Strategic Analysis and Strategic Analysis Tools Essay Example

Strategic Analysis and Strategic Analysis Tools

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Executive Summary

The article at hand is a report discussing the structure of several industries and the various marketing strategies they use. The strategies have undergone severe analysis based on several theories of marketing. To help explain these concepts the fast food industry is the main source of reference. In addition, we will use Hungry jack’s limited as the main example in the fast food industry. Based on the different approaches the company has used a sound conclusion was reached. This enables us to gain in-depth knowledge on the different marketing strategies companies in the fast food industry use. Through this, we are also able to determine the various challenges affecting the industry. The reports also clearly show the strengths and weakness of firms in this field. Through this report, we are able to validate the efficiency of the different strategies in this specific field drawing examples from the Hungry Jack’s approach.

Through research and analysis, different appropriate recommendations are to be followed in order for further success. These recommendations are based on strengths and weakness of the company and the sector at large. The recommendations also propose different methods of tackling major challenges seen in the firm. In order to second the recommendations real-time experiences are drawn from Hungry Jack’s Limited.

Introduction

Fast food refers to a category of food prepared, served and packed to the customer. They are mainly take-away kind of dishes. The first type of it emerged in the 1950’s in the United States of America. Majority of these foods have a small preparation time and sold highly in restaurants. Fast food restaurants use unique selling styles; where majority sell via drive through. The Fast food industry also involves sales of various foodstuffs such as hamburgers, French fries, soft drink among other quick foods.

To enable us understand this sector in details we will use the Australian Fast food sector. In Australia, the fast food sector is an area with tones of profits due to the large sale of fast food in restaurants. This sector has a great impact on the economy and is highly profitable. Based on a recent research, the sector has greatly grown in the past few years due to entry of many new companies in the sector. In 2011, 17 major chains opened almost 5500 outlets while 80 minor chains accounted for another 1,000 outlet across Australia. Based on research hot potato chips remain the leading fast food product in Australia. The sector is all rounded in terms of target audience, since it focuses in satisfaction of all age groups, gender, income groups and also caters for different preferences and taste of prospective consumers. To enable us internalize the concepts of marketing we will use Hungry Jack’s Limited’s marketing strategies.

Hungry Jack’s limited is an Australian fast food franchise of Burger King Corporation. It is privately owned by Jack Cowin who is its founder. Hungry Jack’s limited owns and operates all Burger King Restaurants in Australia. The company is responsible for opening, licensing and over sighting standards of Burger king outlets in the country. With approximately over 300 locations in Australia it is Burger king’s second largest franchise in the world (Schlosser 2012).

Situation Analysis

In order understand the marketing strategies used, we will analyze various situations and their impacts on the fast food sector. To back this information will use statistical data and analysis based on Hungry Jack’s. In this section, we will study several elements of a business. These are the external environment and the internal element that is the firm. To carry our analysis efficiently and effectively we will use several tools of analysis.

External Environment Analysis

Businesses do not exist in a vacuum but exit among other business and other external elements. These forces have some impact toward a business’s day-to-day operations and their response to certain situations. The environmental factors also greatly affect the type of strategy the business uses in order to conquer the market. Among these external environmental factors, include customers, competitors, the economic system, social system, legal factors, technological trends, and international trends.

Fast food restaurants have a wide range of products all aimed towards total satisfaction of the target market. Delicacies vary from low fat food to sugary foods and even soft drinks. Through this, stakeholders of the fast food sectors are able to compete with other areas. In order for a business to maintain itself within the pool of the sector, it is important for the business to identify both prospective and current competitors. It is also important for the business to clearly understand the market structure and study the various trends. This will enable the business to identify the various capabilities required for it to participate effectively in the industry.

Competitors

A competitor in the business world is any individual or entity in rivalry with a company in the same industry offering similar goods and services and existing in the same market. Competition with more than one company has numerous effects on the market structure. As a result, businesses tend to use strategies that that will enable them to secure a large portion of the market. Other businesses opt to reduce their charges with an aim of securing bigger market share.

Hungry Jack’s being a large fast for organization in Australia faces a great threat from international competitors who have outlets in Australia such as Pizza Hut, McDonalds among other American fast food suppliers. Due to this competition they are forced to sell at slightly lower prices and frequently upgrade their products and services in order to cope with competition from these international fast food companies().

Consumers

A consumer is an individual who purchases goods and services form a seller in order to satisfy a given personal urge or want. Hungry Jack’s has focused on the satisfaction of their customers by effectively responding to their needs and requests. The most recent trend is their focus on healthy food, especially after a recent publication justifying that consumption of fast food is very unhealthy. Another approach that Hungry Jack’s has embraced is the use of a well-elaborated menu which specifies all ingredients used in a given product. This is due to a recent research result that proved consumers perceive items described on the menu in an elaborate complex manner as of high quality.

The economic system

Despite the fast food sector being highly profitable it is extremely stressful, especial during expansion and setting up new outlets. The expenditures include real estate expenditure, transport cost, adverting costs and more salaries for the new work force. In addition, there various economic aspects that have an impact on the activities of the fast food industry such as bank interest rates, inflation and recent unemployment trends.

Technological trends

Just as any other business, Hungry Jack’s also feels the impact of changing technological trends and the social media. As a result, majority of fast food companies are employing the latest technology that can bring profits. Hungry Jack’s has followed this trend and installed free WIFI internet connectivity in all its outlets in Australia. This has played to their benefit since majority of their clients enjoy having a meal while surfing for free().This has allowed them to put up advertisement and marketing messages to those who access the free internet hence increasing their sales.

Social trends

Since time in memorial, fast food has been an America concept even though it has spread in the recent times. Majority of the big fish companies such as Burger King have insisted on franchising and maintaining the same old procedures and standards in the sector and allowing very few changes in the marketing strategies (Terry 2012; Forrest 2012).

Hungry Jack’s has tried to maintain the local beliefs and attitudes by designing favorable marketing strategies for their consumers. As a result, majority of Australian prefer the brand Hungry Jack’s to the global Burger king brand.

Political, Legal, International trends

Based on business laws, for a business to expand overseas it has to purchase a license that gives it the right to use its trademark and launching their new brand under a new brand in the new terrain (Terry 2012; Forrest 2012). This issue highly emerged when Burger King wanted to expand its self independently many years after their franchise agreement with Hungry Jack’s become successful. This led to a large legal tangle between the two firms in which the Hungry Jack’s emerged victorious.

Firm level analysis

The firm level analysis involves the analysis of factors that affect a business within itself. Mainly these are factors from within the company itself. This factors display the reason behind a company’s internal success. These internal environmental factors are the company culture, physical distribution, mission statement, marketing strategy and engagement with the community.

Company culture

In any business, it is important to ensure there is a good organizational culture. Hungry Jack’s has achieved this by promoting employment of labor from within the neighborhood. Recruits undergo excellent training and special treats from their leaders. The organization creates many growing opportunities within the company. Hungry Jack’s has shown its concern for the welfare of their employees by setting up an Employee’s Foundation aimed at supporting their workers in their time of need.

Mission statement

For a company to be successful it must have mission to fulfill. Hungry jack’s also have their own concrete mission which acts as a guiding block towards success of their day to day activities. Based on their website their mission is to be the leading Quick service business in Australia, ensure delivery of high quality products and maintain cleanliness within the environment.

Marketing

For any business to be significantly distinguished there is high need for them to promote their brand. Consumer should be able to see a product and identify it with a given brand. Hungry Jack’s has achieved this by trying to familiarize the society with their brand. They are in involved in society events. Recently they sponsored the Australian Tidy Towns Awards aimed at keeping Australia beautiful. It has also created excitement with movie promotions like star wars premiums with the purchase of kids’ value meals.

Factors of success

Through this we are able to determine various trends and strategies that have enabled Hungry Jack’s to be successful. These factors involve meting the required standard and regulations in the sector, observing customer request and requirements, meeting factors essential for competition and acquiring the required resources. These resources include both technical and professional. Consumers require their request to be met through satisfaction of their needs (Rothaermel, 2013). Hunger Jack’ has done this by providing goods and services which are highly reliable, have special features and easily available.

Majority of competitors use the same marketing structure based on price, supply and delivery. In order for a firm to emerge victorious, it is essential for an organization to acquire a set of skills that enable them to outdo their competitors (Melnyk, et al, 2011). It is important for a firm to adhere to the regulatory rules and standards put in place. For a product to enter the market, it must attain the minimal requirements of the sector. These regulatory laws ensure technical compatibility, interface issues for network or system products and process performance. As one of the leading fast food organization Hungry Jack’s has been able to set standards for products in the sector. It also acts as a trendsetter for other firms in the sector. In order for a firm to be on the game, it also needs to have access to internal technology. This especially helps worker of the company. Such include use of automobiles, cellphones and internet in work places. Hunger Jack’s has followed this by installing free WIFI in all its branches and equipping outlets with cellphones for workers for easy communicate.

Analytical Framework

For a business to succeed in a competitive business environment it must employ the use of competitive marketing strategies. Based on the analysis we have used to tools of analysis that include the SWOT analysis and Porter’s five force analysis.

SWOT Analysis

SWOT analysis is a tool that helps in the accession of a company’s activities and performances. It helps use understand the strengths, weaknesses, opportunities and threats involved in the company’s activities. It begins by defining the business objectives, internal factors and external factors that will help realize the objective. The strengths and weakness are from within the company while opportunities and threats are due to the external factors.

Strengths defines what the organization does best, the organization’s unique selling points, perception your strength by competitors and consumers and the organization’s competitive edge. The weakness of a company explain what other companies do better to win customers, value of the business element to the business and perception of your weakness by competitors (Eden, & Ackermann, 2013). Opportunities try to explain the different effects of external factors towards the businesses. They also ties to analyze the market structure to determine the market gaps and unfulfilled consumer demands (Johnson, et al, 2011). Opportunities also include any type of innovation that the company may use to increase the rate of consumption of its goods .by involving an aspect of innovation in their goods. Threats define the external factors whose impact is unfavorable toward the company. They also define the strains that pose negative impact the organization at large. Negative impacts of the competitive environment between businesses also define the threats the business faces (Rothaermel, 2013). When using SWOT it is important to maintain several conditions.

There should be use of a mixture of various tools of analysis in order to get comprehensive results. Internal and external factors should be given priority in order to understand the significant elements in both. A risk assessment should be carried out to determine high risk and impact threats and opportunities to deal with them appropriately (Johnson, et al, 2011). Hungry Jack’s has used this analysis tools in several ways. It has located its outlets in strategic location, providing clients with secure parking sites and use of promotions through discounts. This has proved to be a strong point of the organization. Its weakness includes locating its outlets away from pedestrian traffic and functionally of food and beverage operations. It has created various opportunities through posing as a trendsetter for other competing firms and participating in calendar events of their respective outlet locations. Threats facing the organization are economic downturn, increase in a range of home use foods, trends towards much lighter food reduce the demand for beef.

Porter’s five-force analysis

Michael E. Porter of Harvard Business School developed this tool of analysis in 1979. He builds it as framework for evaluating and testing the competitive positions and strengths of a company. The main ideology of this theory is the use of five key elements that determine the intensity of competitiveness of a market structure. Majority of strategic analysts use the Porters five-force framework to understand and asses the profitability of new products and services (Rice, 2010). By understanding this, they can be able to know where power lies and identify the strengths and weaknesses hence try to create more opportunities and avoiding any potential threat. The Porters five forces include supplier power, buyer power, competitive rivalry, threat of new entry and threat of substitution (Middleton 2013).

Supplier power defines the control of supplier in the increase in price of commodities. This is due to factors such as number of supplier per input, product uniqueness, size and strength of the supplier and finally cost of switching from one supplier to another (Lee, Kim, & Park, 2012). The purchasing power of a consumer assesses the impact of buyer in price reduction. This is possible by determining the number of buyers, individual importance of each buyer and cost of switching suppliers to the buyer (Rice, 2010). Competitive rivalry defines the intensity of rivalry in the market. The presence of competitors, offering undifferentiated goods and services reduce the attractiveness of the market (Rothaermel, 2013). Strong firms in a market are at constant threat of substitution by other upcoming firms. The existence of substitute goods increases the chances of consumers shifting towards the substitute in response to change in prices. This reduces the powers of supplies and market attractiveness. Profitable markets constantly attract new entrants (Kaplan, & Norton, 2013). These new firms tend to come into the market with new ideologies which might outshine those of existing firms. Some tend to even kick weak existing firms out of the market. Hungry Jack’s has achieved this by maintaining high quality food and beverages. It has also heavily invested in advertising and promotion methods that will always keep their customers on check. The recent of such is the new iPhone application by Hungry Jack’s called shake and win. This gives away free food items to any potential client within a one-kilometer radius of any Hungry Jack’s store.

Conclusion

From this analysis, it is clear that external and internal environments of a business exert great influence on the daily operation of a business and the type of marketing strategy it uses. If an organization is able to handle the various challenges it faces to produce then it will definitely perform well in the market. This is evident in the case of Hungry Jack’s from its ability to manage its environments it has remained a top dog in the fast food business.

Recommendation

For any business to be successful in terms of achieving its goals and objective, investors should be in position to identify the most ideal strategic analysis tools. They should also be able to apply these tools for the benefit of business efficiency. In addition, they should realize various techniques to integrate environmental elements to ensure maximum output.

The aspect of business success does not just arise from nowhere. The investor should take deliberate steps to learn how to manage environmental factors that influence business operations. It is impossible to avoid some of these external factors that influence the course of business hence there is need for investors to commit adequate resources in managing them and use them for the benefit of their businesses.

References

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Johnson, G., Whittington, R., Scholes, K., & Pyle, S. (2011). Exploring strategy: text & cases. Harlow: Financial Times Prentice Hall.

Kaplan, R., & Norton, D. P. (2013). The execution premium: Linking strategy to operations for competitive advantage. Harvard Business Press.

Lee, H., Kim, M. S., & Park, Y. (2012). An analytic network process approach to operationalization of five forces model. Applied Mathematical Modelling, 36(4), 1783-1795.

Melnyk, S. A., Cooper, M. B., & Hartley, J. L. (2011). Managing operations across the supply chain. New York, NY: McGraw-Hill Irwin.

Middleton, J. 2013, The ultimate strategy library: the 50 most influential

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Porter, M.E. (2010). Competitive advantage: creating and sustaining superior performance.

Rice, J. F. (2010). ADAPTATION OF PORTER’S FIVE FORCES MODEL TO RISK MANAGEMENT. Defense AR Journal, 17(3).

Rothaermel, F. T. (2013). Strategic Management: Concepts. McGraw-Hill Irwin.

Schlosser, Eric. 2012, “Fast Food Nation- What the All American Meal is Doing to the World”, England, Penguin Books

Strategic ideas of all time. Oxford: Capstone

Terry, Andrew and Heather Forrest. 2012, “Where’s the beef? Why Burger King is Hungry Jack’s in Australia and Other Complications in Building a Global Franchise Brand.” Northwestern Journal of International Law & Business 28 (2):28:171

Wilkinson, Richard. 2010. “Leadership Role Profile and Job Satisfaction of Restaurant General Managers” Journal of Food Service Business Research: 331-245