Anderson et al 1994 pp.54d). Low-quality customer service typically results in increased levels of customer dissatisfaction, a trend that is detrimental to the future success of any business enterprise. Current financial data provided shows that “the business” has suffered a dramatic decline in profitability, failing to create any returns on investment for its shareholders. This suggests that there exists a significant level of operational inefficiency in the company’s management policies.

Opportunities

There are a number of opportunities available for the business to pursue. The first of these is rebranding; defined as a marketing strategy where new design, symbol, name or combination of all these is used to create a new unique image in the mind of the customer, the process is highly effective in removing the effects of a negative company image held by the public. The new management could implement a rebranding exercise to improve the company’s current public image. Combined with a reform of management policy, a rebranding exercise would be instrumental in improving the business’ current sales and would increase its market share. Another opportunity available for the business is an investment in a research and development program. Effective research and development are vital to the success of any business entity. Platforms for research and development would encourage innovation and creativity in the business. Innovations that are popular today have only occurred because of the culmination of years of experimentation in research departments. Long-term commitment is required for the success of research and development efforts, though there are frequent failures, they only increase the pressure to produce successful results. Research and development give a company a competitive advantage over rival manufacturers or service providers, an attribute that could be associated with the fact that one of the major functions of the department is to anticipate future challenges and develop effective solutions for them. R&D can also increase the rate of growth in an organization through the introduction of revolutionary products on the market. Long-term investment in research and development is essential for the success of businesses in the current economic environment, which is characterized by high demand for newer and better products. Despite the fact that returns on investment in research and development are only realized in the long term, once success is attained, the financial rewards are remarkably high.

Threats

In consideration of the principles of SWOT analysis, Porter’s theory of the five forces, and the business’ current financial situation, there are a number of internal and external threats that could affect its recovery and success (Porter 2008 pp. 28.). “The business” faces a significant threat from the entry of new competitors into the market. Newcomers onto the market could be entirely new companies or older companies that are expanding their product range. Moreover, it faces the greatest existential threat from the latter. This observation arises from the fact that existing corporations have already established reputations with the public and have vast resources. The most significant internal threat arises from organizational inefficiency (Dyson, 2004 pp. 631-640.). Low profitability and poor customer service would greatly diminish the business’ ability to compete with rivals.

References

Robert G. Dyson, (2004). Strategic development and SWOT analysis at the University of Warwick. European journal of operational research, 152(3), pp. 631-640.

Michael E. Porter, (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), pp.358-40.

Anderson, E.W., Fornell, C. and Lehmann, D.R., (1994). Customer satisfaction, market share, and profitability: Findings from Sweden. The Journal of Marketing, pp.358-66.