Mi Tenda is a small independent grocery store that has been started with a strong strategic vision to serve customers with a “friendly like neighbors” attitude. As a part of development strategy, an important task is to conduct a SWOT analysis. It should be remembered that the competitors of Mi Tenda will be the large supermarkets and chain stores rather than other mom and pop stores. The analysis will be accompanied by major decisions and recommendations for each of the factors analyzed. The analysis will include among other things economic and legal aspects of the business.
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SWOT analysis stands for strengths, weaknesses, opportunities, and threats. This analysis will also be given in a tabular form for easy reference. “SWOT analysis is a basic, straightforward model that provides direction and serves as a basis for the development of marketing plans.” (Danca, n.d). This definition states the importance of this analysis since it provides a direction and also to develop strategic marketing plans. Seven factors including the two mentioned above will be analyzed one by one here.
- Strengths: Mi Tenda is a small business and a sole proprietorship. Hence the legal formalities in formation and running the business is minimized when compared to other forms like corporations and partnerships. The business can focus more or administration and customer service and other aspects without being bothered too much be legal formalities and requirements. But all other common regulations like payment of taxes, consumer, and environmental laws etc are applicable to everyone and the store will see to it that they are complied with.
- Weaknesses: The US is a country where legal formalities are taken seriously by the government. Hence, there is every chance that the store may inadvertently make some mistake. There is also a chance that the store may be sued by competitors and other stake holders for genuine or false reasons. The store will have only limited resources in handling such instances.
- Opportunities: The low legal requirements in starting small single ownership stores are very little and hence growth opportunities will not be hampered this. As long as the store retains this format, expansion to other areas will not be a problem. The country also has a strong legal administrative machinery and the store can avail of this in case it intends to take legal action against outsiders.
- Threats: The practice of suing others is quite prevalent even for flimsy reasons. Competitors may use this as an excuse to create problems for the store if they find that the store is getting successful. The trend seen is that the legal regulations as to formation and running of small stores may not change much. But regulations on imports of certain consumer goods may affect the type and price of the goods sold. More regulations on environmental protection will surely be coming.
- Strategy: Some countries will enforce these regulations more strictly than others. Whatever be the case Mi Tenda intends to follow the rules and regulations to the letter and will not attempt to cheat the consumer or any other stakeholder in any way.
- Strengths: The basic way that a small store should be has remained unchanged over time and is also similar in many parts of the world. It is only that many stores stopped that personal touch that problems began. Moreover, customers are now familiar with the practices of large corporations and the novelty of shopping there has worn off. People has less time to drive to a distant place to shop and will prefer a closer store even if it a little more costly. They can make up on the time saved and the fuel charges spent on driving longer distances. Mi Tenda can use this as strength.
- Weaknesses: The inability of small businesses to compete with large organizations is a major problem. It is seen that big organizations are now entering all fields of businesses. These companies make use of economies of scale to offer low prices. This cannot be matched by stores like Mi Tenda.
- Opportunities: There is nothing to prevent Mi Tenda from growing if the first shop is a success. With increased globalization and free trade, opportunities for expanding not only within the country, but internationally are also a possibility in the future. In short Mi Tenda can become a big supermarket chain if the business is done correctly.
- Threats: Globalization has resulted in competition from companies from other countries as well apart from US corporations. An example would be the presence of TESCO in the country. The trend that is being seen today reflects what has been said in the above sentence. Companies are crossing boundaries and creating more competition for shops like Mi Tenda.
- Strategy: The only strategy that can be followed is to offer personalized service, quality goods at value for money prices, offer as much variety etc.
Every business is a part of the society and hence closely related to it. So social factors are very important and will play a big role in the success of any business.
- Strengths: The vision of Mi Tenda to provide “friendly like a neighbor” service is the biggest strength of the company. Customers of big supermarkets feel the lack of personalized and friendly service provided by big supermarkets and retail chains. Customers should keep coming back just to avail of the service. Another thing is that this type of service will bring about a lot of word of mouth advertising for the company.
- Weaknesses: Since it is a small store, the service will depend on the mood and character of the owner as well as the employees. None of them will be professionally trained in this respect. Unless the owner takes great care, this neighbor like service may not happen. This type of service will also result in negative word of mouth advertising for the company.
- Opportunities: The lack of personalized service of large shops mentioned above is the best opportunity to be made use of by Mi Tenda. As such many customers feel the need for more friendly service and providing them will be good for the store. It will be difficult for large stores to provide good and constant service at all times in all their branches. With a little care, neighbour like service can be provided at all times in Mi Tenda.
- Threats: The people who come to work at Mi Tenda will mostly consist of part timers like students, housewives, etc who want to earn some extra money. In such a case, the turnover will tend to be high. It is difficult to find always people with a good disposition. Training them will also be difficult because of the high turnover. Moreover, they may not care much over being nice to people and may not comply with the owner’s orders since the job is not very important to them. The trend that is now being seen is that personalized service is seen to be more valuable by customer service. The customer must feel that he is valuable and should also feel extremely welcome.
- Strategy: All efforts will be taken to see that “friendly like a neighbor” service is provided to customers at all times. One was is to see that only people who like people (a good disposition) will be taken as staff after interviews. This will be the main qualification for the job. Periodic training and constant reminders will also be a factor here. Staff will be rewarded on the level of friendliness and warmth they show to their customers. Regular customer surveys can be conducted in order to find the qualified candidates.
- Strengths: Small businesses need only low overheads and operating expenses when compared to large corporations. This is true for all businesses throughout the world. It is also possible that with proper care, these resources can be utilized to maximum effect to increase profitability. Moreover products sold by Mi Tenda are for daily use and hence will have more demand from customers.
- Weaknesses: The main weakness is that the store cannot match the lower prices offered by large supermarkets. The large resources at their disposal will result in economies of scale which they can pass on to the customer in the form of lower prices.
- Opportunities: Being a small organization, economic strategy can be changed or adapted quickly. Even strategies can be adopted from outside and changed to suit the stores needs. There are less of administrative hassles in doing so.
- Threats: Large competitors can offer a wide variety of goods at lower prices which cannot by matched by Mi Tenda. But a more important threat is the state of the health of the economy itself. If the economy is doing well, customers will not look at the price factor much. But if it is poor, customers will prefer to go to supermarkets and buy for longer periods (say for a month) to avoid repeated visits. They will also reduce volume of shopping and only buy very essential items. Both these are threats to small shops. The general trend seen is that small shops tend to expand to other areas if they are doing well. But it is also seen that more and more mom and pop stores are going out of business due to high level of competition from larger players.
- Strategy: The only option is to give good personalized service, and good value for money products. If a recession comes, Mi Tenda can only wait it out by cutting down expenses and not increasing profits even if it means small losses for the company.
- Resources: Every business needs some level of resources in capital, personnel, etc for effective and profitable running
- Strengths: Only low levels of resources are needed for such types of shops. A business oriented person can start a shop with available resources and financing from banks.
- Weaknesses: With low resources, economies of scale enjoyed by large corporations cannot be had. Also the convenience and space inside the store will be limited. Expanding the store size will also be a limitation. Quality of staff might also be a problem.
- Opportunities: If the store is a success, there is great potential for expansion. New branches can be opened in other areas.
- Threats: If a large store opens near Mi Tenda it will be a problem. There will not be enough resources to match the competitor in terms of cash, price offered, and space. The trend that is being seen is that most small businesses are going out of businesses due to lack of resources.
- Strategy: The strategy that is open is to keep resources in standby in case such a threat mentioned above happens. If not all efforts will be made to expand once the first store becomes successful in an attempt to become a large corporation in the future.
- Strengths: The Company has only small and manageable goals. It is easier to keep one’s focus and also to achieve smaller goals.
- Weaknesses: In order to grow to a large scale the goals set must be large. This is not possible with small goals.
- Opportunities: The goals are flexible and can be changed and expanded as needed. This is not so in the case of larger companies. This is very useful in highly competitive environments.
- Threats: Remaining small may result in the company not being able to handle the competition and may result in going out of business altogether. This is also the general trend that is being seen in such businesses today.
- Strategy: There can only be long term strategy here and that is slow and steady growth. Resources must be ploughed back and new and bigger goals set each year.
There will a corporate culture in all organizations.
- Strengths: The corporate culture in Mi Tenda will be simple and uncomplicated. It will be a close knit culture and will be more like a family unit.
- Weaknesses: Being a small store, the foundation for this culture is very weak. In fact there will even be no identifiable culture to speak of.
- Opportunities: This family like culture can be used to bring in more customers who are keen to get more personalized service.
- Threats: A change in attitude of the owner or a change in ownership can change whatever culture that exists very easily. It will also be easy for an employee to create problems if he or she wishes to do so. The trend now being seen is that small organizations are bringing in more professionalism into practice.
- Strategy: The trend mentioned above can be taken as the strategy here. All efforts will be made to bring in professionalism without loosing the neighbor like service that is the vision of the company.
A SWOT analysis of Mi Tenda has been made here and seven factors have been analyzed in more detail. With the right approach, hard work, strategy, and being friendly like a neighbor can definitely bring success and growth for the shop.
SWOT Analysis Table:
|External Forces and Trends Considerations|
|Legal and Regulatory||Sole proprietorship |
Hence very few legal formalities
|Lack of resources for handling disputes if the need arises||Few restrictions on growth. More branches can be opened as per owner’s wishes||Legal intimidation from bigger competitors||Legal aspects will remain the same. More statutes and restrictions to help environmental protection|
|Global||Similarity in basic running of the business||Big corporations are eating into the market share of small grocery and other shops||Virtually unrestricted expansion if stores are profitable||Cannot compete with multi-nationals||Growth of multi-nationals. Personalized service seen as acceptable everywhere in the world|
|Economic||Low overheads. Practically no advertisement expenses. Maximum space utilization. Products are mainly for daily use||Cannot offer the low prices offered by big chains, super and hyper markets||Flexible. Economic decisions can be changed easily. Very flexible||Competitors can offer more choice at lower prices |
The health of the economy will be a factor
|Expansion to other areas if the first store is a success|
|Technological||Very little technical infrastructure needed||Cannot afford the technical and logistics capability of big players||Availability of ready made software solutions for better store administration||Low technical base||Technology that will help small stores will continue to improve|
|Innovation||Can innovate strategies and plans easily||Not much opportunity for innovation for a small grocery store||Can adopt innovation from other areas and adapt them to suit our requirements||Can only innovate with the available resources||Innovation is essential for survival|
|Social||The personal ‘neighbor like’ touch. No other form of business can match this.||Disposition of the owner and staff. If he or she is moody, relationship can turn bad||The low personalized touch in large stores can be made use and compensated here to attract customers||Lack of professionally trained staff. Most are temporary and come only to make some extra money. Need not take customers seriously||Customers are wanting more personal attention.|
|Environmental||Low environmental damage if careful. Can implement policies and statutes easily||Lack of resources to recycle or dispose of waste||Making use of increased environmental awareness. Can make this a part of the theme or vision of the store||More and more statutes with regard to protection of environment. Contributes to this factor even though in a small way||The protection need will only increase over time.|
|Competitive Analysis||The strong vision and will to succeed of the owner||Difficult to cater to specialized markets (ethnic) as products may have to be imported. Low volumes will make it unfeasible||More and more small stores are going out of business. Can make use of this opportunity to provide excellent service/products and grow||Low prices and variety offered by competitors||Competition will only increase the future. The grocery business will see more international players coming to the market|
|Internal Forces and Trends Considerations|
|Strategy||. Prime placement |
. Display of the tip of aisle
|. Distribution channels||. Offer discounts |
. Product mix can be easily changed
|. Internal theft||. Strengthen forward and backward linkages|
|Structures||Simple organizational structure with no more than three levels.||Unprofessional.||Structure is flexible with employees being able to work in more than one area||Structure is weak in the sense that employee turnover is high resulting in gaps in the structure.||No major changes in structure for such small stores|
|Processes and Systems||Simple and uncomplicated||Professionally managed by large competitors. More efficient and cost effective||Flexible enough to change if needed||Not sophisticated enough to ensure efficiency. Cannot offer competitive prices||Will remain more or less the same until major expansion takes place|
|Resources||Only low level of resources needed to start and maintain||Cannot match resources of large competitors. Hence very low economies of scale||It first store is successful, expansion possibilities are there. Finance will also be available||Lack of resources||Has the potential to increase resources if successful|
|Goals||Strong, but small goals. More manageable||Small goals have limited potential for growth||Flexible. Goals can be enlarged step by step||May remain small and could result in going out of business altogether||Large goals and large corporations|
|Strategic Capabilities||Able to suit and adapt to the owner’s vision easily||Limited||Flexibility is there to change and adapt||Cannot compete with big players||Strategic planning is growing in importance|
|Culture||Simple family like culture||No organizational culture to boast of||This family like culture can be an asset for better customer service||No strong foundation. It can be destabilized by change in ownership or presence of anyone intending to create problems||A balance between personalized service and professionalism|
|Technologies||Low investment and uncomplicated. Need no special staff or department in maintenance||Low technology means low level of information and less efficiency in processes and logistics||Can easily increase technology in bits and parts||Cannot utilize high technology in one go due to lack of resources||Technology will play more important role in all aspects of business.|
|Innovations||A person with high innovative ideas can easily bring in such ideas without formal procedures.||Limitation in innovation due to small size||Flexible. Can change new ideas to suit the store’s needs||Cannot match innovation levels of large stores||Innovations are also key to business success|
|Intellectual Property||Chances of owning IP rights are low. Hence no worry about protecting them.||IP rights can result in more profitability. This is not possible with small stores||No bar in developing IP rights if there is a successful idea of concept.||IP rights of large corporations may affect some of the products sold by us.||The issue of violation will become more serious as more and more patents and branded goods arrive. GM foods may also cause us to pay more and also to stop some lines of business|
|Leadership||Simple structure. Mostly the owner himself will be the leader. Hence no leadership issues||Leadership depends solely on the owner or manager||Owner has the opportunity to develop leadership skills and apply it in his shop||Change in owner or manager will also change the quality of leadership (either positively or negatively)||Quality of leadership is an increasing factor for success|
Danca, Antony. C. (n.d.). SWOT Analysis: What is SWOT Analysis. 2008. Web.
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