Situational Analysis of Panera Bread Company Essay
Conducting a situational analysis of the environment of Panera Bread Company considered the multi-dimensional factors affecting its performance and the identification of challenges or problems that led to the development of recommended solutions to support the sustainability of the company. The situational analysis considered the macro environment, market or customers, competition, collaborators and company aspects.
Macro Environment Analysis (PEST)
The political factors affecting the operations of Panera Bread Company comprise of regulations on consumer rights, sales contracts, product quality, and other regulations comprising the standards uniformly applied in the baked products industry. Overall, the political environment of the baked products industry is competitive, which means that apart from the regulations required by law and public policy, bread producing companies have a wide room for self-regulation.
This enables Panera Bread Company to use compliance with these regulations as a means of enhancing value offering to consumers to compete with other bread producing firms. The economic factors affecting Panera Bread Company are exchange rate volatility because it imports some of its raw materials and its operating cost and economic downturns because these affect the purchasing power of its consumers. Panera Bread Company developed the company as providing high quality products and high end services at
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This strategy should support growth in the company even with exchange rate adjustments and economic downturns. The technological factors influencing the operations of the company refer to innovations in the tools and processes in bread production that require lesser cost and ICT tools in marketing to support the promotional campaigns of firms. Panera Bread Company employs the traditional European style stone deck bakery oven (Thompson 285). However, although the concept is traditional, there are various innovations to make deck ovens more fuel efficient.
This allows Panera Bread Company to operate cost effectively while providing artisan bread. Nevertheless, the company sparingly engages in ICT tools for its promotional activities. The socio-cultural factors determining the operations of Panera Bread Company include the appeal of its business concept to different socio-demographic groups. The ability to meet the demand for the targeted socio-demographic groups determines the long-term success of the company. Panera Bread Company targets a broader market appealing to consumers across gender, age, income and racial groups.
By understanding socio-cultural factors, the company was able to fashion its business concept to address the demand of a broader market. Competitive Situation The competitive environment within which Panera Bread Company operates comprise of the internal and external situation. The internal situation leads to the internal strengths and weaknesses of the firm and the opportunities and threats external to the company, particularly relative to its competitors. The strengths support the capture of opportunities while the weaknesses and threats are areas for improvement or resolution to ensure effective outcomes for the company.
One of the strengths of the company is as a fast-casual firm positioned in between fast food companies and full-table-service dining (Thompson 294). This allowed the company to combine cost effectiveness and differentiation to appeal to both the customers of fast foods and full-service firms by offering high value based on a competitive pricing for quality products and high end service. This gives rise to the other strength of the company of having a strong brand name and high brand equity by giving customers a positive experience to encourage repeat purchases and word-of-mouth advertising to their family, friends and acquaintances.
However, the company also has weaknesses. One is its cost structure as vulnerability. Any changes in the factors affecting its operating cost would have an impact on its pricing and/or revenue generation. Another is its limited promotional activities. Although the company collects contributions from its franchises and allots a percentage of revenue for advertising, the priority is personal selling and experiential marketing that heavily relies on consumers to notice the company and make the move to try its products and services (Thompson 288).
These are areas for consideration if Panera Bread Company wants to remain competitive in the long-term when its competitors strongly engage in advertising. A number of opportunities are open to the company relative to its competitors. One is to target niche markets or organize its products according to niche markets (Bradford et al. 38). Panera Bread Company has great products sold more or less uniformly at its bakeshop cafes.
The company can introduce product lines for vegetarians, health conscious individuals, those engaged in loss weight regimens, sports enthusiasts, those with diabetes, and other niche markets. This way, the company can provide a product line for its broader or mass market while at the same time accommodate niche markets. This would enable the company to sustain a high market share. Another opportunity is to engage in more active advertising of the company even at its existing level of expenditure on promotions. This would ensure a wider awareness and market reach to influence more people to try its products.