REAL SWOT ANALYSIS

SWOT ANALYSIS
What is SWOT Analysis?
A SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats and
is a simple and powerful way to analyze your company's present marketing situat
ion.
The best way to understand SWOT is to look at an actual example: AMT is a comput
er store in a medium-sized market in the United States. Lately it has suffered t
hrough a steady business decline caused mainly by increasing competition from la
rger office products stores with national brand names. The following is the SWOT
analysis included in its marketing plan.
STRENTH:
Knowledge. Our competitors are retailers, pushing boxes. We know systems, networ
ks, connectivity, programming, all the VARs, and data management.
Relationship selling. We get to know our customers, one by one. Our direct sales
force maintains a relationship.
History. We've been in our town forever. We have loyalty of customers and vendor
s. We are local.
WEAKNESSES:
Costs. The chain stores have better economics. Their per-unit costs of selling a
re quite low. They aren't offering what we offer in terms of knowledgeable selli
ng, but their cost per square foot and per dollar of sales are much lower.
Price and volume. The major stores pushing boxes can afford to sell for less. Th
eir component costs are less and they have volume buying with the main vendors.
Brand power. Take one look at their full page advertising, in color, in the Sund
ay paper. We can't match that. We don't have the national name that flows into n
ational advertising.
OPPORTUNITIES:
Local area networks. LANs are becoming commonplace in small business, and even i
n home offices. Businesses today assume LANs as part of normal office work. This
is an opportunity for us because LANs are much more knowledge and service inten
sive than the standard off-the-shelf PC.
The Internet. The increasing opportunities of the Internet offer us another area
of strength in comparison to the box-on-the-shelf major chain stores. Our custo
mers want more help with the Internet, and we are in a better position to give i
t to them.
Training. The major stores don't provide training, but as systems become more co
mplicated, with LAN and Internet usage, training is more in demand. This is part
icularly true of our main target markets.
Service. As our target market needs more service, our competitors are less likel
y than ever to provide it. Their business model doesn't include service, just se
lling the boxes.
THREATS:
The computer as appliance. Volume buying and selling of computers as products in
boxes, supposedly not needing support, training, connectivity services, etc. As
people think of the computer in those terms, they think they need our service o
rientation less.
The larger price-oriented store. When we have huge advertisements of low prices
in the newspaper, our customers think we are not giving them good value.
SWOT analysis is a simple framework for generating strategic alternatives from a
situation analysis. It is applicable to either the corporate level or the busin
ess unit level and frequently appears in marketing plans. SWOT (sometimes referr
ed to as TOWS) stands for Strengths, Weaknesses, Opportunities, and Threats. The
SWOT framework was described in the late 1960's by Edmund P. Learned, C. Roland
Christiansen, Kenneth Andrews, and William D. Guth in Business Policy, Text and
Cases (Homewood, IL: Irwin, 1969). The General Electric Growth Council used thi
s form of analysis in the 1980's. Because it concentrates on the issues that pot
entially have the most impact, the SWOT analysis is useful when a very limited a
mount of time is available to address a complex strategic situation.
The following diagram shows how a SWOT analysis fits into a strategic situation
analysis.
Situation Analysis
/
\
Internal Analysis
External Analysis
/ \
/ \
Strengths Weaknesses
Opportunities Threats
|
SWOT Profile
The internal and external situation analysis can produce a large amount of infor
mation, much of which may not be highly relevant. The SWOT analysis can serve as
an interpretative filter to reduce the information to a manageable quantity of
key issues. The SWOT analysis classifies the internal aspects of the company as
strengths or weaknesses and the external situational factors as opportunities or
threats. Strengths can serve as a foundation for building a competitive advanta
ge, and weaknesses may hinder it. By understanding these four aspects of its sit
uation, a firm can better leverage its strengths, correct its weaknesses, capita
lize on golden opportunities, and deter potentially devastating threats.
Internal Analysis:
The internal analysis is a comprehensive evaluation of the internal environment'
s potential strengths and weaknesses. Factors should be evaluated across the org
anization in areas such as:
• Company culture
• Company image
• Organizational structure
• Key staff
• Access to natural resources
• Position on the experience curve
• Operational efficiency
• Operational capacity
• Brand awareness
• Market share
• Financial resources
• Exclusive contracts
• Patents and trade secrets
The SWOT analysis summarizes the internal factors of the firm as a list of stren
gths and weaknesses.
External Analysis:
An opportunity is the chance to introduce a new product or service that can gene
rate superior returns. Opportunities can arise when changes occur in the externa
l environment. Many of these changes can be perceived as threats to the market p
osition of existing products and may necessitate a change in product specificati
ons or the development of new products in order for the firm to remain competiti
ve. Changes in the external environment may be related to:
• Customers
• Competitors
• Market trends
• Suppliers
• Partners
• Social changes
• New technology
• Economic environment
• Political and regulatory environment
The last four items in the above list are macro-environmental variables, and are
addressed in a PEST analysis. The SWOT analysis summarizes the external environ
mental factors as a list of opportunities and threats.
How to Perform a SWOT Analysis?
A SWOT Analysis is an integral part of a marketing plan and can also be part of
a business plan. Knowing what a SWOT Analysis is and how to perform one is very
important.
Conclusion:
SWOT helps a company to se itself for better and for worse. Companies are inhere
ntly insular and inward looking SWOT’s are a means by which a company can better u
nderstand what it does very well and where its shortcomings are. SWOT’s will help
the company size up the competitive landscape and get some insight into the vaga
ries of the marketplace.
SWOT analysis has been a framework of choice among many managers for along time
because of its simplicity and its portrayal of the essence of sound strategy for
mulation - matching a firm’s opportunities and threats wit its strengths and weakn
esses. Central to making SWOT analysis effective is accurate internal analysis – t
he identification of specific strengths and weaknesses around which sound strate
gy can be built.
SWOT ANALYSIS OF PEPSI-CO
The following table shows the internal and external factors affecting the market
opportunities for PepsiCo. This SWOT analysis also shows PepsiCo s internal str
engths such as their experienced management team, a competitive product line, a
global marketing realm, and the continuous efforts by their research and develop
ment to research trends in the industry and to be creative in exploiting those t
rends. Some possible opportunities noted in the SWOT analysis are the growing ma
rkets for specialized ethnic foods and healthier food products. Another opportun
ity is that the income of consumers is high enabling them to be less price sensi
tive, and convenience is becoming evermore important not only to the United Stat
es but to many countries around the world.
Although PepsiCo has much strength, a few weaknesses lie in the fact that the co
mpany is so large and could possibly lose focus or have internal conflict proble
ms. A few of the threats PepsiCo must stay aware of are the ease of reliability
of its product line, the almost pure competition in pricing for its products, an
d the quickness of technological advances causing existing products to be no lon
ger the most advanced.
Internal Factors
Strengths
Weaknesses
Management
Experienced, broad base of interests and knowledge
Large size may lead to conflicting interests
Product Line
Unique, tastes good, competitive price, and convenient
New one calorie products have no existing customer base, generic brands can make
similar drinks - cheaper
Marketing
Diverse, and global awareness
May lose focus, may not be segmented enough
Personnel
International, diverse positions
Possible conflicts due to so many people, possible trouble staying focused
Finance
High sales revenue, high sale growth, large capital base
High expenses, may have trouble balancing cash-flows of such a large operation
Manufacturing
Low costs and liabilities due to outsourcing of bottling
Lose control and quality standards
Research & Development
Continuous efforts to research trends an reinforce creativity
May concentrate too much on existing products, intra-preneuralship may not be we
lcomed
External Factors
Opportunities
Threats
Consumer/Social
Huge market in the healthy products and growing market for specialized foods for
ethnic groups
More expensive products than Coke, such a high price may limit lower income fami
lies from buying a Pepsi product
Competitive
Distinctive name, product and packaging in with regards to its markets
Not entirely patentable, constant replicability by competitors
Technological
Internet promotion such as banner ads and keywords can increase their sales, and
more computerized manufacturing and ordering processes can increase their effic
iency
Computer breakdowns, viruses and hackers can reduce efficiency, and must constan
tly update products or other competitors will be more advanced
Economic
Consumer income is high, more tend to eat out, convenience is important to U.S.
Very elastic demand, almost pure competition
Legal/Regulatory
High U.S. Food & Drug Administration standards eliminate overnight competitors
SWOT ANALYSIS OF PEPSI IN PAKISTAN
STRENTH
1. Company Image:
It also is a reputable org. and is well known all over the world. Perception of
producing a high quality product.
2. Quality Conscious:
They maintain a high quality as Pepsi Cola International collect sample from its
different production facilities and send them for lab test in Tokyo.
3. Good Relation with Franchise:
Throughout its history it has a good relation with franchisers working in differ
ent areas of the world where they have the production facilities.
4. Production Capacity:
It has the highest production capacity i.e. 60,000 cases per day is not only in
Pakistan but also in South Asia.
5. Market Share:
It has a highest market share i.e. 62% in Pakistan and leading a far step head f
rom its competitors.
6. Large No. of diversity businesses:
This is also its main strength as it ahs diversity in many businesses such as
i. Pepsi beverages
ii. Pepsi foods
iii. Pepsi Restaurants.
7. High Tech Culture:
The whole culture and business operating environment at Pepsi-Cola-West Asia has
quick access to a centralized database an they use computers as business tools
for analysis and quick decision making.
8. Sponsorships:
They mainly use celebrities in their advertising campaigning like Imran Khan, Wa
sim Akram, and Waqar Younas etc. Also sponsor social activates programs like mus
ic etc.
WEAKNESS
1. Decline in taste:
During the last years, it was published in Financial post that there has been bi
g complaints from the customers with regard to the bad taste that they experienc
ed during the span of six months.
2. Political Franchises:
Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong politica
l support from a political party which is in opposition. In; their era in govern
ment less taxes are imposed on them but relation increases as they come in oppos
ition. So the selection is not appropriate as this thing is harmful to their ima
ge as well as the strategies.
3. Short term Approach:
They have a lack of emphasis on this in their advertising such as currently when
they losses the bid for official drink in the 96 cricket world cup. They starte
d a campaign in which they highlight the factor such as “nothing official about it”.
4. Weak Distribution:
They lack behind in catering the rural areas and just concentrating in the urban
areas.
5. Low consumer knowledge:
Unable to maximize local consumer knowledge.
6. Lack of soft drink:
Lack of soft drink “know-how” as a result of diversified business units and generali
st managers
OPPORTUNITIES
1. Increase Population:
As almost in all over the world growth rate is increasing which in turn increase
s the demand of products and necessities and especially in Asia the market is gr
owing at a faster rate as compare to other continents. So they have to attract n
ew entrants.
2. Changing social trend:
As in all over the world people are rushing towards fast food and beverage becau
se of life which has become much faster, it provide the company a favor to captu
re this fast moving market with its take away product.
3. Diversification:
They may enter in garments business in order to promote their brand mane, by mak
ing sports cloths fro players which represent their name by wearing their clothe
s.
4. Distribution of snack foods:
Opportunity to distribute Pepsi snack foods in the future.
THREATS
1. Imitators:
They also have a problem of imitators as receives complaints from customers that
they find take product in disguised of Pepsi’s product.
2. Government Regulation:
They face problem if government employ taxes on them which force them to raise t
he price of their product.
3. Corporation’s shortage problem:
Again this is also a serious threat from it suppliers as if supplier is unhappy
with the company. He may reduce the supply and exploit the company. This action
will surely affect the production process.
4. Non-carbonated substitutes:
Non-carbonated substitutes, such as juices and tea brands are maintaining a stro
ng foothold in the market.
5. Political instability:
The big threat to Pepsi in Pakistan is Political instability and civil unrest.
6. Threat of labor strikes:
External threat of labor strikes and power outages in Pakistan.
SWOT MATRIX (TOWS MATRIX)
What is a SWOT Matrix (TOWS Matrix)?
The SWOT Matrix illustrates how management can match the opportunity by facing y
our institution with its own strength and weekness to yield four sets of possibl
e strategic alternatives. The SWOT Matrix framework lends itself to brainstormin
g to create alternative strategies that you might not otherwise consider.
How to Perform a SWOT Matrix (TOWS Matrix)?
A firm should not necessarily pursue the more lucrative opportunities. Rather, i
t may have a better chance at developing a competitive advantage by identifying
a fit between the firm s strengths and upcoming opportunities. In some cases, th
e firm can overcome a weakness in order to prepare itself to pursue a compelling
 opportunity.
To develop strategies that take into account the SWOT profile, a matrix of these
factors can be constructed. The SWOT matrix (also known as a TOWS Matrix) is sh
own below:
SWOT / TOWS Matrix
Strengths
Weaknesses
Opportunities
S-O strategies
W-O strategies
Threats
S-T strategies
W-T strategies
Basically four main strategies are proposed:
• S-O strategies pursue opportunities that are a good fit to the companies’ strength
s. These strategies are based on institutional strengths to take advantage of ma
rket opportunities.
• W-O strategies overcome weaknesses to pursue opportunities. These strategies are
based on overcoming institutional weaknesses to take advantage of market opport
unities.
• S-T strategies identify ways that the firm can use its strengths to reduce its v
ulnerability to external threats. These strategies are based on institutional st
rengths to avoid market threats.
• W-T strategies establish a defensive plan to prevent the firm s weaknesses from
making it highly susceptible to external threats. These strategies are based on
overcoming/minimizing institutional weaknesses to avoid market threats.
TOWS MATRIX OF PEPSI
We have discussed SWOT analysis of Pepsi-Co in our previous topic now here we ar
e going to discuss the TOWS Matrix of Pepsi-Co, keeping in mind its SWOT analysi
s. Following is the detailed analysis of Pepsi-Cola TOWS matrix:
‘WT’ ANALYSIS
• One weakness that Pepsi posses is that it has very strong taste it really feels
that something highly toxic going inside the body, where as the same product of
the coke is not much strong.
• They also have a problem of imitators as receives complaints from customers that
they find take product in disguised of Pepsi’s product. During the last years, it
was published in financial post that there has been big complaints from the cus
tomers with regard to the bad taste that they experienced during the span of six
months. If they soon pay no attention towards that this will create a big probl
em for them.
• Large size may lead to conflicting interests.
• New one calorie products have no existing customer base; generic brands can make
similar drinks – cheaper. It is also big threat for any company people may like o
r dislike new launching product.
• Such as in Pakistan, Hamayun Ahkhtar is its franchisee who has a strong politica
l support from a political party which is in opposition. In; their era in govern
ment less taxes are imposed on them but relation increases as they come in oppos
ition. So the selection is not appropriate as this thing is harmful to their ima
ge as well as the strategies. So this may become a big threat for the Pepsi.
‘WO’ ANALYSIS
• They have a lack of emphasis on this in their advertising such as currently when
they losses the bid for official drink in the 96 cricket world cup. They starte
d a campaign in which they highlight the factor such as “nothing official about it”.
If they don’t focus on sudden changing’s in their advertising then they can convert
this weakness into opportunity.
• They lack behind in catering the rural areas and just concentrating in the urban
areas. They should try to increase their distributions and also focus on captur
ing rural areas; this will become a big opportunity for them.
• The other big weakness on Pepsi is that they don’t pay any attention towards garme
nts. They may enter in garments business in order to promote their brand name, b
y making sports cloths fro players which represent their name by wearing their c
lothes. That must increase the customer and income of the Pepsi.
• High expenses may have trouble balancing cash-flows of such a large operation. T
he staff may show dishonesty. They should try to pay much attention towards thei
r cash flow, and audit there statements on regular basis.
‘ST’ ANALYSIS
• In many countries Pepsi had more expensive products than Coke; such a high price
may limit a lower income family from buying a Pepsi product, therefore which is
a big threat for Pepsi that may Pepsi have to face in the future.
• In foreign countries Pepsi have many branches with different flavors as compare
to Pakistan, which has only 2 or 3 Pepsi products. Non-carbonated substitutes, s
uch as juices and tea brands are maintaining a strong foothold in the market. Pe
psi has a big threat from COKE, which are its main competitor from about 100 yea
rs.
• Pepsi is a foreign company therefore they have a big threat every time on them o
f Political instability and civil unrest.
• The whole culture and business operating environment at Pepsi-Cola-West Asia has
quick access to a centralized database and they use computers as business tools
for analysis and quick decision making. Computer breakdowns, viruses and hacker
s can reduce efficiency, and must constantly update products or other competitor
s will be more advanced.
• Continuous efforts to research trends an reinforce creativity, if they fail in t
heir efforts then there is a big threat for the company. The competitors may get
benefit by their plans.
‘SO’ ANALYSIS
• The whole culture and business operating environment at Pepsi-Cola-West Asia has
quick access to a centralized database and they use computers as business tools
for analysis and quick decision making. Internet promotion such as banner ads a
nd keywords can increase their sales, and more computerized manufacturing and or
dering processes can increase their efficiency and that will become such a big o
pportunity for Pepsi.
• It has the highest production capacity i.e. 60,000 cases per day is not only in
Pakistan but also in South Asia. Established network of 45 distributors each sup
plying 1,100 retailers. High per capita soft drink consumption – average of 22 ser
vings compared to 5 for Pakistan. At will become such a big opportunity. Due to
large production the product of Pepsi is always available in the market and that
will become useful to attract taste lovers customers.
• Large No. of diversity businesses is also its main strength as it ahs diversity
in many businesses such as Pepsi beverages, Pepsi foods, Pepsi Restaurants, and
due to large number of diversity they can capture more customer, therefore it wi
ll become such a big opportunity for Pepsi.
• Pepsi is also a reputable organization, and is well known all over the world. Pe
rception of producing a high quality product and strength can become a big oppor
tunity for Pepsi if they use it in well arranged manner, such as advertising mor
e and also by conducting concerts to attract more customers.
• They maintain a high quality as Pepsi Cola International collect sample from its
different production facilities and send them for lab test in Tokyo, if they sh
ow test reports on label of there products this will also attract customers.
• They mainly use celebrities in their advertising campaigning like Imran Khan, Wa
sim Akram, and Waqar Younas etc. Also sponsor social activates programmed like m
usic etc. this will become such a big opportunity to build such a large number o
f customers. So we can say that it is one of the big strength that may become a
big opportunity for Pepsi.