Importance and Functions of a SWOT Analysis

SWOT Analysis

SWOT Analysis is an empirical framework that helps a company’s management team consider both internal and external influences that influence its activities and results. This tool is called holistic since it considers the company’s environment’s Strengths, Weaknesses, Opportunities, and Threats. The company’s strengths and weaknesses are internal causes, while the opportunities and threats are external factors that can either help or damage the enterprise (Taylor, 2016).

For Ez-Pleeze, a SWOT Analysis would be beneficial as it would aid them in understanding the areas in the organization that they need to improve on. By gaining an understanding of your weaknesses, it is easier to dedicate your time and resources on how to curb them. Additionally, when the company managers are able to understand the strengths available to them, they can focus on these to enable them to gain better financial performance. SWOT Analysis for such an organization would also help Ez-Pleeze place various measures that will insure them against risks associated with their threats. The SWOT Analysis is therefore a useful tool in strategic planning and decision making as it takes into account the various factors that may affect the company. Decision makers are therefore well suited at prioritizing which objectives need to be met first based on the results obtained from their SWOT Analysis. This analytical tool is also beneficial as it safeguards a company’s going concern status by providing opportunities that may benefit the company for years to come. When managers at Ez Pleeze are able to take up some of the opportunities available to them, they will benefit from increased revenue margins, higher market share and an edge over one’s competitors (MindTools, 2017). This will in turn ensure that the company’s operations will be in existence for the foreseeable future.

Internal Strengths of Ez-Pleeze Fast Food Company

The company is one of the largest beef and chicken producers both in the USA and Mexico. It has been mentioned that the company is the fifth largest beef and chicken producers in the United States and the second largest chicken producer in Mexico. This means that the organization has a strong presence in these markets therefore able to generate significant revenue margins from them.

The company has an efficient research and development department which is considered to be an industry leader in the United States when it comes to industry related technology. This means that Ez-Pleeze are able to benefit from technological advancements and innovations in the products and services available to their consumers (BPP Learning Media, 2012).

The company takes good care of their employees through the various health and wellness programs available to them. As this industry is considered to be a labor-intensive industry, Ez-Pleeze strives to retain a loyal work force through such programs and other opportunities for professional growth and development. These include promotions and tuitions which go a long way in keeping employees motivated towards achieving company goals and objectives (BPP Learning Media, 2017).

Ez-Pleeze are always in constant contact and communication with their consumers. This enables them to have a better understanding of their tastes and preferences and employ the same to their products and services. This is crucial in retaining their consumers amidst stiff competition and the ease with which competitors can shift from one producer to the next.

The company supplies its products to more than 50% of the largest food chains in the United States, some of which have operations in other international countries. They are therefore able to benefit from access to new market segments from these fast foods.

Internal Weaknesses of Ez-Pleeze Fast Food Company

The company is experiencing dwindling and thin profit margins. This is as a result of increased expenditure over the years with an aim of maintaining sustainable business operations. For example, investments in technology have costed more than twenty million dollars whose rewards will not be obtained immediately by the organization. Additionally, the company has had to invest approximately five to seven million dollars annually on marketing and advertising expenses due to stiff competition. The cost of goods sold is also high as a result of increasing prices of commodities used in their production process. These expenses have led to low profit margins which has seen shareholders dumping their stock.

These high expenses have also limited the amount of funds available to the company such that they are not able to benefit from acquisitions, mergers, partnerships and other strategies for growth. This affects the company’s performance as its competitors are continually seeking various acquisitions and partnerships to diversify their risk and increase their scale of operations (Martyak, 2014).

The company also has limited presence in the global market, that is, only dominant in USA and Mexico. These two markets are already saturated from the huge number of existing and new entrants seeking market share. Additionally, with increased producers in the market, the company is likely to lose some of their market share to such competitors (BPP Learning Media, 2017).

As a result of limited finances, the company has also not been able to venture into product diversification. Their revenue margins are reliant on their beef and chicken sales to various consumers. The company has limited products in comparison to their competitors. They also have not increased their operations to various consumer segments within their markets including institutional consumers like schools and hospitals.

External Opportunities available to Ez-Pleeze Company

Other food products are available that can contribute to the company’s revenue margins. These include pork and other packaged foods like pizza toppings, tortillas, sauces, meat dishes among others. These products have contributed approximately 25% to the revenue margins of Yellow Down Foods, which is one of the company’s largest competitors. These new food products will also increase their consumer segments as they will have access to new market segments.

The company can also diversify into the production of healthier foods for the health-conscious consumers. Consumers have changing tastes and preferences and many consumers are changing their diet to consuming health conscious foods. This provides a good area through which the company can be able to dominate hence attracting and retaining consumers.

There are various companies around Ez-Pleeze that would provide strategic business ventures and partnerships with them. This will enable them to gain increased managerial expertise, benefit from diversified business acumen, diversify their risk portfolio and even gain access to new consumers. Such partnerships will aid the company in reducing some of the expenditure that has limited their options for growth (Martyak, 2014).

The company can also use fats from their various animals to provide a source of renewable energy. This can also be sought by working together with energy companies as evidenced by the strategic alliance between Yellow Down Foods and Direnium Corporation. Renewable energy will go a long way in reducing the company’s production costs and will increase the company’s brand image and reputation. This is because the community wants to be associated with organizations that are conscious about their environment.

The company can also expand into India and China whose population growths will provide a good source of revenue for the organization. They can also benefit from the same by increasing the consumer base to include institutional consumers including schools.

External Threats posed to Ez-Pleeze Company

The company faces competitive rivalry from other producers of food products in this industry. These include Yellow Down Foods and Beefchix Industries that have higher revenue margins that Ez-Pleeze. These two companies also have higher scale of operations than Ez-Pleeze for example selling of pork and its products and other packaged food products. Such competitors mean that Ez-Pleeze will have reduced market share and dominance. Such competition might lead to reduced prices for products which will adversely affect the financial performance of Ez-Pleeze.

The company faces increased federal and foreign laws combined with regulations from various regulatory bodies that focus on ensuring food safety standards are adhered to. Additionally, the company also faces environmental laws and regulations that safeguard against pollution. As this is a labor-intensive industry there are also other laws and regulations that protect the health, safety and well-being of employees emphasized by safe working conditions.

The prices for commodities used in the production process are continually increasing as a result of various economic fluctuations and market downturns. Such products include natural gas, wheat, and corn among others. Such price increments adversely affect the profit margins attained by Ez-Pleeze. This is because such products are highly relied on in the production process and the company currently has no substitutes to the same that will enable them to maintain their standards of quality in the production process.

The organization also faces the risk of diseases that may affect cattle and poultry. Such diseases including salmonella may affect the revenue margins of their products as consumers will shift to other food products to avoid getting ill. These diseases pose a huge risk such that even if a rumor spreads that there is an ongoing viral or bacterial infection affecting cattle or poultry, the company will be affected by dwindling sales margins.

Recommendations

The company needs to expand its operations by venturing into new market segments mainly India and China. This should be one of the recommended strategies that they should adopt as these new markets will present an opportunity for significant revenue margins. The company has a reputable brand name amongst food chains that have international operations and so they will not spend significantly in marketing and advertising to these new markets.

The company should also venture into supplying pork products and other packaged food stuffs. These two have been a stable source of revenue for Yellow Down Foods by providing them with revenue margins of 25%. This means that it is a viable source of revenue for Ez Pleeze and will also aid in improving their financial performance.

The company should also look for new sources of capital that will enable them to invest in strategic alliances and partnerships. These joint ventures can actually be carries out by organizations for example in India where by the organization will benefit from ease of access to this new market. Additionally, alliances and partnerships are a huge source of increased managerial expertise and cost reductions which would benefit Ez-Pleeze (Martyak, 2014).

References

BPP Learning Media. (2012). ACCA P3 - Business Analysis - Study Text 2013: Study Text. London: BPP Learning Media

BPP Learning Media. (2016). ACCA P3 - Business Analysis - Study Text 2017: Study Text. London: BPP Learning Media.

Martyak, M. (2014, August 8). Strategic Alliances: How They Can Benefit Your Business. Retrieved March 16, 2017, from https://www.powerlinx.com/blog/what-are-strategic-alliances/

MindTools. (n.d). USP Analysis: The Unique Selling Proposition:

Finding Your Competitive Edge. Retrieved March 16, 2017, from https://www.mindtools.com/pages/article/newTMC_11.htm

Taylor, N. F. (2016, April 01). SWOT Analysis: What It Is and When to Use It. Retrieved March 16, 2017, from http://www.businessnewsdaily.com/4245-swot-analysis.html