SWOT Analysis & External Market Trend Analysis

SWOT Analysis: Internal

Company

Management:

Strength:

The company management is directed towards creating an environment, where all workers derive maximum amount of benefits.

The company has a functional leadership structure, where departments, such as marketing, are headed by experts in the field. This ensures expertise in operations.

Talent is developed within the organization. Elevating people within the organization to positions of leadership help propel the company forward because these have the experience, understand the culture and market needs of the organization.

The company encourages all employees to be honest and open, regardless of their level or situation they are in.

After explaining what happened he insisted on refunding us for our desserts. He was quite forceful in fact. My wife and I told him it was OK…We thought this was the end of the story until the manager of the restaurant came to our table…She went on to explain how the waiter approached her and explained what had happened. She also explained how this young man was one of their best waiters and that he felt terrible…Not only did this waiter admit to making a mistake (Pereira 1).

The company conducts regular training to teach its workforce, as well as to impart leadership skills.

Weakness:

Only managers and staff, working for 25 hours a week or more, get benefits, such as full health insurance.

Managers have the discretion to determine employees who will work the longest shifts, and have huge benefits.

Employees may feel discriminated if they never get this opportunity.

A better health benefit scheme for all lower level employees is necessary to avoid the looming discrimination.

Recommendation:

There should be programs to develop talents, such that employees who work for Cheesecake Factory can feel empowered even after leaving the company (cpstrat.com 1).

There is a need to review the benefit system, such that every employee is rewarded for their work. The current system, where only managers and those who work 25 hours and more a week, get full health benefit is discriminatory.

The company should make leadership autonomist to the team level to encourage independent decision-making.

As a company founded on a passion for baking, the leadership fosters a passion driven workplace, where passionate recipe creators get a chance to be innovative.

The management should strive to keep employees happy because the service industry thrives for good service. When employees come first, they will put the customers first.

The management should focus on employee retention by creating an employment, where employees get high compensation and skill advancement opportunity through mentorship programs.

Marketing:

Strength:

A chief marketing officer heads the companys marketing department.

The CMO is responsible for making all decisions regarding the companys marketing activities.

The company has a designated position for the chief marketing officer, headed by a talented person with a deep understanding of the market.

The chain has a diverse product mix that is characterized by numerous menu items, serene environment and peripheral services to enhance diners experience.

The company offers fair prices for large portions.

The company is widespread across the US with restaurants in posh and suburban areas.

The company is also venturing into foreign markets.

Weakness:

It is paramount to have an autonomous marketing department leadership at every restaurant.

The organization lacks an active advertisement campaign.

Advertising is a major contributor to organizational success because it creates awareness. Customers are aware of the prices and products.

Recommendation:

A paid advertisement campaign could go a long way to popularize the restaurant to its potential customers.

A social media campaign to make the customers aware of the restaurant could go a long way in increasing restaurants revenue.

The company could sponsor special dinner events that attract the public, especially media community for more coverage.

Finance/

Accounting:

Strength:

The company has a strong return on equity notes (Dreman 1).

A high return on equity shows that the company is good to invest in because stockholders wealth will grow.

With a wide geographical presence, the company is likely to continue performing well financially because risk in one market will be redistributed.

The company has steady earnings per share.

EPS for latest quarter is not greater than the EPS for previous quarter. (Dreman 1)

Weakness:

The company has a lower market capitalization, as compared to the 1500 large companies.

With such capitalization, risk might be high for investors, in case of error and fraud.

The problem with a steady EPS is that the potential investor may be looking for growth.

With a current ratio of 0.64, the companys current ratio is below the industrys average of 1.43 (Dreman 1).

Recommendation:

The company should focus on increasing its market capitalization to assure investors of protection from the risk of fraud.

The company should also have a good cash management cycle to ensure that the working capital is well managed.

The company should pursue wealth maximization, other than bottom-line management.

The company should sell more stock to in the financial market to raise more capital, required for expansionary measures.

Selling stock for capital purposes lowers the risk levels. It also helps to diversify risk and distribute it among a large group of people.

Operations:

Strength:

The company has detailed procedures, controls, standards, food management systems and food preparation methods, as well as processes.

The company counts on enthusiasm, quality, ability, and dedication of all workers in various levels of authority.

The company keeps its restaurant doors throughout the year, except for Christmas and Thanksgiving.

This means that customers who love the restaurant can walk in for dinner and enjoy a meal any day.

The restaurant setting also offers an outdoor dining experience for diners who want to have their meals outside.

The company offers efficient and attentive service to guests.

The staffs at all restaurants are trained regarding their role or position for excellent restaurant operations.

Staff is hired on an hourly basis and number of staff within the restaurant is scaled according to the traffic of customers.

Weakness:

The scaling of employees, based on traffic, may harm the hotel, where the traffic surges unexpectedly causing stalling of operations in the hotel.

Recommendation:

The organization should determine the minimum and maximum number of employees required at any given time for the restaurant operations to run smoothly.

Other

Customers:

Strength:

Different menu items, offered in all the chains restaurants, are more than likely to attract customer attention.

Different settings of each restaurant, such as interior decor and open-air dinner create an appealing environment, which fosters positive dining experience.

The large portions at fair prices are likely to attract cake lovers from competitors.

Home delivery appeals to the customers who do not want to go to the restaurant for a meal.

Customers are looking for diverse, nutrient rich, and fresh ingredients.

The customers are the ideal advertising tool because the restaurant depends on their word of mouth.

Weakness:

With the increasing levels of lifestyle diseases, such as diabetes, obesity, and cancers, customers may shy away from cake, which the chain identifies with.

The company needs to come up with new and non-traditional recipes to appeal to the changing age demographics.

Negative customer reviews could negatively affect customers perception of the organization, thus reducing the organizations performance.

Recommendation:

The company needs to come up with a new type of dessert that keeps the original idea of a cheesecake in mind but renews the idea to match the changing healthy eating habits.

As the company ventures into different geographical areas, it will need to align its staff, operations, and menu to appeal to customers in the new area.

Suppliers:

Strength:

The company ensures that it sources its raw materials, menu ingredients, as well as other supplies from reputable sources.

To maintain high quality food, the chain sources for top quality ingredients.

The company also evaluates its suppliers on price competitiveness to ensure that they get the best product for the best prices.

The chain has no centralized purchasing systems from dedicated suppliers.

Every restaurant in the chain is allowed to determine its needs in terms of materials for ingredients and to purchase them from the supplier who meets the needs of organization in terms of quality, freshness, and price.

The organization sources its products from suppliers who must deliver the product on time to ensure that operations in the restaurant keep running.

The restaurant sources ingredients from suppliers who provide products at low prices.

Due to sourcing the products from suppliers, who provide low priced ingredients, the company is able to sell meals to customers at competitive prices.

Weakness:

The lack of a long-term contract with suppliers poses a threat towards the materials availability, needed in case there is an abrupt shortage within the chain.

With increased environment activism, customers want to know where food items or ingredients are sourced and how they were grown. Without dedicated long-term suppliers, customers are likely to smell foul and abandon the restaurant over time.

Farm produce, such as daily products, are subject to price fluctuations.

Recommendation:

It is paramount to establish a long-term relationship with some farms or companies who supply fresh ingredients and which can easily be traced from a farm to the customers plate.

Distribution Channel(s):

Strength:

The company runs several restaurants in major cities in the US, where customers can come and dine.

The company also has a contract with SYSCO – the largest foodservice distributor and marketer.

The contract with SYSCO has afforded The Cheesecake factory to reach out to more people and diversify its products by adding two more product lines.

Expanding into new regions affords the company an opportunity to increase its revenues.

The organization also has an opportunity to add to its menu items new recipes and cuisines from the new regions it ventures.

Weakness:

The company fails to take note of the expanding need for online presence, which allows diversifying the distribution channels.

Recommendation:

The company should start e-retail to reach out to consumers who do shopping on the online platform.

SWOT Analysis: External

Economic:

Opportunity:

With a constantly growing economy, the competition for top talent will be high.

In a strong and expanding economy, customers have more purchasing power, thus demand will keep increasing.

An economic expansion means growth in the food service industry.

A strong economic growth on the global scale is attractive for many organizations to go global because markets are ripe.

A growth in the off-the-premises market has provided an opportunity for organizations to offer other services through take-outs, and outside catering.

Economic growth in the US has initiated a decrease in consumer debt and gas prices. As a result, customers have more money to spend on leisure activities, such as dining in restaurants (Hays 1).

Threat:

A stronger economy means more jobs in different sectors. Consequentially, potential employees are likely to target industries that pay more. The food service industry, being one of largest employer of minimum wage may suffer.

Because consumers disposable income is less than in previous years, the restaurant sales growth rate is not what it once was (Simons 1). Economies outside the US remain relatively weaker and the chain may record poor performance in new markets.

As economies expand, global competition is likely to go large-scale.

Hays (1) notes that the economic expansion has negatively affected the restaurant industry because labor costs have increased, wholesale food costs have skyrocketed with a 3.6% increase, while menu food price have increased with only 2.6%. This translates to marginalized revenues for food service industry.

Recommendation:

The company should maintain good compensation programs to attract and retain talented workers.

The company should invest in new markets to take advantage of global expansion.

Social, Cultural, Demographic:

Opportunity:

The globe is moving towards the global village concept, where boundaries are broken and cultures are merged.

This means that the same social, cultural, and demographic factors, affecting the industry in New York, may be similar to those in Johannesburg, Shanghai, Hong Kong, and Paris among others.

People in different regions may have the same spending habits.

Changing demographics represents shifts in changes and preferences; it is an opportunity for any organization to appeal to different customers from different backgrounds.

Threat:

This factor may affect the companys marketing efforts, especially in the middle east, where cultures are more conservative.

Different religions expect their devout to follow certain rules and behave in a certain manner Religion and custom are two of the most important factors impacting a business. Every organization has to adapt itself to the prevalent customs and traditions in a region (Pandita 1).

Some menu items are also prohibited in certain religions.

Recommendation:

The organization should encourage diversity in the workforce, so that customers can feel familiar in the restaurant environment, regardless of their cultural background.

Political/Legal:

Opportunity:

Many governments are opening up their economies for foreign players by offering tax holidays, and reduced tariffs. This means there is an expansion of the global market.

Businesses should look forward to invest in markets, where governments favor private establishments, especially in markets where governments endeavor to attract foreign investment.

The need for foreign investment creates an opportunity for businesses to get close to cheap material. The combination of low cost material and cheap labor offers organizations to attain cost competitiveness, which is the leading factor in global business success.

Cost competitiveness, afforded by global expansion, gives organizations a chance to expand, thus diversifying risk and redistributing risk and loss in different markets.

Threat:

Many global economies are affected by political skirmishes, which result due to dictatorship and other political wrangles.

Opening up foreign markets only favors large multinationals with adequate market capitalization.

Secondly, labor laws and other laws, applicable to the food service industry and restaurant business, may hinder a player from taking part in the global expansion.

Many governments lack business ambitions, especially in regions where cultures are conservative and are laid back. New businesses in such regions stand to fail.

With laws, such as Affordable Care Act, employers will have to provide employees with adequate health coverage, which may affect business revenues (Simon 1).

Many developing markets have aggressive protectionist policies to protect the growing industries.

Taxation systems are aggressive in young economies, thus creating unfair competition.

Many foreign establishments have become ripe targets for terrorist groups in many unstable regions, such as middle east. Such activities hamper business growth and even pose material business risk.

Recommendation:

The company should investigate foreign markets before embarking on expansions to ensure that all the potential risk areas are mapped out and avoided.

The company should invest in politically stable markets.

Technological:

Opportunity:

Expanding technology presents new frontiers for online and home delivery services.

Through technology, customers can place orders in their favorite hotels, where the same can be delivered to their doors by the restaurant.

The growth in technology offers a new way in staff, inventory and asset management, increasing efficiency and minimizing losses.

Technology also allows businesses to create downloadable menu applications for patrons, which they can access, using their smart phones to place orders (Vardy 1).

Technology also presents new marketing channels on the social media, where an organization can aggressively advertise to elicit interest among the potential consumers.

Technology offers a new way to carry out operations in the larger economy.

Many people are now technology dependent. The organization should, therefore, embark in adopting technology in its marketing activities. For instance, email marketing.

As Vardy (1) notes, iPads are increasingly becoming a part of the modern kitchen.

Usually, technology offers organization a competitive edge because wastage is minimized.

Adopting mobile technology also gives restaurants an opportunity to learn more about customers using their data history.

It is, thus, easier to predict future dining habits from past habits.

Technology expansion presents an opportunity for the food industry to combine the much-needed human interaction with technology to deliver optimal services that give customers the ultimate dining experience.

Threat:

Technology may bring about staff resistance, in case staff lacks adequate training.

Technology may also pose threats when technological glitches occur because a business dependent on the same may have to shift to manual function, which may cause a slump in business.

There are many laws required when dealing or operating business with technology, such laws include, Sarbanes-Oxley Act, Gramm-Leach-Bliley, and HIIPA.

There are also increased incidences of data heists, which are hefty in terms of lawsuits, and profitability among others.

Recommendation:

The cheesecake Factory should adopt technology for inventory.

The company could also benchmark to determine how successful retail businesses conduct e-commerce.

The company could also deploy hefty social media marketing.

Natural:

Opportunity:

Good climate, due to global environmental conservation, may lead to increased rainfalls and increased farm produce, thereby driving material costs down.

When the supply of raw materials is high, the prices are likely to go down. This offers price competition, which increases demand for products, which offers economic growth.

Weather affects business cycles, such as boom and recess. The business cycles affect profits and revenues.

Threat:

Weather conditions are unpredictable and sometimes they may turn for the worst.

This will drive costs for food materials high, thus affecting the food service industry negatively.

Natural disasters also pose risk to businesses because losses occur due to destruction. The problem is that they are unpredictable.

Organizations must create emergency budgets, set aside funds for such occasion, thereby driving up the cost of doing business.

Many international markets, such as Japan, China, and Haiti are rocked with earthquakes, which might post risks to expansions that want to expand.

Recommendation:

The company should be forefront in fostering good environmentalism by sourcing materials from organizations that follow environmental friendliness.

The organization should have a disaster preparedness plan that details how events will run in case a disaster occurs.