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What does the SWOT analysis means. SWOT analysis can be defined as a process or method in evaluating the strengths, weaknesses, opportunities and threats towards an organization. SWOT analysis may provide helpful information in matching the resources and capabilities of an organization with the competitive environment that it is working in. The strengths and the weaknesses can be said as the internal factors which an organization may still control. Also, the opportunities and threats can be said as the external factors where you couldn't control.
SWOT analysis is widely used as a tool to analyze and to review the overall strategic plan of the organization and its environment. It also shows the positive and negative sides of the internal and external factors that may deter the organization from being successful. With the help of the SWOT analysis, an organization will be able to forecast or predict the changing trends and make decisions wisely.
In this assignment, I am to conduct SWOT analysis on the Pizza Hut Restaurant to identify the company and its market share status. Pizza Hut is known as a famous American restaurant that serves different styles of pizza and side dishes like the garlic bread, salad and pasta. The first Pizza Hut Restaurant was started by Dan and Frank Carney at Wichita, Kansas.2.0 Answer
Hospitality is a hot industry ventured by many young talents. But with the great number of people venturing into this industry and the presence of the competitors, the goals for the organizations are getting harder to achieve. In order to be a successful organization in the market, it is essential to make clearer and effective strategic plan for the particular organization and its environment. An effective analysis like SWOT may be helpful in identifying the internal and external factors that benefit and harm the organization. The SWOT analysis is widely used in the organizations in order to be successful.
2.1 Conducting SWOT on Pizza Hut
Pizza Hut is a very optimistic company and takes extra precautionary steps in maintaining the communication with the customers in order to sustain the loyal customers. Anyhow, there is a long list that identifies the strengths, weaknesses, opportunities and the threats towards the Pizza Hut restaurant.
One of the major strength of the Pizza Hut restaurant is the branding of the company. Pizza Hut has over 12000 restaurants in 90 countries which has gained popularity and confidence of the customers. Besides, Pizza Hut has standardized company outlook, with its interior design which is simple yet attractive and easy to be remembered. Despite the branding and the company outlook, Pizza Hut also provides services like the door step delivery for the customers which is more convenient. There is another major upper hand that the Pizza Hut outlets posses is the constant ingredients supply from the distributor. It more or less saves some of the operating cost of Pizza Hut because the ingredients are usually bought in bulk at lower price. This produces higher profit for the company.
Besides, the recipes for Pizza Hut pizzas can be easily mixed and matched from the few list of ingredients. As an example, the Pizza Hut can create a new menu of pizza just by adding or removing some herbs and ingredients like cheese, pineapple or pepperoni from the pizza base which is more profitable than opening another market line that serves other than pizza.
The nature of Pizza Hut's business is heavily dependent on the cheese to flavour the pizzas. This could be their major disadvantage as they heavily rely on the supply and the price of cheese in the market. Any shortage of cheese supply will affect the cost and operation of its business. Other than that, most Pizza Hut outlets hire the fresh workers who do not have experience in the hospitality industry. It can be harmful towards the organization because the inexperience workers may not satisfy the customers with their services. Consequently, it gives a bad impression to the customers of how a Pizza Hut restaurant runs. As an example, the late delivery of the door step service or the late order taking for the walk in customers. The high production cost of the Pizza Hut may be another weakness that may affect the organization. This is because of the intensive competition among the pizzeria that forces Pizza Hut to reinvent a brand new pizza to cater the taste buds of the customers, and at the same time it is difficult for a big food organization to change its recipes in view of the high cost for frequent change of food processing order. This may result the customers of Pizza to bear higher charges without knowing the reason behind. This may probably causes lost of the customers.
Even though Pizza Hut mostly serve products which are pizza based, they are aware of the trend of the customers' social pattern and lifestyle. Pizza Hut serves rice-based meals like cheese baked rice to cater the Asian taste buds while remaining the main ingredient of the Pizza Hut meals which is cheese. To offer variety to the customers, Pizza Hut now also serves western food like the chicken chop or sandwiches to keep the customers fresh every trip they make. This opens a new market line for the Pizza Hut restaurant because they are able to cater the multi cultural taste buds. It is not only about the meals that Pizza Hut has invented and served that has created opportunities to the organization, the online ordering system provided by the Pizza Hut also gives opportunities and convenience to the organization and customers respectively. The online ordering system can be said as one of their powerful marketing strategy to cater the needs of our modern society. As an example, mostly teenagers or the parents prefer to order their meals online and delivered right in front of the door step. This is because the technology has now replaced the trip to the organization and people found it more convenience especially when they need a quick meal during working hours.
One of the threatening factors of Pizza Hut is the competitors. Competitor like the Domino's Pizza offers the similar products which are mostly bread based and also provides delivery system for the customers. Besides, organization like Domino's Pizza offers additional benefits to the customers. As an example, they offer special vouchers for the customers if the delivery has been delayed or late. Besides competitions, Pizza Hut also faces the risk of materials shortage due to the heavy dependent on the suppliers. As solution, Pizza Hut should consider having their own factory to supply common ingredients like flour and herbs. This is ultimately beneficial as they rely less on the imports and in general, reduces the cost of the operation. Lastly, the promotions, advertisements, price and additional services like the delivery service may force the organization to be in high risk due to the intensive competition in the environment. When there are better options for customers to choose from, it may leads to comparison and dissatisfaction.
2.1.5 The SWOT Analysis Matrix
Popular branding of the company
Standardized company outlook that can be easily remembered
Constant ingredients supplier
Easy pizzas recipes
Reliance on cheese supply
Hire inexperience workers
Inefficiency of workers
High production cost
Aware of trends, social pattern, lifestyle
Different styles of menu
Risk of materials shortage
Lack of marketing strategy
2.2 Conclusion & Recommendation
Through the SWOT analysis of Pizza Hut restaurant, I would suggest that Pizza Hut should be strict on the training of the employees in order to sustain the loyal customers. There should be regular training reinforcement to ensure the satisfaction of the customers in every trip they make. This will result in better satisfaction among the customers and will definitely bring higher profit to the organization and knock down the competitors. Besides, Pizza Hut should consider of having their own factory to supply ingredients to reduce the operation and production costs. Lower production cost reduces the price of the products that may attract more customers.
Despite the weaknesses and threats, additional service provided by Pizza Hut like door step service has helped to bring higher revenues to the company. Door step service is highly priced in the modern society where mostly everyone is busy, they could still enjoy their meal which can be delivered to them in a short while. To ensure the satisfaction of the customers, Pizza Hut may also offer some extra benefits to the customers such as loyalty card which offers special price in meals that the customer has made and discount voucher for the dissatisfied customers.
Macro environment can be defined as the uncontrollable external factors which may affect an organization's planning and performance, product's development, decision making and strategies. The macro environment factors include the demographic condition, economic environment, changes in technology and cultural and social environment. Basically the demographic environment here refers to the study of population.
Example of an organization can be given to further explain about macro environment and its impact on the operation of an organization like Pizza Hut Malaysia. This American based pizza restaurant will be experiencing several macro environment factors that may either bring positive or negative impact to their business and organization. Therefore, an analysis of macro environment factors should be carried out by Pizza Hut to keep the organization away from any undesirable damage.
Every organization or business can be easily affected by the macro environmental factors since these factors are uncontrollable. The branding of the organization does not count because the macro environmental factors may still give an impact to the organization, either positively or negatively. Even for the well established organization like Pizza Hut can be affected by the macro environmental factors. To prevent damage or any loss to the organization, first must identify what are the macro environmental factors.
4.1 Demographic Condition
Demographic factors can be defined as the statistical study of human populations which includes the gender, location, age, race, education level, occupation, size and density. The demographic environment can be said as the major interest to all marketers because most people are involved in it. As for a fast food restaurant like Pizza Hut, gender and age do not make any difference to the restaurant because Pizza Hut is a family restaurant which fits all ages and serves variety of pizza which can cater everyone's taste buds. Despite from above mentioned factors, education level and occupation may impact the business in Pizza Hut restaurant due to the pricing of each menu. Most consumers are from the middle income or higher because they can afford to pay for the meal.
Apart from that, the location of the Pizza Hut outlet also gives an impact to the revenue of the organization. A good example is that Pizza Hut outlet in shopping mall may attract more customers than the other outlets as it is more convenient and also it is the quickest way for customers to enjoy their meals in the shopping mall after a tiring shop in the mall. Besides, due to the humid and warm weather in Malaysia, customers prefer to spend their time or weekend in the shopping mall. With all these reasons, the most strategic location for Pizza Hut outlet is inside the shopping mall.
4.2 Economic Environment
The economic environment refers to the willingness of spending by potential customers or the purchasing power. This factor will bring a negative effect to Pizza Hut because not all of the consumers are willing to pay extra amount on fast food, or in short, it is an over budgeted fast food. Especially for the generation X, who was born between 1965 and 1976 might not spend a little extra on fast food even if they have the purchasing power because they had experienced war and know the importance of money. Besides, most Malaysians are very cautious in spending to avoid any debts and prefer to spend their money on a future plan for their children or daily needs.
Another economic environment factor is the nature of economy in Malaysia. It can greatly affect the business of Pizza Hut. Due to the unemployment rate, fast food family restaurant like Pizza Hut experienced loss because there are more and more consumers who want to dine with cheap homemade meals rather than spending money on eating out.
4.3 Changes in Technology
Changes or advancement in technology has more or less helps to create opportunities or new market. Pizza Hut should be more updated on technology or use gadgets to help promoting their products. Although Pizza Hut now has online ordering system that allows customers to order their meal online, but it is not enough to create profit for the organization. This is because customers would not realise about the webpage of Pizza Hut unless it is being advertised in popular webpages like Facebook or Google. In fact, Pizza Hut should advertise more on gadgets application that customers can now order and keep themselves updated on the new products by browsing the application that can be found in smartphones. Though Pizza Hut has attractive advertisement on the television screen, but it may not be as effective as advertising on webpages or applications. As the teenagers have made a huge number in consuming fast food, it will be proven that advertising on webpage and application may make greater profits for the organization as teenagers nowadays spend most of their time browsing the net and smartphones application.
4.4 Cultural and Social Environment
As known by everyone, Malaysia is a multi-cultural country which consists of different races with different religions. Therefore, it plays an important role in affecting food businesses like Pizza Hut. In order to satisfy each of the races and religions, Pizza Hut should first understand the background of each religion before creating a new product for the restaurant. As an example, the Hindus are not allowed to consume beef products due to their beliefs and religion. Therefore, instead of creating pizzas or spaghetti which consist beef, Pizza Hut should create a new product with lamb so that consumers from any races will be able to dine in Pizza Hut and consume the pizza.
In conclusion, identifying and analysing macro environmental factors are essential for every organization in order to prevent any damages towards the organization. It is not just to prevent, it is also to increase profits of the organization.
With the help of the analysis, Pizza Hut will be able to prevent undesirable damage and maintains the reputation. With the macro environmental factors also, Pizza Hut will be able to come up with back up plans that can be applied during unforeseen circumstances.