In this part of project I will try to analyse Dunnes Stores using very useful tool in business environment called SWOT analysis. Abbreviation SWOT stands for Strengths, Weaknesses, Opportunities and Threads. It analyse internal factors of business, the Strengths and Weaknesses as well as external factors which are Opportunities and Threads. It is one of most popular technics used for gathering and comparing information, it used as universal tool for the first stage of strategic planning. It looks inside the company and the environment it operates.
Depth of analysis depend on information available, in case of Dunnes Stores most of the info that can be useful relates to external factors, as the company is not willing to provide any data or reports to the public. Strengths In this section by describing strengths of the business we will try to show positive aspects of it, all what is an advantage of the company itself as well as advantage that the business has over competitors and what is under control its control. Below I will present main strengths of Dunnes Stores.
One of the advantages of Dunnes Store is that is an Irish company with long tradition, but this a positive aspect when we are taking into consideration the Irish market, because the company operates as well in other countries where this fact can be ignored by customers as they can have more trust to their local retailers. Whatever we are looking from Irish perspective and the fact that this is the national business is proudly used by Dunnes to build good reputation; this is reflected in Dunnes advertisement campaign with famous slogan ‘The difference is we’re Irish”.
People tend to shop in places they know and they can trust, Dunnes Stores had built its good image for many years and no doubt this is the strength of the company. * Dunnes Stores is offering very good and friendly shopping environment to its customers, usually stores are big, products are easy to find and there is always member of staff on the shop floor ready to help with shopping or to carry goods to the car if that kind of help is needed. Very often there is a place in the store where the customers can stop for coffee and meal, all of that is part of company’s policy which is, putting the customers first.
Another advantage of Dunnes is that customers can find sections with different products categories in one store, such as grocery, homeware, kitchen appliances, stationery, books, DVD’s, clothing for man, woman or children. In this area company has an advantage over its competitors, what we can see in stores like Aldi or Lidl is that they have products from similar categories but mostly can be found in baskets in the middle of the store or on the stands, while in Dunnes products from different categories are in different sections and are divided into sub-sections. Strength which is attractive for the customers is range of the prices offered by Dunnes for its products. Everyone can find good quality products at the price level suitable for its “pocket”. One of the cheap brands is “ST. Bernard” which is range of cheapest products but still with quiet good quality, and this not only food brand but also other sections of the store offer products marked with this name such as; plastic bags, washing liquids, toilet paper.
Another convenience brand is “Dunnes Stores”, this represent company’s offer of textiles, homeware, and food, company states that this brand has good quality as best branded products. * Dunnes Stores Value Club card which was created for loyalty programme is putting company over its competitors, not all of them are giving that kind of opportunity to their customers. Programme created by Dunnes was working very well from the start, as in 2009 it was one of the factors that helped the company increase its market share beating Tesco of which market share was fallen at that time.
The points collected during every visit in the one of the stores are converted for Money Off Vouchers which can be used to buy specific products in any store in Ireland, another option are vouchers which have money value and can be used as money off coupons for every product purchased in the store. * Strength which seems to be one of the major is that Dunnes is big Irish employer with staff number of 16000 spread on 155 stores over Ireland. This number of employees and the size of the company result in significant money injections to national economy.
Weaknesses By meaning weaknesses there is everything that is not working well within the company and what should be improved, that is internal disadvantage which can be improved as the company have control over it and can take an action for positive changes. Internal weaknesses are creating chaos and disorganisation within company and if spot by competitors can be used as weapon to improve their position on the market. * Major weakness of Dunnes Stores is poor management.
Every business is depending of managerial decisions in order to achieve its goals and increasing performance, while analysing company’s performance on Irish field it can be seen that competitors are taking advantage over Dunnes in market share what I will describe in more detail in Threads section later in this analysis. Bad management decision in the past as selling clothes produced in Burma which is one of the world’s most repressive regimes has negative impact of company’s good image and should be avoided. Business like Dunnes Stores needs loyal employees and this is issue that should be solved by management as morale inside company is low. There was a case in Galway branch where staff was secretly monitored for 77 days without any notice about that, as a result 2 employees were dismissed and other 2 quit. One of workers took a legal action against Dunnes as the girl was fired without any warning. This kind of information spread in company’s environment very quick and it can have destructive effect on personnel willingness to good performance and loyalty.
As the one of Dunnes past employees I know from inside that not many people are happy because they are working in that company, many of them are treating their work like stop before their can find something better or just do not want take risk because have families and financial responsibilities to them. There is atmosphere similar to factory, come, do your job and go home. It is significant lack of incentive scheme for workers as they can feel as important part of the company.
It can have the effect in the future, if there will be improvement in economy and more jobs on the market many of current employees can possibly move to other companies. * Company should concentrate on completion good management team with ability to create and implement marketing strategy that will lead to improve declining business position on Irish retail market. Relation company-staff should be also improved in the way that employees can feel as important part of company along with rewards for good work. Opportunities
Opportunities are external changes that are without control of the company, but if analysed and used properly can benefit to the business. Some of them are for example new trends on the market, changes in consumer tastes, positive changes in law or taxation, or new distributions channels. * Changes in technology, especially in access to internet can be used by Dunnes as booster for future success. Online shopping is a big area of market and when used properly can result in enhance of business, by mentioning internet as a new way to operate I meant online shopping and advertising.
Company seems to be looking forward to expand its activity in this area, according to Sunday Business Post Dunnes will focus on groceries and a substantial range of products will be available to the customers online. Company has already hire specialists in IT to set up professional team which will be managing online services. Companies that are already operating in online retailing are Tesco, Superquinn and SuperValue, Aldi, Lidl and Mark and Spencer have no presence in this area. Cheap brands are very popular nowadays due to economic situation and this is an opportunity to use experience the company have with low cost products (“St. Bernard”, “Dunnes Stores”) to expand its presence on this area of retail. We can see growing position of Lidl and Aldi while economy is in recession and this is because their pricing policy, they had always cheap brands and in the time of economic boom there was no significant improvement in those companies performance as people tend to spending money in shops with better branded products.
Customers are choosing products proportionally to income or money they can spend. It is obvious that in recession customers move toward cheaper products and this should be used by management to make changes in pricing policy and range of cheap brands available in the stores. Also when the company is taking actions to expand its online selling service have to take into account web pages described as price checkers where a customer have that possibility to see prices and choose retailer. Opportunity that can be considered in order of increasing of profits can be an opening more small shops that will be closer to the customers. Competitors are operating in this area and are doing quite well, Tesco for example is opening small shops “Tesco Express”.
There are two main benefits for the business, one is additional profits and second that customers will be still shopping in Dunnes what will keep them close to the company name and products. There is a deep research programme needed to analyse potential profitability of above opportunities and not only, and this refer to skilled and well orientated management again. Threats Threats it is all that can affect the business in bad way, that create danger of unfavourable changes and is outside of company’s control. It is important part of analysis as the company using this information can consider new strategic plan to avoid risks and damages. * Most significant thread which is not only Dunnes problem at the moment is the economic crisis that affecting business world.
Dunnes suffer along with most other companies decline in turnover and profits. This state of economy was unpredictable and this is not a company fault, but what the company should do is to use its strengths to improve performance and use this as a lesson for the future to prevent similar situation. * Maybe that lesson can be learn from some of the competitors, in time when retail business have troubles there are some players that are using this state of economy to expand. Dunnes Stores report significant drop in market share by 5. % to 21. 6% according to Kantar Worldpanel and is in danger to drop to the third place in Irish market share now occupied by SuperValue.
In the same time market share of Lidl went up by 2. 2% to 6. 7% and Aldi by 30% to 6. 1%, this can be a sign that management of Dunnes have no good marketing strategy against recession and “enemies” in retail war. All that business are operating in the same sector and there is a reason why one can be successful while other is in trouble even having strong position and good reputation as Dunnes. Relating to the economy crisis is the fact of increasing emigration mostly young people in working age of which income will be spent overseas and will be supporting foreign economy.
That will lead to decrease in number of customers on Irish retail sector, as emigrants are young people Dunnes should focus on profile segmentation and age variable when preparing marketing strategy. Another threat that can be an effect of emigration is potential decrease of Dunnes’s labour force as they can decide to go abroad, in this case management should consider once more incentives that will keep employees within company. Lower incomes or just support from Social Welfare of existing and potential customers have to be considered and appropriate pricing strategy applied as there is a danger from competitors and its attractive prices that can result movement of customers to their stores. Assuming, the company have to identify its threats and opportunities and take an action by using its strengths to turn opportunities into benefits, try to implement suitable strategy to eliminate threats and solve internal issues defined as weaknesses.