Environmental Analysis
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INTRODUCTION
Swot analysis is “A process of monitoring both internal and external changes which will ensure company awareness and assist in the prediction of future trends. It matches company capabilities with the wants of the customer and isolates restraining influences.”
A SWOT analysis considers the strengths and weaknesses of the business and its current strategy, and the opportunities and threats the business environment may present the firm with in the future.
SWOT analysis can be a very useful way of summarising many of the other analyses and combining them with the key issues from environmental analysis. The aim is to identify the extent to which the current strategy of an organisation and its more specific strengths and weaknesses are relevant to and capable of dealing with, the changes taking place in the business environment.
This simple technique provides a method of organising information in identifying possible strategic direction. The basic principle of SWOT analysis is that any statement about an organisation or its environment can be classified as follows:
In SWOT, strengths and weaknesses are internal factors. For example: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.
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.
In SWOT, opportunities and threats are external factors. For example: 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.
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.
My chosen Organisation is Cadbury; Cadbury Schweppes was founded in the year 1831 by John Cadbury. Its revolutionized cocoa started processing from the year 1866 onwards. This company originally merged with Schweppes in 1969. Currently, this successful company is employing approximately about 43,000 people worldwide. Today, Cadbury is the worlds fourth biggest supplier of chocolate.
One of its products, Dairy Milk was introduced in 1905, and has become the most successful moulded chocolate in UK history and the basic ingredient for many other Cadbury products. 95 years later, Dairy Milk is one of the worlds most famous brand names and the companys leading chocolate bar by revenue. Cadbury considers its success is based on three factors: quality, value for money and good advertising.
SWOT ANALYSIS FOR CADBURY
STRENGHTS
Large established business
Good reputation
Wide portfolio of products
Good advertising ( coronation St)
Large target market
Invest in research and development
Well known brand with loyal customers
Very profitable organisation; generating revenue of 6508 billion GPB in 2005
Global chocolate brand
Current trend of snacking and eating on the go favours confectionary business
WEAKNESSES
Strong branding requires substantial financial investment
Confectionary not regarded as healthy as it contains high levels of fat and sugar
Communication between manufacture and retailers very complex
OPPORTUNITIES
Sponsoring of sporting events
Diversify into different market
Expand nationally
Established products can be revived with new packaging and promotional expenditure
More countries entering EU and therefore bigger market, the company has the opportunity to expand its global operations. New markets with new products which are limited in particular region
Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.
THREATS
Main Competitor Nestle and Coca Cola launching a new product
More companies diversifying into confectionary business
Large price war taking Cadbury off the market
High level of investment needed to launch products deter product innovation
Health lobbies encourage consumers to reduce confectionary intake
The strengths of the multiple retailers own brands threaten established brands