Implementation and Control
A SWOT analysis is an examination of a company’s strengths, weaknesses, opportunities, and threats. In other words, the SWOT analysis is an evaluation of the internal and external factors influencing the firm (Snelling, 2012). The following is the SWOT report for ToolsCorp.
- ToolsCorp has a strong brand image in the Tennessee region.
A strong brand image is important because it ensures that the frim attracts and retains customers. Companies with a stronger brand image attract a larger customer base. The brand image is what consumers remember when making the decision to purchase a product. This factor is in this category because it is internal in nature and provides a competitive advantage for the firm.
- High profitability
Profitability is a critical factor in determining the success of a company. A company’s profitability determines its ability to settle its operational costs such as salaries, rates, and other expenses. This factor is in this category because it is an internal factor. The decisions that the management makes regarding the operations of the firm determines the firm’s profitability, thus it is an internal strength.
- Large market share
The market share is the portion of the market that the firm controls. The market share is important because it shows the consumers’ preference for a particular product. The market share is an internal factor since it is within the control of company.
- Quality of human resources
The human resource factor is a critical factor in determining the success of an organization. Hiring qualified employees can increase productivity. Further, highly motivated employees perform better. This is an internal factor since the company can directly influence it.
- Lower operational costs
This factor is important because it can give the organization a competitive advantage over others. Operational cost is an internal strength since the firm can directly influence it.
- Significant product recalls
Product recalls have a negative impact on the brand image among consumers. This is because it reflects poor product quality. This factor is internal since the firm has direct control. It is under the weaknesses category since it results to loss of sales.
- Shortage of experienced staff
This is a major weakness especially where the company relies on a few experienced staff. This exposes the company to vulnerabilities in case the vital staffs are sick or decide to leave the company. It is a weakness since it has the potential to bring about losses.
- Unresolved legal suits
ToolsCorp has unresolved legal suits that could potentially affect its cash flow position in the event it lost the legal suits. This is an internal factor that can hinder the company from achieving its objectives, and hence a weakness.
- Lower plant capacity
This represents the ability to satisfy customer demands through the production of demanded goods by customers. If the plant capacity is low, this means that the company is unable to meet customer demand. This can drive customers to rival firms. This is an internal factor since the firms can take direct measures to control it.
- Lack of financing
Inadequate financing can curtail the company’s plans to expand production. As such, it would be unable to meet market demands. This is an internal factor with a negative impact hence it is a weakness.
- Expansion into the international market
ToolsCorp largely markets its product in the domestic market. The company can expand its supply chain into overseas regions where there is ready market for products. This is an opportunity because it is an outside factor with a positive influence.
- Support from local government
The local government has a significant influence in the business environment. For instance, a reduction in taxes or giving of subsidies can help businesses to grow and expand operations. This is an opportunity because it is an external factor with a positive influence on the company.
- High demand for the company’s products
Demand for the company’s products may increase for various opportunities such as increased disposable incomes, changing demographics, and changes in consumers’ tastes and preferences. When the factors are in favor of a product, the respective company may experience growth in sales. This is an external factor with a positive effect.
- Application of modern technologies to cut costs
Emerging technologies can significantly help in cutting costs and improving service delivery. The company has an opportunity to apply emerging technologies such as mobile applications to improve customer satisfaction. This is key in developing customer loyalty. This is an external factor and can help the company achieve its objectives, thus an opportunity.
- Opportunity to expand through partnerships and acquisitions
The company can easily establish dominance in the region by acquiring its competitors or engaging into partnerships. This is an opportunity because it is an external factor.
- Increased competition
Every industry faces the threat of competition especially from large players in the market. High competition could lead to price wars and loss of market share. This external factor threatens achievement of set objectives. As such, it is a threat.
- Fluctuation in energy prices
Fluctuations in energy prices may have a significant impact on the business. High oil prices, in particular, may result to losses. High oil price is an unfavorable external factor to the business, the reason why it is a threat.
- Financial crisis
An economic recession could significantly affect ToolsCorp through low demand. During the 2008 financial crisis, majority of companies were at risk of bankruptcy. The risk of another economic meltdown is still real. A financial crisis is an unfavorable external factor to the business, the reason why it is a threat.
- Increased raw material prices
High prices of raw materials can affect the price of final products. This could make them out of reach for the target consumers, reducing demand. The company does not have control over prices of raw materials since it constitutes external factors.
- Rapid technological evolution
High technological development can transform the market beyond the ability of the company to adapt. Technological evolution is an external factor that the company cannot control.
Business Plan Outline
The following is an outline of a business plan showing ToolsCorp’s strategic initiative.
- The executive summary segment
- Overview of the market
- The product and services that ToolsCorp will offer
- Notes about intellectual property rights
- Overview of the leadership or management team
- Financial forecast
- Financing or capital requirements
- Exit opportunities (Fabozzi, 2008).
To provide quality products to our customers and deliver benefits to investors through continuous innovation, focus on quality and safety of our products, creating long-term investment value, and by ensuring that customers get value for money.
Key Operating Principles
- Improving safety and quality
- Enhance customer loyalty
- Provide a long-term investment value
- Enhancing integrity in operations
Preliminary Market Analysis
The state of Tennessee had approximately 6,549,352 inhabitants as of 2014. The state has an average population growth of about 8.2 percent, meaning that the market is still expanding. About 61 percent of the residents are between ages 20 and 64, which represent the workforce age group. In 2014, the unemployment rate was 6.7 percent (“Tennessee Higher Education Commission,” 2016). Statistics indicate that 88.3 percent of Tennessee’s adult population (25 – 64 years) had a high school diploma as of 2014. A further 34.3 percent of the adult population had received a college degree. These statistics indicate that the region has highly qualified human resources that can support production. Poverty rates stand at 18.2% (“Tennessee Higher Education Commission,” 2016). This indicates that majority of the people has high incomes that support the purchase of food and other goods and services. In other words, the Tennessee region is good for industries.
The one-year strategic objective is to increase market share to 30 percent within the Tennessee region. The implementation of this involves conducting promotions and advertisements to drive sales. A potential ramification is continued customer loyalty to existing brands. Feedback will be obtained by calculating the products sold and obtaining data about the total products sold by other brands.
The five-year strategic plan is to strengthen the company’s financial resources. The implementation plan involves building positive cash flow and increasing the asset base of the company. A potential ramification is increase in borrowings. The feedback mechanism is a lower debt ratio, preferably less than one. A high debt ratio indicates that a company is bankrupt (Gallagher & Andrew, 2007).
A ten-year strategic objective is to develop innovative products that can transform people’s lives. The implementation of this objective requires engaging in research and development, which may be costly to the company. A potential ramification is unsustainability of the objective due to high costs of conducting research. The feedback mechanisms involve examining the number of new product developments over the ten-year period.
The additional material that I consider for this case is the issue of business permits and licenses. In order to operate the company, there is need to obtain licenses and permits. This may not be a problem in the state of Tennessee. However, the company may face challenges while trying to expand into other states or countries with different business regulations. For instance, there are different regulations in various states for selling alcohol, guns, and other products. It is important to learn about the legal environment in other countries.
Fabozzi, F. J. (2008). Handbook of Finance: Financial Markets and Instruments. Hoboken: John Wiley & Sons.
Gallagher, T. J., & Andrew, J. D. (2007). Financial management: principles and practice. Retrieved from https://books.google.co.ke/books?id=sSzpPWDSapoC&printsec=frontcover&source=gbs _ge_summary_r&cad=0#v=onepage&q&f=false
Snelling, J. (2012). The Influence of the SWOT Analysis in Organizational Development Strategic Planning. GRIN Verlag.
Tennessee Higher Education Commission. (2016). Profiles and trends in Tennessee higher education: 2016 annual report. Retrieved from https://www.tn.gov/assets/entities/thec/attachments/Profiles-Trends-2016.pdf