Charley's Family Steak House (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Charley's Family Steak House (A)
Charley Turner, the owner of four Charley's Family Steak Houses located in a rapidly growing cosmopolitan city in eastern Texas, is about to meet with Alex Pearson, the new manager of Charley's Family Steak House No. 2, in mid-December 2007. The primary purpose of this meeting is to finalize the 2008 operating plan for the restaurant, and similar meetings are scheduled with the other restaurant managers. Turner has decided that, due to the growth of his business, he can no longer continue to manage the operation as he did when there were only one or two restaurants. Therefore, he is in the process of implementing a more formal and rigorous planning and budgeting process. The case describes the process through which Charley Turner and Alex Pearson reach agreement regarding the final operating plan for the restaurant for 2008. The description contained in the case is both detailed and thorough, and includes the basis on which annual revenues are projected as well as the basis on which each expense is forecast for the year. Students are asked to verify all the amounts shown in the 2008 operating plan and then to prepare a revised operating plan based on a more pessimistic sales forecast.
Swot Analysis of "Charley's Family Steak House (A)" written by E. Richard Brownlee II includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Charley's Steak facing as an external strategic factors. Some of the topics covered in Charley's Family Steak House (A) case study are - Strategic Management Strategies, Corporate governance, Costs, Financial analysis and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Charley's Family Steak House (A) casestudy better are - – increasing government debt because of Covid-19 spendings, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, there is increasing trade war between United States & China, cloud computing is disrupting traditional business models,
supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Charley's Family Steak House (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Charley's Family Steak House (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Charley's Steak, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Charley's Steak operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Charley's Family Steak House (A) can be done for the following purposes –
1. Strategic planning using facts provided in Charley's Family Steak House (A) case study
2. Improving business portfolio management of Charley's Steak
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Charley's Steak
Strengths Charley's Family Steak House (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Charley's Steak in Charley's Family Steak House (A) Harvard Business Review case study are -
Diverse revenue streams
– Charley's Steak is present in almost all the verticals within the industry. This has provided firm in Charley's Family Steak House (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Charley's Steak is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by E. Richard Brownlee II can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Charley's Steak
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Charley's Steak does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Effective Research and Development (R&D)
– Charley's Steak has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Charley's Family Steak House (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Charley's Steak is one of the most innovative firm in sector. Manager in Charley's Family Steak House (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Charley's Steak in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Training and development
– Charley's Steak has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Charley's Family Steak House (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High brand equity
– Charley's Steak has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Charley's Steak to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Charley's Steak is one of the leading recruiters in the industry. Managers in the Charley's Family Steak House (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Charley's Steak digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Charley's Steak has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Sustainable margins compare to other players in Finance & Accounting industry
– Charley's Family Steak House (A) firm has clearly differentiated products in the market place. This has enabled Charley's Steak to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Charley's Steak to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Charley's Steak has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Weaknesses Charley's Family Steak House (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Charley's Family Steak House (A) are -
Lack of clear differentiation of Charley's Steak products
– To increase the profitability and margins on the products, Charley's Steak needs to provide more differentiated products than what it is currently offering in the marketplace.
Interest costs
– Compare to the competition, Charley's Steak has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Charley's Family Steak House (A), is just above the industry average. Charley's Steak needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Charley's Steak has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Increasing silos among functional specialists
– The organizational structure of Charley's Steak is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Charley's Steak needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Charley's Steak to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Charley's Steak has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Charley's Steak supply chain. Even after few cautionary changes mentioned in the HBR case study - Charley's Family Steak House (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Charley's Steak vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Charley's Steak needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Charley's Steak has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Charley's Family Steak House (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Charley's Steak has relatively successful track record of launching new products.
High bargaining power of channel partners
– Because of the regulatory requirements, E. Richard Brownlee II suggests that, Charley's Steak is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Charley's Family Steak House (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Charley's Family Steak House (A) are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Charley's Steak in the consumer business. Now Charley's Steak can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Charley's Steak can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Charley's Steak can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Charley's Steak can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Charley's Steak can use these opportunities to build new business models that can help the communities that Charley's Steak operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Loyalty marketing
– Charley's Steak has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Buying journey improvements
– Charley's Steak can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Charley's Family Steak House (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Charley's Steak can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Charley's Steak can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Better consumer reach
– The expansion of the 5G network will help Charley's Steak to increase its market reach. Charley's Steak will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Charley's Steak to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Charley's Steak can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Charley's Steak can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Charley's Steak to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Charley's Family Steak House (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Charley's Family Steak House (A) are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Charley's Steak can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Charley's Family Steak House (A) .
Stagnating economy with rate increase
– Charley's Steak can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Charley's Steak in the Finance & Accounting sector and impact the bottomline of the organization.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Charley's Steak with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Charley's Steak needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Charley's Steak can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Increasing wage structure of Charley's Steak
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Charley's Steak.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Charley's Steak in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Charley's Steak has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Charley's Steak needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Shortening product life cycle
– it is one of the major threat that Charley's Steak is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Charley's Steak high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Charley's Steak business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Charley's Family Steak House (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Charley's Family Steak House (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Charley's Family Steak House (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Charley's Family Steak House (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Charley's Family Steak House (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Charley's Steak needs to make to build a sustainable competitive advantage.