Company Situation Analysis
Questions to Answer:
How well is the present strategy
working?
What are the company’s SWOT?
Are the prices and costs competitive?
How strong is the competitive position?
What strategic issues does the company
face?
How Well Strategy Is Working
Based on competitive approach
Low-cost leader
Differentiation
Market niche
How Well Strategy Is Working
Qualitative analysis
Completeness
Internal consistency
Rationale
Suitability to the situation
vs. Quantitative analysis
Achieving stated financial and strategic objectives
Whether considered an industry leader
How Well Strategy Is Working
Indicators of performance
Market share
Attraction and retention of customers
Profit margins
Net profit and ROI
Credit rating
Sales growth
Trends in stock price
Image and reputation
Measures of continuous improvement
SWOT
Strengths
Skill or important expertise
Valuable physical assets
Valuable human assets
Valuable organizational assets
Valuable intangible assets
Competitive capabilities
Position of market advantage
Alliances and cooperative ventures
SWOT
Weaknesses
Deficiencies in skills or needed expertise
Lack of physical, organizational or intangible
assets
Missing competitive capabilities in key areas
SWOT
Opportunities
Not every industry opportunity is a company
opportunity
Offer avenues for profitable growth
Offer potential for competitive advantage
Match well with company’s financial and
organizational capabilities
SWOT
Threats
Emergence of new products
Emergence of new technologies
Entry of new competitors
New regulations
Vulnerability to interest rate fluctuations
Vulnerability to FX rate fluctuations
Demographic shifts
Political upheaval
SWOT Example: Panera, p. C85
Strengths
An attractive and appealing menu (see case Exhibit 6)—
Panera offers high quality food at a good price (the company
delivers good value for the money); moreover, it has menu
offerings for the more health/weight-conscious diner
Bread-baking expertise (definitely a core competence)—
artisan breads are Panera’s signature product
Panera Bread is the nationwide leader in the bakery-café
segment
Panera Bread has high ratings in customer satisfaction
studies
A good brand name that management is continuing to
strengthen
SWOT Example: Panera, p. C85
Strengths (cont.)
The fresh dough operations and sales of fresh dough to
franchised stores is a source of revenue and profit (see case
Exhibit 1 showing that fresh dough cost of sales to
franchisees run well below the revenues from fresh dough
sales to franchisees)
Initial success in catering—extends the company’s market
reach
Has attracted good franchisees—sales at franchised stores
run a bit higher than those at company-owned stores (see
case Exhibit 2)
The financial strength to fund the company’s growth and
expansion (see case Exhibit 1) without burdening the
company’s balance sheet unduly with debt
SWOT Example: Panera, p. C85
Weaknesses
A less well-known brand name than some rivals (Applebee’s,
Starbucks)
Sales at franchised stores run a bit higher than those at
company-owned stores—why is this occurring? Are
franchisees better operators?
SWOT Example: Panera, p. C85
Opportunities
Open more outlets, both company-owned and franchised—
there is untapped growth potential in a number of suburban
markets as shown in case Exhibit 3
Open Panera Bread locations outside the U.S. as market
opportunities in the U.S. begin to dry up
SWOT Example: Panera, p. C85
Threats
Rivals begin to imitate some of Panera’s menu offerings
and/or dining ambience, thus stymieing to some extent
Panera’s ability to clearly differentiate itself from rival chains
New rival restaurant chains grab the attention of consumers
and draw some patrons away from Panera—in other words,
competition from other restaurant chains (either those in the
fast-casual segment or other restaurant categories) becomes
more intense
Panera Bread begins to saturate the market with outlets,
such that it becomes harder to find attractive locations for
new stores and the company’s growth slows
Company Competencies
Company competence
Product of experience and learning
Real proficiency
Consciously built and developed
Competitive capability
Valuable and beneficial to customers
Differentiate company from competitors
Enhances competitiveness
Company Competencies
Core competence
Internal activities performed well
Central to competitiveness and profitability
Resides in people, not assets
Distinctive competence
Activities performed well compared to
competitors
Basis for competitive advantage
Distinctive Competence
Importance
Competitive capability provided
Cornerstone of strategy
Sustainable competitive advantage
Resource is hard to copy
Longevity of resource
Resource is competitively superior
Not easily trumped
Differences in Costs
Items purchased from suppliers
Basic technology and age of plants
Economies of scale
Exposure to inflation and FX rates
Marketing, sales and promotion
Transportation and shipping
Forward channel distribution
Value Chains
Activities that create value for the
customer
Strategy critical
Based on core competencies
Benchmarking costs of key activities
“Best practices”
Value Chains
Primary activities
Purchases and
inbound logistics
Operations
Outbound logistics
Sales and marketing
Service
Support activities
R & D, technology
and systems
development
Human resources
management
General
administration
Strategic Options
Upstream
Negotiate
Integrate
Train suppliers
Use substitutes
Make up the
difference elsewhere
Downstream
Push to reduce
markup
Train distributors
Develop more
economical
distribution strategy
Make up the
difference elsewhere
Strategic Options
Company
Streamline
Operations
Reengineer
processes and
practices
Eliminate cost
activities
Relocate activities
geographically
Outsourcing
Technological
improvements
Innovation
Simplify product
design (Value
Engineering)
Achieve backward
and forward savings
Company’s Competitive Position
Competitive strength assessment
List industry’s key success factors
Rate firm and rivals on each factor
Sum individual ratings
Determine net advantage or disadvantage
Weighted vs. unweighted
Company’s Strategic Issues
Whether current strategy is adequate to meet
trends in competitive forces
Adjust to respond to driving forces of industry
Industry’s future key success factors
Vulnerability to efforts of rivals
Capitalize on strengths
Prioritize opportunities
Protection against threats and weaknesses
Company’s Strategic Issues
Competitive advantage or disadvantage
Strong and weak spots in current strategy
Additional actions needed
Improve cost position
Capitalize on emerging opportunities
Strengthen competitive position