Spare time equipment and recreational gear

Spare Time Equipment

Strengths

Weaknesses

Opportunities

Threats

pare Time Equipment' is a newly started business located on the edge of Minneapolis in Minnesota, offers small pleasure boats, snowmobiles, jet-skies, line of trailer and pickup truck campers manufactured by different companies. Mark Zimmerman, the owner of the business has been trying for two years to bring his sales level up in order to make the business profitable. His recent strategy in this regard is to include 'mountain bikes' in the line of products he offers in this area.

In order to reach the right decision regarding the new strategy of increased products line, Mark needs to have a SWOT (Strengths, Weaknesses, Threats, and Opportunities) analysis of the business. SWOT Analysis is an important business planning tool used to determine the Strengths, Weaknesses, Opportunities and Threats of a business firm (Pahl & Richter, 2009). With the help of SWOT analysis, information regarding company's internal and external environment can be obtained. Griffin (2011) also emphasizes the point that SWOT analysis is actually the evaluation of a company's internal strengths and weaknesses as well as its environmental opportunities and threats.

SWOT Analysis:

Strengths

Spare Time Equipment is the sole seller of pleasure boats, snowmobiles, and lawn equipment in the area. All of the brand lines are exclusive to the business and available at its store.

Mark, the owner of Spare Time Equipment, has an edge as the products offered are not available within five miles radius of this store. Hence, the customers loyal to brands that are carried by Mark will turn to his store for the equipment required.

The business not only offers the goods in the inventory but also provides the maintenance services to the customers.

Mark has tried to establish outstanding relationship with his customers. Mark's business terms have been established on the basis of friendship and personal services, ultimately making the customers loyal to this business. On the other hand, Mark's repeat sales will increase accordingly.

Mark's healthy relationship with the customers and suppliers will help him from both sides of supply chain. In the start of the chain, Mark is getting exclusive support from his suppliers. And in the end, customers have turned to be trustworthy and loyal.

The business gains an edge when the expenses like advertising and promotional schemes are supported by the suppliers. Mark has got local advertising and point-of-purchase type aids from the suppliers of the brands. Similarly, several other benefits have been obtained from the suppliers of the brands that Mark's business carries.

Mark's business approach has been highly appreciated by external stakeholders like suppliers. As an outcome, Mark can get benefits like loans for investment, purchase on credit etc. from his suppliers.

Weaknesses:

The location of the Mark's store is not favorable as it is in an older building along the side of a major highway with no close dwellings.

Owner, Mark, has neither previous experience of maintaining a business like this nor a strong financial support in order to backup for losses or debts.

The products that are being offered by Mark's business at 'Spare Time Equipment' are also available in different brands at other stores. This implies that competition among the brands is intense as large numbers of brand substitutes are available for the same product.

Mark's business faces a shortage of manpower during the peak seasons. Currently there are total two employees including the owner. The other employee is Ginny, Mark's friend, who collectively works with Mark on selling and maintenance services. During peak season the increased workload cannot be managed by these two workers.

Internal costs of the business increase to a great extent, if Mark hires the additional labor in order to manage the increased workload during peak seasons. Mark is not able to control the internal costs which also hinder the profits.

The advertising done by Mark resulted in higher number of enquiries but the actual sales made were less than expected. The local advertising strategy didn't produce the expected results.

Even after two years, Mark's business couldn't generate profits. There is no attraction to continue business as the results of the business operations seem unfavorable. Furthermore, the pays received by both employees of the business, owner and the helper are far below than expectations. This could be a reason to stop the business operations immediately.

Opportunities:

Mark has built strong and trustworthy relationships with his suppliers and customers. This behavior can help to build a friendly image of the business. The business can establish a strong position in the market on the basis of being friendly and service oriented place to buy equipment. As a result, sales will increase ultimately maximizing the profits.

There is a golden opportunity for Mark to introduce more lines of products. The business was established on the basis of products like small pleasure boats, snowmobiles, jet-skies, trailer and pickup trucks. Then lawn mowers, tractors and trimmers were added in the products line as supplied by one supplier. Similarly other household equipment usually required for leisure and sports activities can also be offered.

Mark can make a portfolio of products in order to keep a balance between peak and off seasons. This will help to normalize the internal and external costs.

Already, Mark is trying to sell the products with differentiation approach. This strategy can further be enhanced by providing innovative products which can of high demand in that market.

Mark has no online presence as yet. For this, Mark can hire an agency to develop a web site of the business. This agency can also provide services like online marketing, social media marketing etc.

Mark also need to incorporate promotional strategies like offering discounts, test drives, free maintenance services for a particular period, special privilege to premium customers etc.

Threats:

Mark doesn't have any backup plans for the supply of the equipment and maintenance services during peak seasons. This can pose a threat to share in the market as customers will not be purchasing from 'Spare Time Equipment' business. This also provides an opportunity for competitors to establish themselves in that particular area of business.

Competitors of the 'Spare Time Equipment' are playing on the pricing basis by offering relatively low prices. In some cases competitors are offering 10 to 30 per cent off on the products sold. Mark cannot compete on the basis of the price discounts as he has to meet the business's internal costs.