Bakery SWOT Analysis- And its Competitors

S.W.O.T Analysis 

SWOT analysis is one of the most commonly used tools for strategic planning in the business world. The simple yet effective tool can be used by both small-scale and large-scale business organizations for strategic planning. SWOT is the acronym for strengths, weaknesses, opportunities, and threats. The application of SWOT analysis enables the organization to understand the working of internal and external business environments. Here, let’s know about Bakery SWOT Analysis.

The SWOT framework is beneficial for the organization as it helps the organization to identify its strengths and weaknesses in the internal environment and match them with opportunities and threats in the external environment so that effective strategy can be developed and implemented to ensure the success of the organization.

This article provides insight into the SWOT analysis of a bakery and how competition influences the working of the bakery.

Benefits of SWOT analysis 

SWOT analysis provides a plethora of benefits to the business organization. The various benefits offered by this framework are mentioned below-

• SWOT analysis is one of the cost-effective strategic planning tools. This simple to use tool helps in developing effective strategies and plans.
• SWOT analysis is a flexible tool that can be used in diverse situations. Thereby, making it one of the most sought-after tools of strategic planning.
• SWOT framework helps the business organizations to clarify various issues that may hinder the growth of the organization.
• The strategies formulated through the application of SWOT analysis are goal-oriented and help the organization to direct and coordinate its activities towards the achievement of organizational objectives. 

Bakery SWOT Analysis

Bakery is generally identified as an eating outlet that serves its customers cakes, cookies, pastries, pies, and other related dishes. These baked dishes may be consumed by the buyer at the premises of the bakery or by getting them packed for takeaway. Most of the bakeries specialize in confectionery items. Bakeries may be operated as an individual outlet, a branch of bakeries, or as a part of a large retail store or a Mall. Bakeries can use SWOT analysis to plan drastic changes which are needed to be incorporated for the enhanced working of the bakery. The SWOT analysis of a bakery is discussed as follows – 

• Strengths – Strengths are the source of competitive and strategic advantage for a bakery. It must ensure that efforts are made to maximize these strengths so that long-term benefits can be achieved. The following points signify the factors that may act as strengths for a bakery – 

1. Competent Staff – For every organization striving to achieve profits and gain market share, the quality, and dedication of its staff serve as the prime strength. Similarly, if the bakery possesses qualified and competent personnel for its management and preparation of confectionery items, the bakery can achieve a strategic advantage over its competitors.
2. Ambiance – The ambiance of a bakery can help it to attract more customers and retain the current customers. Customers are generally attracted to food outlets that provide an ambiance that suits the customer and makes them feel at home. So the significance of ambiance as a strength of a bakery is certainly undeniable.
3. Wide range of products – A bakery offering a wide range of bakery products to its customers can gain a competitive advantage over its competitors. This enables the bakery to use a wide range of products on offer as a strength to move ahead of the competitors.
4. Location of bakery – The location of a bakery can serve as an important strength, as the bakery situated in a prime location in the market can attract more customers and footfall. 

• Weaknesses – Weaknesses are the source of hindrance to the progress of an organization. Some weaknesses that may hinder the growth of a bakery are enlisted as follows – 

1. Increased operating costs – The increase in operating costs of the bakery can seriously damage the working of the bakery. The rising operating cost will lead the bakery to hike its product prices, which may lead to negative customer response. 
2. Weak brand image-  For a bakery unable to make its presence felt across the market, survival, in the long run, may become very difficult.
3. Customer dissatisfaction – Several factors may lead to customers being dissatisfied with the bakery. These dissatisfied customers may give negative reviews to the bakery which may seriously harm its reputation.
4. Lack of Coordination – Coordination is the essence of any successful organization. If the activities and employees working in a bakery face lack of coordination, the bakery may not be able to achieve operational efficiency. 

•  Opportunities – Opportunities are the conditions and situations which if properly capitalized can do wonders for any organization. The opportunities that may help a bakery to achieve competitive advantage are enlisted below- 

1. Opening a new branch – A bakery can greatly benefit if a new branch under the same brand name is established. This will help to establish the presence of the bakery over a larger geographic region.
2. Home delivery services – Starting the home delivery of bakery products can help the organization gain more customers and generate higher profit levels.
3. Advertising campaigns – By using a proper combination of traditional advertising methods and modern marketing methods such as digital marketing can help the bakery to build a brand image in the market and generate brand awareness.
4. Membership benefits – The provision of membership benefits and special discounts to customers can help the bakery to establish customer loyalty.

• Threats – Threats are the factors or conditions which have the potential to negatively affect the organization until they are dealt with effectively. The various threats that a bakery may face are mentioned below- 

1. More competitors – The increase in the number of competitors can bring serious implications for a bakery. Unless the bakery formulated proper plans and strategies to deal with the competitors, the bakery may not be able to sustain itself in the competitive environment.
2. Economic slowdown – Unfavorable economic conditions in the country may lead to an increase in customer attrition rate as the economic slowdown tends to put a burden on the pockets of individuals, which may lead to decreased spending on the part of customers.
3. Employee dissatisfaction –  If the employees of a bakery are dissatisfied with the management, this may have serious implications. If the bakery does not deal with the problems of employees, the employees may not work wholeheartedly or may leave the work.

Bakery and competition 

The actions and strategies of competitors have a profound impact on the working and policies of the bakery. The bakery must ensure that its customers do not switch to rival bakeries. If the number of competitors in the market increases, the intensity of competition will also increase. All the bakeries operating in the market will aim to capture maximum market share and drive the rivals out of the market. Bakery continuously needs to analyze its competition so that proper policies and plans can be chalked out to face the competitors. The competition faced by a bakery may be of the following types – 

• Price competition –  In this form of competition, price is the major consideration to gain a competitive advantage. The bakery or other competitors may decrease the price of products in a bid to attract more customers and gain an upper hand over the competitors. A decrease in prices may help the bakery to increase the demand for its products. If the bakery has loyal customers, these customers can help the bakery to face the ongoing price competition, as loyal customers generally don’t switch to products of the competitors if there is a small decrease in price initiated by the competitors. 

• Non-price competition – If the bakery or its competitors are not in a position to decrease the price and gain more customers. They may engage themselves in a non-price competition. In this form of competition, organizations focus on attracting customers by planning aggressive advertising campaigns. These campaigns are undertaken to increase sales. So, the bakery needs to carefully formulate its plans to face the non-price competition in the market.

Conclusion – All in all it can be said that a bakery, through the application of SWOT analysis,  can formulate and implement suitable strategic plans to ensure its success. After conducting a SWOT analysis, the bakery must ensure proper efforts are undertaken to maximize its strengths and minimize its weaknesses. The bakery must also formulate plans to fully capitalize on the many opportunities that it may come across and try to deter the threats to minimize the negative impact of the threats. 

Frequently asked questions

Question 1. What are the various disadvantages of using SWOT analysis?

Answer 1. Although the SWOT framework provides several benefits, it also has certain disadvantages such as – 

•  SWOT analysis results in large amounts of information inflow. Large volumes of information may lead to information overload. 
• The application of SWOT analysis may not produce certain decisions.

Question 2. Can non-price competition help the bakery to gain more customers?

Answer 2. Yes, a bakery can use non-price competition to gain more customers by generating brand awareness and gaining customer acceptance for its products.