SWOT analysis Company S W O trengths and

SWOT analysis Company S W O trengths and eaknesses Industry, Economic and Technical pportunities and Strategic Analysis T hreats © Colin Boyd 2002

SWOT analysis for Wendy’s Strengths and weaknesses are specific to Wendy’s – they are internal characteristics Inside Wendy’s Strategic Analysis Outside Wendy’s = the external environment © Colin Boyd 2002

SWOT analysis for Wendy’s Opportunities and threats apply to all the members of the industry that Wendy’s is in – they are external characteristics Outside Wendy’s = the external environment, which is the same for all members of the fast food industry Strategic Analysis © Colin Boyd 2002

The PEST model of the external environment PEST = the Political, Economic, Social and Technological environments that interact with business. Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Political, Economic and Social Dimension • International and National Economic Policies • Traditional Government Regulation • Government Restrictions • Recent Political and Social Developments • Consumer Pressure • Economic Developments • Population Change • Wealth Changes • Leisure Trends Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities For each item on the checklist; for this industry (as defined by horizontal integration for the specific firm we are examining); what are threats and opportunities facing all the members of this industry, both now and in the foreseeable future? Environmental Opportunities and Threats must be the same for all members of any one industry Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Political, Economic and Social Dimension International and National Economic Policies • taxation • regional incentives • trade agreements Traditional Government Regulation • safety – employee, customer, bicycle helmets • hygiene • competition -- de-regulation Government Restrictions • trade with Iraq, Cuba • advertising and display of tobacco products • coping with new medical technologies Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Political, Economic and Social Dimension Recent Political and Social Developments • • Quebec separatism the “Green” movement skateboarders and snowboarders acceptability of cosmetic surgery Consumer Pressure • telemarketing conduct • negative option pricing of cable TV • acceptability of tobacco use and advertising Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Political, Economic and Social Dimension Economic Developments • • • the “boom and bust” economic cycle counter-cyclical businesses seasonality other economic cycles drivers of demand – direct or derived? Population Change • • Strategic Analysis large aboriginal youth population Sask. population will be skewed baby boomers = 1 million extra Canadians “a python swallowing a pig” © Colin Boyd 2002

The Thunder of the Baby Boomers Compared to what a normal population profile would be like, Canada has 1 million extra people in the baby boomer age range funeral parlours nursing homes retirement property 80 bird watching walking golf 70 health foods fitness 60 office building homes travel rings 50 the pill universities 40 rock’n roll school buses school building 30 A baby boomer born baby food in 1955 is now aged 56 20 daiper cleaning 0 10 …like a python swallowing a pig, the bulge moves ever onwards… Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Political, Economic and Social Dimension Wealth Changes • • huge changes in disposable income holidays, gadgets, car ownership many more people own houses = improvements the stinking rich – 4 Season’s Hotels Leisure Trends • • Strategic Analysis more time off work, less home work = leisure time hedonist pursuits – skiing, windsurfing, travel exotic foods, cooking home cocoon – alarms, home theatre, take-out food © Colin Boyd 2002

Environmental Threats and Opportunities Market Factors • Product Life Cycle • Market Demand • Market Requirements • Consumer Preferences • Pricing Structure • Distribution Requirements • New Products • New Competitors Strategic Analysis © Colin Boyd 2002

The Product Life Cycle MATURITY DECLINING GROWTH SALES VOLUME DECLINE CONSTANT GROWTH ACCELERATING GROWTH INTRODUCTION TIME Strategic Analysis © Colin Boyd 2002

Strategic Analysis © Colin Boyd 2002

Porter's Generic Strategies Niche Positioning • it is probably easier to establish a niche position when the market is growing Product Differentiation • when the pie is growing, no one is fighting too hard for market share, and hence differentiation is possible in the growth stages of the life cycle = MARKETING SKILLS Cost Leadership • A mature market means a fight for market share via price competition, which in turns puts all the attention on product costs = MANUFACTURING SKILLS Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Market Factors • Market Demand • consumable goods – how many person per year? • durable goods – how long do they last? • derived demand – 1 auto = 5 tires • Market Requirements • utility products – coloured nails? Westjet • need for a broad range of products • Consumer Preferences • draft beer trends – dark tasty ale v light lager • organic foods Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Market Factors • Pricing Structure • air fares – return versus single • rebate coupons preserving the retail price structure • grey market goods • Distribution Requirements • growth in 2 income families • less time to shop = catalogues + internet, not retail • IKEA = KD (Knock. Down) furniture Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Market Factors • New Products • lonely hearts via digital phones • computers v VCRs • floppy discs v compact discs v mini-discs • New Competitors • Fujifilm and Kodak versus digital photos • Canon and Kodak into photocopiers • Sony Store and Sony Entertainment Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Product and Technology Dimension • Raw Materials • Pricing of Raw Materials • New Ingredients or Raw Materials • Cost and Experience Curves • Process Innovation • Technological Breakthrough Strategic Analysis © Colin Boyd 2002

Environmental Threats and Opportunities Product and Technology Dimension • Raw Materials • general availability – new diamond sources • geographical scarcity • cost/unit vol. dictates the location of manufacturing? • Pricing of Raw Materials • vulnerability to price increases? e. g. OPEC oil prices • Hedging strategies – Westjet v Air Canada • New Ingredients or Raw Materials • plastic kayaks • Substitute away from vulnerable raw materials Strategic Analysis © Colin Boyd 2002

The Experience Curve Slope of. 2 to. 3, meaning a 20% to 30% reduction in unit manufacturing costs for each doubling of production Kingston 4 GB Data. Traveler Pocket USB Drive $12. 99 Cost per Unit made 2 101 10 10 3 10 4 Total Accumulated Production Strategic Analysis 105 106 © Colin Boyd 2002

Environmental Threats and Opportunities Product and Technology Dimension • Process Innovation • multi-screen cinemas on a single-screen footprint • computers replacing secretaries in Commerce • home wine-making • Technological Breakthrough • • Strategic Analysis Apple Computer and Apple Corp. - no music use insulin from GM bacteria instead of from pigs laser eye surgery digital photography and digital music © Colin Boyd 2002

CENTRAL STRATEGIC ALTERNATIVES 1 Stay as you are 2 Continue in current business, but in a more efficient and streamlined way 3 Get out of all or part of current business by selling, merging or liquidating 4 Expand current business 5 Expand primarily in businesses other than main current business = DIVERSIFICATION 6 Choose alternatives 2 or 3, and 4 or 5. 1 2 and 3 4 and 5 6 Strategic Analysis STABILITY RETRENCHMENT GROWTH COMBINATION © Colin Boyd 2002

Decision Making at the Strategic Level …involves questions such as…. • • Are we in the right kind of business? Should we stay the same, or change in some way? Should we become smaller, or bigger? On which dimension(s) should we change… …. geographical scope? …. breadth of products offered? …. extent of vertical integration? …. specialization versus diversification? Strategic Analysis © Colin Boyd 2002