Vikas, a CFA student, was preparing for his project, when her sister interrupted to nag him as usual.
“Bhaiya, what are you always doing? What is this box?”, Seema inquisitively asked.
“Seema, you’re always full of questions. But yes, instead of merely spending money at Starbucks, why don’t you ever think through a different angle? You see, I’m writing a SWOT Analysis report on Starbucks.”
“Hmn, nothing of that sort. I’m curious to know. Now you want me to nag you into explaining?”
SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. SWOT Analysis is a management tool used to identify strengths, weaknesses, opportunities and threats. By identifying and analyzing this, one can achieve a competitive edge by working on their weaknesses and boosting the strong points. Usually prepared as a matrix, it helps you to visually represent the above four parameters. It is quite interesting to prepare a SWOT analysis of any company, business or even a project, as it helps you to visualize in advance, what are the positives and negatives of any organization.
How Does SWOT Analysis help you?
- Prepare a model that can help you visualize easily the performance of a company.
- Helps analyze your strong points and areas of concern in both internal and external environments.
- Helps prepare a mitigation plan in case of any of the threats happening in real.
- Explore Untapped potential
- Compare with competitors and take a cue from their SWOT analysis.
Last article, we saw how company analysis is carried out in investment research. Starbucks is a leading name in the coffee beverage industry: a premium retailer of specially roasted coffee.
- A strong brand name and goodwill in the market
- Operations across the world
- Strong financial performance and high net worth
- Competition from local brands.
- High price as against other mediocre brand which sell at lesser prices.
- Dependence of suppliers of coffee beans which impacts businesses. Procurement of coffee beans is impacted by the laws surrounding the plantation of coffee.
- General perception of Starbucks is expensive, hence, is not the preferred option, especially in developing nations.
- Growth in geographical segments: There are still opportunities of expansion in Asian markets, which has not been completely harnessed.
- Boost changes in prices, discounted prices especially in developing nations.
- Other eating joints such as McDonalds and Starbucks who offer cheaper options for coffee along with fast food. Hence, it is preferred by the younger generations, being a pocket-friendly option.
- Health concerns: Diet conscious younger generation is preferring for alternatives such as fruit juices, in a bid to reduce consumption of caffeine.
“Hmn, bhaiya, this is pretty interesting… so, I can use SWOT analysis for anything?”
“Absolutely yes! You can conduct a SWOT analysis on yourselves too, though your biggest opportunity is nagging your brother.”
“Yes, I’m a threat to you!” exclaimed Seema.
“On a serious note, you should conduct a personal SWOT analysis to map your career path, by analyzing your talents and weak points!”