Krispy kreme weaknesses

© 2017 Robert J. Powers, all rights reserved

NOTE ON SWOT ANALYSIS

SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities and Threats.

Strengths and weaknesses are internal factors which can help or hurt our chances of succeeding,

while opportunities and threats are external. We use these as we make business decisions,

because we want to exploit strengths and opportunities, fix weaknesses, and avoid threats.

Your textbook does a good job describing environmental analysis. The purpose of this

document is to add some practical advice to the last three of the four steps of a SWOT analysis:

1. identify relevant environmental factors,

2. identify possible strengths and weaknesses,

3. compare the two to identify opportunities and threats, and

4. highlight the key SWOT factors.

Details about the four steps follow.

1. Environment

We have no control over the environment, but since it can affect our customers, suppliers,

competitors and business partners, we must understand what is going on. Later, we will

compare our list of strengths and weaknesses to environment factors to identify opportunities

and threats. For now, we list the possible external factors and; in step 3, we will see which

might lead to opportunities and threats.

What we are looking for are changes in the environment which might affect our success.

That means each must important to our business and have a long-lasting effect. For example,

while Krispy Kreme was expanding nationally, the low-carb craze hurt them badly and forced

them to retrench.

Large, quick changes are the most important. As a sage once said, "Change offers both

threats and opportunities." If we identify and react to relevant environmental issues sooner and

better than our competitors, then we win. Procter & Gamble, for example, reversed declining

sales of Downy fabric softener by taking advantage of consumers' growing sensitivity to the

environment, specifically too much trash going to land fills. When they launched concentrated

Ultra Downy in small bottles, fabric softener sales began to grow again after a long decline.

I split the environment into the broad and narrow. The difference is that the narrow

environment is concerned with issues close to our business rather than more distant issues.

For the broad environment, I use the acronym STEEP as a checklist to make sure I don't

forget any:

Note on SWOT analysis

2

S Social, cultural, demographic

T Technology

E Economy

E Environment

P Political, legal, regulatory

Examples of social, cultural and demographic factors, respectively, are an increased sense

of insecurity because of terrorism, popular trends such as fashion, and an aging U.S.

population.

Technology is changing all the time. New technology might affect our suppliers, our

competitors and our customers. In addition, we might be able to take advantage of it in a new

product, to make our operations more efficient, or to serve our customers better. The Internet is

an example of the latter.

The state of the economy affects all parties, too. In boom times, consumers are more willing

to spend, but raw-material shortages might raise our costs. In a depression, customers cut back

on spending, but we might find better employees to hire. Since a recession is typically short-

lived (2009 being an exception), it does not affect strategy.

The environment E refers to raw materials and pollution. People's attitudes towards the

environment are covered in the S of STEEP, while regulations are part of the P of STEEP, which

consists of political, legal and regulatory factors. Regulations are the law–we must comply.

Law suits and political threats might be enough to affect the behavior of a player.

I use the acronym MCCCS for the narrow environment:

M Market

C Customer