Please see attached file.
SWOT, MARZILLI'S FINE ITALIAN FOODS
Introduction: Study the description of this situation, then proceed through the directions for strategic analysis that follow. You will also want to take a look at Marzilli's financial statements (attached).
The Situation: Marzilli's Fine Italian Foods is a grocery store founded in 1940 by Gino Marzilli and his wife, Maria. Gino and Maria were immigrants. In its early years the business provided Italian specialty grocery items to the residents of an Italian immigrant neighborhood in the center-city area. Gino's family ran a grocery store in Milan, Italy, and his own store had much of the flavor of Milan.
Over the years the business has been quite successful. In 1952 Gino and Maria bought a large building not far from the original store. The building was remodeled and provided them with a much larger store area plus an apartment to live in. In 1960 they began producing homemade pasta and a series of high-quality sauces to be used with Italian foods. The recipes were developed by Maria, and the products, sold exclusively at the store, have continued to be quite popular.
Gino and Maria retired in 1975, turning the business over to their only child, Jim Marzilli. Jim has been involved in the business all of his life. He's married, but his wife has not been involved in the business. They and two of their four children live in a southern suburb of the city.
Although the business remained very successful through the 1980s and into the 1990s, recently the sales revenues have shown a steady decline. Jim attributes this decline to several factors. Most important is the fact that most of the old Italian population has moved from the center-city area to the suburbs. These people are dispersed in five or six southwestern suburbs that are a forty to sixty minute drive from the old neighborhood. Thus many of the store "regulars" shop infrequently at Marzilli's, although the store is crowded on Friday and Saturdays, particularly before holidays and feast days. A related factor is that the center-city neighborhood where the store is now located is now populated by young professionals. Although some of them patronize the store, they purchase only a limited number of items, such as bread and certain sauces. Jim feels that this is because their knowledge of Italian cuisine is limited, although many seem to be interested in Italian cooking.
Over the past few years the business has been barely at the break-even point, and Jim feels it is time to do something about the situation. He would like the store to be the busy meeting place for Italians that it was in the 1950s and 1960s but realizes that times have changed. He is 55 years old and does not want to retire or sell the business. Three of his four children are not interested in the business, but his oldest son Dom has expressed some interest. Dom lives in an apartment above the store and works downtown for a market research firm. His wife June is a teacher and has helped in the store during rush times. Although June is not Italian, Jim says that she is almost as great an Italian cook as he and his mother. Dom and June have no children.
At this point, Jim sees two basic options:
1. Maintain the same line of products, but cut back on the number of employees and store hours. He now has six employees and thinks he could get along with four. And since much of the business comes from old customers who come on Fridays and Saturdays, Jim feels that he could maintain the same level of sales by being open only Tuesday through Saturday. The cut back of employees and shorter hours will cut costs; if sales remain at about the same level, Jim thinks the business will be profitable in the coming years.
2. Start adding " American " foods to attract more of the current neighborhood
residents. Marzilli's would thus become a neighborhood grocery rather than an Italian specialty food store. Jim would retain some Italian foods to serve his old customers, but the store would gradually evolve into a neighborhood grocery store. There are no grocery stores within a four- or five-block radius, and Jim feels that he could pick up a lot of neighbor hood trade.
Guideline: Marzilli's is declining for a number of reasons, yet at the same time there are a number of opportunities available to Marzilli's. Using the information given about Marzilli's, and your knowledge of the external environment, compile a list of opportunities and threats for Marzilli's.
Sources of opportunities and threats:
? Indirect/General/Macro Environment
- Demographic, Economic, Political & Legal, Sociocultural, and Technological Segments
? Direct/Industry Environment
- Threat of New Entrants, Rivalry Among Existing Firms, Threat of Substitute Products or
Services, Bargaining Power of Customers, Bargaining Power of Suppliers, and Stakeholders
Numbers are just place holders and are not indicative of the number of opportunities or threats.
Guideline: Using the information about Marzilli's and whatever you may know about businesses similar to Marzilli's compile a list of Marzilli's strengths and weaknesses.
Sources of Strengths and Weaknesses
? Primary Activities
- Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales, and Service
? Support Activities
- Firm Infrastructure, Human Resource Management, Technological Development, and
(When you have a strength that allows you to carry out an activity in a manner that is superior to
the competitions ability to carry out the same activity that strength is said to be a distinctive competence. Mark all strengths that may be considered a source of a distinctive competence with an asterisk.)
You have completed an external and internal analysis for Marzilli's, now would be an appropriate time to write a one sentence mission statement for Jim. Keep in mind a good mission statement should address: 1) product or service, 2) customers, 3) principle technology, and 4) primary market.
Your next step is to devise alternative strategies for Marzilli's. Jim has already come up with two strategies, but you might think of his strategies in terms of satisficing, i.e. they are easily formulated and result in no competitive advantage for Marzilli's. Jim's first option, to cut back on the number of store hours is really a 'do nothing' solution and addresses neither threats or opportunities. Jim's second option, to become a neighborhood version of a 7-11, fails to take advantage of Marzilli's strengths and may even leave Marzilli's in a weaker position. Develop additional alternatives for Jim by placing your five or six most significant opportunities, threats, strengths and weaknesses on the accompanying S.W.O.T. matrix (page 5). Then match up strengths with opportunities, weaknesses with threats, etc. until you come up with a number of viable alternative strategies (include Jim's options). In some categories, e.g. S.O. strategies you may find several alternatives, in other categories you options may be more limited.
Now you have completed your S.W.O.T. analysis you must select one strategy for Jim to follow. Place your chosen strategy in the space provided below and provide a brief justification why you believe this is the best strategy for Jim. Is your strategy consistent with your mission?
Please don't confuse the S,W,O,&Ts with strategies when completing the matrix. Think of S,W,O,&Ts as facts and informed assumptions, but not actions. Yuppies with an interest in Italian cuisine constitute an opportunity. Marzilli's expertise in Italian recipes and cooking is a strength. Cooking lessons for Yuppies with an interest in Italian cuisine is an action and a S,O strategy.
Marzilli's Fine Italian Foods is discussed very comprehensively in this explanation.