Swot Analysis Is A Strategic Planning Tool Marketing Essay

Swot Analysis Is A Strategic Planning Tool Marketing Essay

For assignment help please contact at help@hndassignmenthelp.co.uk or hndassignmenthelp@gmail.com 

"SWOT Analysis is a Strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture or in any other situation requiring a decision".

The technique is credited to Albert Humphrey, who led a research project at Stanford University in the 1960s and 70's, using data from the Fortune 500 companies.

Need and Purpose of SWOT analysis for an Organization:

The required first step in SWOT analysis is the definition of the required end state or objective.

The definition of objective must be explicit and accepted by all participants in the process.

This first step must be performed carefully because failure to categorize correctly the end state aimed for leads to wasted resources and possibly failure of the enterprise. In relation to objectives the following terms have been used in the short story: desired end states, plans, policies, goals, objectives, strategies, strategy and actions.

Strengths are attributes of the association that are helpful to the achievement of the objective.

Weaknesses are attributes of the organization that are harmful to the achievement of the objective.

Opportunities are external situation that are helpful to the achievement of the objective.

Threats are external conditions that are harmful to the accomplishment of the objective.

SWOT Analysis Organization:

STARBUCKS

Why I select this Organization:

Some of the important reasons as follows:

One of the most active organizations.

deliberate and business plan on very high level.

Multinational Organization and large scale business.

SWOT Analysis

Strengths

Starbucks Corporation is a very profitable organization, earning in excess of £600 million in 2009.The company generated revenue of more than £5000 million 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 2008. 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.'

Starbucks giving high rate of profits to their shareholders.That motivates more shareholders and provide more finances for the organizations.

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 Kingdom 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.

Opportunities

Starbucks are very good at taking advantage of opportunities.

In 2004 the organization created a CD-burning service in their Some Stores & cafe with Hewlett Packard, where cunsumers create their own music CD.

New products and services that 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 both have potential.

Starbucks only in world selected countries. Need more growth.

Threats

Who knows if the market for coffee will grow and stay in favors with customers, or whether another type of beverage or leisure activity will change coffee in the future?

Starbucks are exposed to rises in the cost of coffee and dairy products.

Since its beginning in Pike Place Market, Seattle in 1971, Starbucks' success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

'Starbucks' mission statement is 'Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.'

How this SWOT analysis help Starbucks in Long term.

This SWOT analysis is for auditing an organization and its environment. It is the first stage of planning and helps marketers to centre of attention on key issues of Starbucks. Strategies and business plan more successfully lunched that crucial for an organization.

PESTEL Analysis Definition and Explanation:

There are many factors in the environment that will affect the decisions of the managers of any organisation. Tax changes, new laws, trade barrier, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can classify them using the PESTEL model. This classification distinguishes between:

Political factors. These refer to government policy such as the degree of involvement in the economy. What goods and services does a government want to give? To what degree does it believe in subsidising firms? What are its priorities in terms of business support? Political decisions can collision on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.

Economic factors. These include interest rates, taxation changes, economic growth, increase and exchange rates. As you will see throughout the "Foundations of Economics" book economic change can have a major impact on a firm's behaviour. For example: Higher interest rates may put off investment because it costs more to borrow a strong currency may make export more difficult because it may lift up the price in terms of foreign currency

inflation may aggravate higher wage demands from employees and raise costs

higher national income growth may boost demand for a firm's products

Social factors. Changes in social trends can force on the demand for a firm's products and the accessibility and enthusiasm of individuals to work. In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. It also means some firms such as Asda have started to recruit older employees to tap into this growing labour pool. The old population also has impact on demand: for example, demand for sheltered accommodation and medicines have increased whereas demand for toys is falling.

Technological factors: new technologies produce new products and new process. MP3 players, computer games, online betting and high definition TVs are all new markets created by technological advance. Online shopping, bar code and computer aided design are all development to the way we do business as a result of improved technology. Technology can reduce costs, improve quality and guide to innovation. These developments can benefit clients as well as the organisations providing the products.

Environmental factors: environmental factors contain the weather and climate change. Changes in temperature can impact on many industries with farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a important issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting require patterns and creating business opportunities.

Legal factors: these are related to the legal environment in which firms operate. In recent years in the UK there have been many significant legal changes that have affected firms' behaviour. The introduction of age bias and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of comparatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

Typical PESTEL factors to consider include:

Factor

Could include:

Political

EU improvement, the euro, international trade, taxation policy

Economic

Interest rates, exchange rates, national income, inflation, unemployment, Stock Market

Social

aged population, attitudes to work, income distribution

Technological

modernism, new product development, rate of technological obsolescence

Environmental

Global warming, environmental issues

Legal

Competition law, health and safety, employment law

By using the PESTEL framework we can analyse the many different factors in a firm's environment. In some cases particular issues may fit in several categories.

For example, the Formation of the Monetary Policy Committee by the Labour government in 1997 as a body that was independent of government but had the skill to set interest rates was a political decision but has economic consequences; meanwhile government economic policy can influence investment in technology via taxes and tax credits. If a factor can appear in several categories managers simply make a decision of where they think it best belongs.

It is important not to just list PESTEL factors because this does not in itself tell managers very much. What managers need to do is to think about which factors are most likely to change and which ones will have the greatest impact on them i.e. each firm must recognize the key factors in their own environment. For some such as pharmaceutical company's government regulation may be critical; for others, perhaps firms that have on loan heavily, interest rate changes may be a huge issue. Managers must decide on the relative importance of various factors and one way of doing this is to rank or score the likelihood of a change occurring and also rate the impact if it did.

It is also important when using PESTEL analysis to consider the level at which it is applied. When analysing companies such as Sony, Coca Cola, and Disney it is important to remember that they have many different parts to their overall business - they include many different divisions and in some case many different brands. it may be useful to consider the whole business when using PESTEL in that it may highlight some important factors, managers may want to thin it down to a particular part of the business (e.g. a specific division of Sony); this may be more useful because it will focus on the factors applicable to that part of the business. They may also want to differentiate between factors which are very local, other which are national and those which are global.

PESTEL Analysis

On

STARBUCKS Coffee

Political Influences

The political arena has a very high influence upon every multinational organization Starbucks also having influence, The regulation of businesses, and the spending authority of consumers and other businesses. Some of the following influences.

relations between coffee producing nations and US

State & Local government controls.

Government policy influence laws that regulate or tax on star bucks business

Government's position on marketing ethics employee rights.

Economic Influences

Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. Starbucks need to look at:

stable demand for food and beverages

Changes in disposable income could influence purchase levels

Interest rates effect very badly in year 2009

The level of inflation Employment level per capita effect by Starbucks

Long-term prospects for star bucks the economy Gross Domestic Product (GDP) per capita, also continued in the upcoming years.

Social Influences

The social and cultural influences on business vary from country to country. Starbucks also effect from this social influences it is very important that such factors are consider. factor consist of:

customer preference in East worlds to West shift from coffee to other beverages

Starbucks also very care full about attitudes to foreign products and services.

How much time do consumers of Starbuck have for leisure,

Starbuck also considering and effect by the population living Are the older generations wealthy

Do the population have a strong/weak opinion on green issues and starbucks very careful about global warming issues,

Technological Influences

Use of technology can improve operational efficiencies

Starbuck is fully aware of Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

Starbucks technology Department allow products and services to be made more cheaply and to a better standard of quality,

New technologies offer customers and businesses more innovative products and services such as hygienic food,

Starbucks used new distribution technologies, books via the Internet,

Starbucks management speak with consumers using internet and improve their product.

Use and Affectivity of PESTEL analysis

The external environment is greatly complex and active. Take your eyes off it for a moment and you may find there has been a significant change in the competitive landscape. This is why PESTEL analysis really needs to be undertaken on a regular basis. However, even then it does not ensure that every significant change will be identified. Have you ever been waiting to meet someone in a crowded place and not noticed there were there until they were almost directly in front of you? You were too busy looking at someone else or for something else (you were sure they would be wearing a particular coat, for example). The same can happen to managers scour the external environment - there is a lot going on in many different places and it is completely possible that they miss the changes that later turn out to be incredibly important. This is mainly likely when people have already decided in their minds what should be happening. They "know" their friend will be coming from a particular direction so that's the only place they look. This is very well if the friend does come from this direction but not so good if he or she chooses a different route. When using PESTEL analysis managers must be ready to look all around them and question their assumptions!

Conclusion:

One of the main reasons Starbucks is so successful in the flattening global economy is because they focus on quality and experience rather than the price. "A comparison of specialty drinks with its competitors reveals very minor differences. Starbucks' image is one of the key elements to their success. By focusing on plenty of comfortable seating, customers feel welcome to stay longer than planned. Another key marketing strategy Starbucks chose was promoting its product through environmentally friendly campaigns.

Starbucks has been in the driver's seat the last ten years, allowing small and large corporations to watch the marketing strategies pay off year after year. Each store delivers a unique experience, particular to each city's culture. "The choice of furniture and fixtures, the names of its drinks, the messages on the cups, the graphics, it's all been studiously crafted,

Starbucks has appealed to such a wide target market, it seems every product introduced will be an instant success (sodas, teas, ice creams, pastries). Ranked in Fortune magazine as the #1 most innovative company, it's no surprise that the new technological addition, the Starbucks Card, boosted sales and helped growth during a time when the economy was struggling. "Starbucks went back to basics, and they've approached the basics with a science and intensity that no one has ever done before,"