Definition of SWOT Analysis
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Analysis of Frito-Lay, Inc.: The Navigator Project (B) case study. Frito-Lay, Inc.: The Navigator Project (B) "referred as Navigator Frito in this analysis " is a Harvard Business Review (HBR) case study used for
MBA & EMBA programs.
It is written by Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad and deals with topics in areas such as Technology & Operations IT, Strategy execution
SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats that Navigator Frito encounters both internally and in macro environment that it operates in. Strengths and Weaknesses are often restricted to company’s internal - resources, skills and limitations.
Opportunities and Threats are factors that are analyzed in view of the prevalent market forces and other factors such as political, social, health & safety, technological, legal & environmental, and economic .
According to global executive survey done by Harvard Business Review & Brightline Initiative – Only 20% of the strategic targets set by organizations are realized. Rest 80% of the strategic targets are not achieved because of incomprehensive planning, limited resource allocation, and poor execution.
The successful organizations such as Navigator Frito are the one who able to predict market trends better than others, provide resources to develop products and services to leverage those trends, able to counter competitors’ threats, and meet customers’ expected value proposition.
Supplements the (A) case.
The four key elements of SWOT analysis are - Strengths, Weaknesses, Opportunities & Threats. Navigator Frito can use strengths to create niche positioning in the market, can strive to reduce & remove weaknesses so that it can better compete with competitors, look out to leverage opportunities provided by industry structure, regulations and other development in external environment, and finally make provisions and develop strategies to mitigate threats that can undermine the business model of Navigator Frito.
|Strength Opportunities (SO) Strategies
Using Navigator Frito strengths to consolidate and expand the market position.
|Strength Threats (ST) Strategies
Navigator Frito can use two approaches - building on present strengths, or analyze the trend and build processes to two pronged market penetration approach.
|Weakness Opportunities (WO) Strategies
Building strategies based on consumer oriented product development and marketing approach.
|Weaknesses Threats (WT) Strategies
Navigator Frito should just get out of these business areas and focus on strength and threats box , or on weakness and opportunities box.
For more detailed SWOT Matrix strategy please go through the detailed analysis of strengths, weaknesses, opportunities, and threats in next section.
What are Strengths in SWOT Analysis
Strengths are the Navigator Frito capabilities and resources that it can leverage to build a sustainable competitive advantage in the marketplace. Strengths come from positive aspects of five key resources & capabilities - past experiences and successes, physical resources such as land, building, human resources, financial resources, and activities & processes .
- Robust Domestic Market that Navigator Frito Operates in - The domestic market in which Navigator Frito is operating is both a source of strength and roadblock to the growth and innovation of the company. Based on details provided in the Frito-Lay, Inc.: The Navigator Project (B) case study – Navigator Frito can easily grow in its domestic market without much innovation but will require further investment into research and development to enter international market. The temptation so far for the managers at Navigator Frito is to focus on the domestic market only.
- Strong relationship with existing suppliers – As an incumbent in the industry, Navigator Frito has strong relationship with its suppliers and other members of the supply chain. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , the organization can increase products and services by leveraging the skills of its suppliers and supply chain partners.
- Strong Balance Sheet and Financial Statement of Navigator Frito can help it to invest in new and diverse projects that can further diversify the revenue stream and increase Return on Sales (RoS) & other metrics.
- Diverse Product Portfolio of Navigator Frito – The products and brand portfolio of Navigator Frito is enabling it to target various segments in the domestic market at the same time. This has enabled Navigator Frito to build diverse revenue source and profit mix.
- Strong Brand Equity and Brand Awareness – Navigator Frito has some of the most recognized brands in the domestic market it operates in. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , brand recognition plays a significant role in attracting new customers looking for solutions in IT, Strategy execution adjacent industries.
- Successful Go To Market Track Record – Navigator Frito has a highly successful track record of both launching new products in the domestic market but also catering to the various market based on the insights from local consumers. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , Navigator Frito has tested various concepts in different markets and come up with successful Technology & Operations solutions.
- First Mover Advantage – Navigator Frito has first mover advantage in number of segments. It has experimented in various areas IT, Strategy execution. The Technology & Operations solutions & strategies has helped Navigator Frito in coming up with unique solution to tap the un-catered markets.
What are Weakness in SWOT Analysis
Weaknesses are the areas, capabilities or skills in which Navigator Frito lacks. It limits the ability of the firm to build a sustainable competitive advantage. Weaknesses come from lack or absence of five key resources & capabilities - physical resources such as land, building, activities & processes, human resources, past experiences and successes, and financial resources .
- Implementation of Technology in Processes – Even though Navigator Frito has integrated technology in the backend processes it has still not able to harness the power of technology in the front end processes.
- Low Return on Investment – Even though Navigator Frito is having a stable balance sheet, one metrics that needs reflection is “Return on Invested Capital”. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad in areas IT, Strategy execution that Navigator Frito operates in the most reliable measure of profitability is Return on Invested Capital rather than one favored by financial analysts such as – Return on Equity & Return on Assets.
- Inventory Management – Based on the details provided in the Frito-Lay, Inc.: The Navigator Project (B) case study, we can conclude that Navigator Frito is not efficiently managing the inventory and cash cycle. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , there is huge scope of improvement in inventory management.
- Project Management is too focused on internal delivery rather than considering all the interests of external stakeholders. This approach can lead to poor public relation and customer backlash.
- Track record on environment consideration is not very encouraging – Navigator Frito track record on environmental issues is not very encouraging. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , this can lead to consumer backlash as customers are now considering environmental protections as integral to part of doing business.
- Organization Culture – It seems that organization culture of Navigator Frito is still dominated by turf wars within various divisions, leading to managers keeping information close to their chests. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad of Frito-Lay, Inc.: The Navigator Project (B) case study, this can lead to serious road blocks in future growth as information in silos can result can lead to missed opportunities in market place.
What are Opportunities in SWOT Analysis
Opportunities are macro environment factors and developments that Navigator Frito can leverage either to consolidate existing market position or use them for further expansion. Opportunities can emerge from various factors such as - technological innovations, increase in consumer disposable income, changes in consumer preferences, political developments & policy changes, and economic growth .
- Access to International Talent in Global Market – One of the challenges Navigator Frito facing right now is limited access to high level talent market because of limited budget. Expansion into international market can help Navigator Frito to tap into international talent market. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , it can also help in bringing the talent into domestic market and expanding into new areas IT, Strategy execution.
- Reducing Cost of Market Entry and Marketing into International Markets – According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad, globalization along with boom in digital marketing and social media has considerably reduced the risks of market entry and marketing in international market.
- Growing Market Size and Evolving Preferences of Consumers – Over the last decade and half the market size has grown at brisk pace. The influx of new customers has also led to evolution of consumer preferences and tastes. This presents Navigator Frito two big challenges – how to maintain loyal customers and how to cater to the new customers. Navigator Frito has tried to diversify first using different brands and then by adding various features based on customer preferences.
- Developments in Artificial Intelligence – Navigator Frito can use developments in artificial intelligence to better predict consumer demand, cater to niche segments, and make better recommendation engines.
- Increasing Standardization – Navigator Frito can leverage this trend to reduce the number of offerings in the market and focus the marketing efforts on only the most successful products.
- Changing Technology Landscape – Machine learning and Artificial Intelligence boom is transforming the technology landscape that Navigator Frito operates in. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , Navigator Frito can use these developments in improving efficiencies, lowering costs, and transforming processes.
What are Threats in SWOT Analysis
Threats are macro environment factors and developments that can derail business model of Navigator Frito. Threats can emerge from various factors such as - political developments & policy changes, technological innovations, changes in consumer preferences, economic growth, and increase in consumer disposable income .
- Squeezing Middle Class in Developed and Developing World – The growing inequality is one of the biggest threat to not only globalization but also to capitalism. Navigator Frito first hand witnessed the impact of it where it has seen lower demand of its products from middle class customers in US and EU market.
- Growing Protectionism - Navigator Frito should hedge the risk against growing protectionism ranging from – storing data into international market to diversifying risk by operating into countries at different economic cycle.
- Increasing bargaining power of buyers – Over the years the bargaining power of customers of Navigator Frito has increased significantly that is putting downward pressure on prices. The company can pursue horizontal integration to consolidate and bring efficiencies but I believe it will be a short term relief. According to Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad , Navigator Frito needs fundamental changes to business model rather than cosmetic changes.
- Threats of New Entrants because of Reducing Costs and Increasing Efficiencies – As Navigator Frito can leverage low cost of reaching customers using social media and e-commerce, so can the competitors – both local and international competitors.
- Credit Binge post 2008 Recession – Easy access to credit can be over any time, so Navigator Frito should focus on reducing its dependence on debt to expand. The party has lasted for more than a decade and rollback from Fed can result in huge interest costs for Navigator Frito.
- Increasing costs component for working in developed market because of environmental regulations – Navigator Frito has to deal with these costs as governments are trying to levy higher environmental taxes to promote cleaner options. For Navigator Frito it may result into higher logistics costs and higher packaging costs.
Lynda M. Applegate, Richard O. Mason, Melinda B. Conrad (2018), "Frito-Lay, Inc.: The Navigator Project (B) Harvard Business Review Case Study. Published by HBR Publications.
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