SWOT Analysis

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SWOT Analysis
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SWOT Analysis - Overview

• SWOT analysis is a tool for auditing an
  organization and its environment.
• It 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 factors.
• Opportunities and threats are external factors.

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SWOT Matrix
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Strengths and weaknesses are internal factors

• A 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.

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• A 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

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Opportunities and threats are external factors

• An 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

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• A threat could be
• a new competitor in your home market
• price wars with competitors
• a competitor has a new, innovative product or
  service
• competitors have superior access to channels of
  distribution
• taxation is introduced on your product or service

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Simple rules for successfulSWOT analysis

• be realistic about the strengths and weaknesses
  of your organization
• analysis should distinguish between where your
  organization is today, and where it could be in
  the future
• be specific. Avoid grey areas.
• always analyze in relation to your competition
  i.e. better than or worse than your competition
• keep your SWOT short and simple. Avoid complexity
  and over analysis
• SWOT is subjective.

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Starbucks Strengths

• Starbucks Corporation is a very profitable
  organization, earning in excess of 600 million
  in 2004.The company generated revenue of more
  than 5 billion in the same year.
• It is a global coffee brand built upon a
  reputation for fine products and services. It has
  almost 9000 cafes in almost 40 countries.
• Starbucks was one of the Fortune Top 100
  Companies to Work For in 2005. The company is a
  respected employer that values its workforce.
• The organization has strong ethical values and an
  ethical mission statement as follows, 'Starbucks
  is committed to a role of environmental
  leadership in all facets of our business.'

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Starbucks Weaknesses

• Starbucks has a reputation for new product
  development and creativity. However, they remain
  vulnerable to the possibility that their
  innovation may falter over time.
• The organization has a strong presence in the
  United States with more than three quarters of
  their cafes located in the home market. It is
  often argued that they need to look for a
  portfolio of countries, in order to spread
  business risk.
• The organization is dependant on a main
  competitive advantage, the retail of coffee. This
  could make them slow to diversify into other
  sectors should the need arise.

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Starbucks Opportunities

• Starbucks is very good at taking advantage of
  opportunities.
• In 2004 the company created a CD-burning service
  in their Santa Monica (California USA) cafe with
  Hewlett Packard, where customers create their own
  music CDs.
• New products and services can be retailed in
  their cafes, such as Fair Trade products.
• The company has the opportunity to expand its
  global operations. New markets for coffee such as
  India and the Pacific Rim nations are beginning
  to emerge.
• Co-branding with other manufacturers of food and
  drink, and brand franchising to manufacturers of
  other goods and services, have potential.

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Starbucks Threats

• Who knows if the market for coffee will grow and
  stay in favour with customers, or whether another
  type of beverage or leisure activity will replace
  coffee in the future?
• Starbucks is exposed to rises in the cost of
  coffee and dairy products.
• Since its conception in Pine Place Park, Seattle
  in 1971, Starbucks' success has lead to the
  market entry of many competitors and copy cat
  brands that pose potential threats