SWOT Analysis: Al Capones

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Table of Contents

Introduction
SWOT analysis
Conclusion and recommendations
Reference List

Introduction

Al-Capones restaurant came into existence in 1927 under the initiative of Gladys Meyers. The restaurant is located along the shores of Fox River and operates in a big and spacious house. In the course of its operation, Al Capones mission is to achieve sustainable growth by providing its customers with an untouchable dining experience (Al Capones, 2012).

The firms operations are guided by one major objective, which entails offering its customers great and diverse wines, spirits, micro-brews, and foods. Al Capones focuses at maintaining the real taste of food and alcohol beverages that it offered during the 1920s. In addition to positioning itself as a unique drinking point, Al Capones also focuses at offering its customers unique entertainment.

One of the ways through which the firm attains this goal is by entering into contracts with renowned music bands such as Dixieland stars and saxophonists such as Johnny Waters, Franz Jackson, and Glenn Koch. These elements are some of the main areas that have contributed towards the firms survival (Al Capones, 2012).

SWOT analysis

Strengths

Strong brand Branding is one of the avenues through which organizations can derive their competitive advantage. According to Healey (2008), branding entails a continuous commitment to deliver product meaning and promise to customers.

The restaurant has managed to maintain the quality of products it offered during the 1920s. As a result, it has developed a strong identity within the society in which it operates. People travel for long miles in order to enjoy the tasty spirits, great food, and lively entertainment within the restaurant (Al-Capones, 2012).

Customers who patronize the hotel experience the roaring characteristic of the hotel that persisted during the 1920s and 30s. This element has played a critical role in enhancing a strong attachment with the society. Consequently, the firm has been in a position to nurture a strong level of customer loyalty. According to Healey (2008), customer loyalty is a key ingredient in the survival and success of firms considering the high rate at which the business environment is transforming.

Product diversification- Since its inception, Al Capones has been able to diversify its product offering. The firm has achieved this by adopting a multiproduct strategy. The strategy enables firms to become more diversified hence improving their performance. Effective integration of multiproduct strategy is realizable by integrating the concept of focusing. Consequently, firms management teams have to focus on the most profitable product to integrate in their product offering (McDaniel, Hair, & Lamb, 2008).

Al Capones has integrated multiproduct strategy by incorporating a variety of foods, wines, spirits, microbrews, cigars, and steaks. The quality of products offered by the firm has significantly contributed towards the development of strong brand recognition. One of the ways through which the firm has attained this element is by positioning itself optimally as a unique steakhouse.

The firm offers sizeable meat steaks compared to other steakhouses in Chicago, which greatly appeals customers. Its product diversification strategy has consistently enabled Al Capones achieve effectiveness in satisfying customers needs (Al Capones, 2012).

Effective pricing strategy Organizations can derive their competitive advantage from effective costing. One of the ways through which firms can achieve this aspect is by producing at a lower cost compared to competitors, which provides firms with an opportunity to set the price of their products competitively (Andreasen & Kotler, 2003).

Al Capones is cognizant of the fact that consumers are price conscious. Consequently, the firm has incorporated a pricing strategy that takes into account the consumers purchasing power. One of the ways through which the firm has attained this goal is by integrating a special menu popularly known as recession proof. The special menus are available on Fridays and Sundays. The menus constitute unique foods.

Unique location- The restaurant is uniquely located along the Fox River. Its location provides customers with an opportunity to explore the wilderness for to access the restaurant, customers travel through the wilderness, past gambling dens, and hoodlum haunts, which contribute to a high level of customer satisfaction.

Strong human capital Firms can derive a high competitive advantage by offering effective and efficient customer service. One of the ways through which they can achieve this aspect is by training their employees on how to offer quality and optimal services.

In the course of its operation, Al Capones has managed to develop strong brand recognition by ensuring that customers get excellent services. Upon patronizing the hotel, customers are welcomed by hostesses dressed like flapper. Additionally, serving is splendid laced with customer friendliness, which enables customers to derive a unique experience (Al Capones, 2012).

Weaknesses

Poor accessibility  Sales revenue of restaurants is greatly dependent on the size of traffic. Consequently, it is paramount for hotels and restaurants management teams to ensure that customers can easily access their premises. One of the ways through which this goal is attainable is by ensuring that the restaurants are strategically located (Garvey, Dismore & Dismore, 2011).

Accessing the restaurant is not easy especially for new comers for the restaurant is located in rugged terrain surrounded by hills and forests. The roads leading to the restaurant are poorly lit. Additionally, the address to the restaurant is hard to find. The signs directing customers to the restaurant are fixed on trees along the road.

In most cases, consumers prefer travelling to guesthouses and restaurants that are conveniently located. When selecting their drinking and dining choices, time is one of the major considerations that consumers take into account (Garvey, Dismore & Dismore, 2011). The restaurant does not have a parking lot. Customers are forced to park their cars along the river and trek to the restaurant. This aspect presents a major security threat to customers and their property, hence a major weakness of the Al Capones

Lack of market leadership The firm has not optimally positioned itself in the restaurant industry. Despite the firm being in operation for a long duration, the firm has not managed to position itself as a market leader, which limits the firms ability to deal with changes occurring in the restaurant industry (Boone & Kurtz, 2011).

Low rate of product innovation The firm has not implemented an effective research and development strategy. This aspect has limited the firms ability to improve its products and service offering. The firm continues to operate in its traditional format, which might limit its ability to adjust to changes in consumer tastes and preferences.

Low scale of operation- The firm operates in only one location. Despite the firm being in operation for almost a century, it has not incorporated the concept of market expansion. This aspect has greatly limited its ability to tap the prevailing market opportunities. Its operation in only one location has reduced the firms ability to attain the benefits associated with economies of scale.

Opportunities

Innovation  Al Capone can increase its profitability by undertaking continuous product and service improvement. Over the years, the firm has positioned itself as a renowned entity with regard to the provision of tasty wines, great foods, and lively music. The firms management should focus on how to add value to its product and service offering. This move will allow the restaurant to gain more customers and thus raise its sales revenue.

One of the strategies that the firm should consider in its quest to be innovative is by adding new flavors (Bilton, 2007). Product innovation will significantly enable the firm to deal with alterations in consumer purchasing behaviors. The firm can also engage in new product development. The technological revolution especially with regard to information technology presents Al Capones with a timely chance to grow by exploiting the opportunities that come with the revolution.

This assertion arises from the fact that Al Capones can use emerging technologies to create market awareness in its marketing practices. Social media is one of the technologies that the firm should focus on. In addition, it should improve its marketing practices by integrating different social networking forums such as Facebook, Twitter, Google plus, and blogs (Chaffey, et al., 2003).

New distribution channels  Al Capones can enhance its profitability by establishing new outlets in the US. Currently, the firm operates in only one outlet, which limits a large number of customers from accessing its products. In the process of establishing new outlets, it should identify the most optimal location where the outlets will be situated. It is also important for the firm to focus on maximizing its profitability by venturing in emerging markets.

Change in consumer lifestyle  Currently, consumers are increasing becoming more adventurous, which presents a great opportunity for the firm to increase its profit. Its unique location and the opportunity for customers to experience the wilderness in accessing the hotel present a convenient opportunity to win a large number of customers.

Additionally, the increase in degree of health-consciousness amongst consumers in their consumption pattern presents an opportunity for the firm. Al Capones should exploit the change in customer lifestyle by ensuring that it offers healthy food products. Currently, the society is undergoing significant social transformation. One of the transformations is associated with growth of domestic tourism.

Increase in consumer disposable income  The US has experienced a stable economic growth over the past decade. Despite the adverse effects of the 2008 economic recession, the numerous economic stimulus packages implemented by the US government have significantly contributed to economic restoration.

Consequently, there is a high probability of consumers experiencing an increment in their disposable income. This aspect will translate into an improvement in their purchasing power. The increment in consumers purchasing power might translate into a shift in their purchasing behavior; for example, they may refocus on consuming in luxurious hotels.

Threats

Change in consumer tastes and preferences  The firms profitability may be affected by alterations in consumer tastes and preferences. For example, the high rate at which consumers are becoming health conscious may affect the firm. Findings of previous studies conducted associate eating red meat with increased risk of predisposing people to cancer and heart diseases.

This realization has made most consumers to become very conscious of their eating patterns (Bakalar, 2012). This emerging evidence is a threat to the survival of the firm considering the fact that steak constitutes one of its main dishes.

Economic recession  The firm faces a major threat emanating from changes in the external business environment. One of these threats relates to occurrence of an economic recession. Recession may adversely affect the firm through a reduction in the firms sales revenue. The recent economic recession made most American consumers to focus on purchasing necessities rather than luxuries. In the event of the recession recurring, the firms profitability may be affected adversely.

Increased competition The US restaurant industry is undergoing significant transformation due to increased competition. Some of the major industry players include Kentucky Fried Chicken, Darden Restaurants, Outback Steakhouse, and Taco Bell. More firms are venturing into the hotel industry in an effort to exploit the emerging opportunities.

Al Capones does not have control over the activities within the industry. For example, the US restaurant industry is experiencing an increment in the number of steakhouses being established (First Research, 2012). As a result, there is a high probability of the firm experiencing a decline in its profitability.

Legal reforms During the 1920s and 1930s, the restaurant experienced a major threat emanating from the imposition of the prohibition era. The prohibition era was imposed through enactment of the Lever Food and Fuel Control Act.

The legislation aimed at reducing the evils associated with alcohol. The US government imposed legislation that prohibited importation, sale, and transportation of alcoholic beverages. The legislation had adverse effects on the survival of the firm because customers count not patronize and enjoy at the hotel freely.

The threat posed by legal reforms persists even today. In 2009, the US government proposed to increase alcohol tax. The objective of the tax is to assist in funding the countrys national healthcare reforms. The enactment of the proposal would result in the tax levied on a 750 ml bottle of alcohol increase from $ 0.21 to $ 0.70. This change will translate into an increment in the price of alcoholic drinks, which will affect Al Capones sales revenue adversely.

Conclusion and recommendations

Al Capones has managed to develop a number of internal strengths, which have enhanced its survival. Its ability to offer quality products and adoption of product diversification has enhanced its ability to satisfy its customers. Additionally, the restaurants unique location and its effectiveness in maintaining the quality of products and service offering have contributed towards the development of a strong customer loyalty.

Its effective pricing has enabled the firm to be consistent in attracting and retaining customers. Despite these aspects, the firm experiences a number of weaknesses such as low rate of product innovation, failure to develop market leadership, and poor accessibility. The firm faces a number of opportunities and threats from the external environment, and thus to survive into the future, it is important for the firm to consider the following.

The firm should allocate more resources to continued research and development in the quest to remain relevant in the ever-changing market place. This move will effectively improve the firms ability to satisfy its customers. Its innovativeness should also incorporate devising strategies on how to improve its distribution channel.
The firm should incessantly carry out market studies in order to monitor and adapt to the prevailing market trends coupled with creating contingency plan to face the future confidently. The market research should focus on customers and competitors.

Reference List

Al Capones. (2012). History of Al Capones hideaway & steakhouse. Web.

Andreasen, A., & Kotler, P. (2003).Strategic marketing for nonprofits organisations. London, UK: Prentice Hall.

Bakalar, N. (2012). Risks: More red meat, more mortality. Retrieved from https://www.nytimes.com/2012/03/13/health/research/red-meat-linked-to-cancer-and-heart-disease.html?_r=0

Bilton, C. (2007). Management and creativity: From creative industries to creative management. Malden, MA: Blackwell Publishers.

Boone, P., & Kurtz. D. (2011). Boone and Kurtz contemporary marketing. Mason, MA: Cengage Learning.

Chaffey, D., Mayer, R., Johnston, K., & Ellis-Chadwick, F. (2003). Internet marketing, strategy, implementation and practice. London, UK: Prentice Hall.

First Research. (2012). Restaurant industry profile. Retrieved from http://www.firstresearch.com/Industry-Research/Restaurants.html

Garvey, M., Dismore, H., & Dismore, A. (2011). Running a restaurant for dummies. Hoboken, NJ: Wiley.

Healey, M. (2008). What is branding? (Essential Design Handbooks). Switzerland: RotoVision.

McDaniel, C., Hair, J., & Lamb, C. (2008). Essentials of marketing. New York, NY: Cengage Learning.

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