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Franz Colruyt is a Belgian discount food retailer that is obsessed with cutting costs. Cost cutting measures in its 160 stores include no bags or in-store music, dimly-lit stores, unpaid 5-minute coffee breaks for employees, and a spartan headquarters. The resulting 6.5% profit margin dwarfs the 1% to 2% margin typical for the industry. Perform a SWOT analysis for Franz Colruyt.
On Sep 23, 2024
Strengths: High profit margin of 6.5% from its extreme low-cost competitive advantage.
Weaknesses: Lack of bagging, in-store music, dim lighting, and lack of aesthetic in-store appeal all limit potential customer base.
Opportunities: Franz Colruyt only operates 160 stores, so there is opportunity for global expansion.
Threats: High profit margin might encourage competition to copy Franz Colruyt's low-cost competitive advantage, eroding it. Changes in consumer behaviour (increased prosperity) might decrease customers interested in only a low-cost alternative.