Competitive Analysis

Group 3 Garrett Matthews

David Hayward

Cory Logan

Nick Watkins

Mayra Garcia

Lindsey Pacatte

Strengths

Expert Management Atmosphere

Global Brand

Opportunities

International MarketRecession

Fish Sandwich

Weaknesses

Breakfast Menu Management Problem

Threats

Food Borne Illnesses

Increase in Beef Prices

Wendy’s SWOT Analysis

   

  Internal Factors External Factors               Favorable Factors

StrengthsExpert ManagementAtmosphere adds valueGlobal BrandStrong Supply Chain

OpportunitiesInternational MarketAdvances in TechnologyFresh Burger MarketRecession

Unfavorable FactorsWeaknesses

Breakfast MenuManagement Changes

ThreatsFood Borne illness Increase in Beef Prices

Key Success FactorsContribute to a company’s

competitive advantages by identifying components that the company performs well in.◦Competitive Factors◦Managerial Factors◦Financial Factors ◦Technical Factors

Competitive Factors

Product Strength• Lack of differentiation• Unique patty shape

Customer Loyalty and Satisfaction• Convenience• Speed of service

Competitive Factors

Market ShareThird largest company in QSR Introduction of new products

Customer ConcentrationLocation variablesStrengthen penetration

Competitive Factors

Cost ControlCentralized distribution centerReduce labor costsEconomies of scale

InvestmentsInternational fast food marketsKnowledge of foreign markets

Managerial FactorsCorporate Image

◦Structure and culture

Social Responsibility◦Dave Thomas Foundation for

Adoption Receives 2009 PR News Corporate Social Responsibility Award

Managerial Factors“Doing What’s Right for Our

Customers”◦Focusing on core: Hamburgers◦Build on the success of Baconator◦Emphasize product being fresh never

frozen◦Updated menu: appeal to 18 to 34

year olds◦New image by capital reinvestment◦Total customer feedback system

Managerial FactorsStrategic Growth Plan

◦Phase 1- revitalizing the brand name and growing sales and profit

◦Phase 2 – plan to build on that success by continuing to improve on company name and brand “Doing What’s Right for Our Customers”

Financial Factors: Current Ratio

Over the 5 year period, current ratio for Wendy’s peaked of 1.66 in 2006

See a downward trend since 2006

Wendy’s current ratio was at .76 for 2008

This .76 current ratio can affect Wendy’s ability to secure short-term financing from both creditors and investors

Wendy’s currently has the lowest current ratio of all the benchmark companies

Financial Factors: Current Ratio

Wendy’s current ratio is not a concern currently

The concern is the downward trend in its current ratio

This downward trend will directly affect investors and creditors decision making

They have the lowest current ratio making them more of a risk compared to the benchmark companies

Financial Factors: Return on Equity

Wendy’s was highest in 2005 and 2006.

Most years there was an above average return for other companies.

In 2007, Wendy’s saw about a 6% drop in ROE from 2006.

In 2008, Wendy’s reported a loss of $480,000.

Financial Factors: Return on Sales

Wendy’s is volatile. ◦ Food prices; fresh

never frozen◦ Low margins;

competition◦ Must control cost

Overall McDonalds and Sonic had some of the highest returns◦ Utilize economies of

scale◦ lesser overhead cost

Financial Factors: Altman Z ScoreSnapshot of a company’s likelihood of

filling bankruptcyComposite score encompassing 5

commonly used financial ratiosCompany’s that are in the 1.8 and

under range are seen as extremely likely to file for bankruptcy

Anything above 3.0 is considered unlikely for bankruptcy

Financial Factors: Altman Z ScoreWendy’s current Altman Z Score

is 7.85Indicates Wendy’s is safe from

bankruptcy at the current timeWendy’s creditor’s will view them

as safe to loan to

Technical FactorsNew and up to date technologies

have long time been the means of support of the quick-service restaurant

Wendy’s has combined order-taking, order processing, and payment steps down to an effortless deed that only takes a matter of seconds.

Top Performersoperational excellence like

cutting costs, maintaining quality, and basically running a tight ship

product innovation which refers to creating a flood of great new products.

The information era, on the other hand, will require mastery of a third category of customer intimacy

Technical FactorsThe future generations of winners in

the QSR business will be well-known for the most part by how well they know their customers and how they make the most of that knowledge to build customer preservation and loyalty.

Wendy’s strategy takes structure along three steps: (1) collecting information, (2) turning information into knowledge and (3) turning knowledge into a customer relationship.

Technical FactorsQSR companies will have the

capability to know their customers in unmatched degrees of specificity.

Instead of the wide-ranging demographic segments that companies now use for their marketing, technology will facilitate a pinpoint approach on a household-by-household, individual-by-individual basis.

Wendy’s Strategy Formulation

Wendy’s is confined to a red ocean

Therefore, in order for Wendy’s to continue forth, they must look to new ventures and ways of doing business that are consistent with their mission but also allow for further future growth

Business and Economic CharacteristicsBecause Price and Convenience

are near universal throughout firms in the industry, Wendy’s must focus on becoming the “highly favored” fast-food choice

Doing so will give customers more inclination to visit store locations

Forces that Affect Competition

The Economy caused businesses everywhere to focus on low cost to the customer; this presents a problem when every firm lowers prices

The end result is that low price becomes the new standard so competition now lies in value

Wendy’s has taken this road before during the inflationary period of the 1970s, with the slogan “Quality is Our Recipe”

Forces that Affect Competition

The Super Size Me Documentary

Caused a public backlash against fast-food restaurants

In response to the 2004 film, Wendy’s introduced the Chicken Temptation® selections to their menu

Competing in the IndustryOverall Wendy’s needs to stand

by their strategy of creating a niche market by way of their side dish offerings.

Expand competition base by being innovative and effective