Swot Analysis Of A General Store


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SWOT ANALYSIS OF A GENERAL STORE
Presented to the Faculty of the Agribusiness Department California Polytechnic State University
In Partial Fulfillment Of the Requirements for the Degree
Bachelor of Science
By Brooke Chandler
January 2010

APPROVAL PAGE

TITLE: AUTHOR: DATE SUBMITTED:

A SWOT Analysis of a general store Brooke Chandler January 2010

_________________________________ Senior Project Advisor

__________________________________ Signature

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TABLE OF CONTENTS
Chapter
I. INTRODUCTION Statement of the Problem Hypothesis Objectives of the Study Significance of the Study
II. REVIEW OF THE LITERATURE Wine Tourism Wine Consumers SWOT Analysis
III. METHODOLOGY Procedures for Data Collection Procedures for Data Analysis Assumptions and Limitations
IV. DEVELOPMENT OF THE STUDY Data Collections Analysis
V. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS Summary Conclusions Recommendations
References Cited
APPENDIX A: Interview Questions for Winery Professionals
B: Interview Questions for Oakville Grocery Company Manager
C: Interview Questions for Jim APP
D: Categorizing a Strength, Weakness, Opportunity, and Threat
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Page
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31 31 31 32 33
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E: SWOT Analysis Example F: SWOT Matrix G: SWOT Analysis H: Financial Analysis
Figure 1. SWOT Analysis Model

LIST OF FIGURES

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Chapter 1
INTRODUCTION
The wine industry in the United States has continually evolved into a major agriculture market. This industry currently contributes $121.8 billion to the U.S. economy (The Wine Institute 2008). Additionally, there are over 820,000 wine related jobs in the U.S. (The Wine Institute 2008). The consumption of wine increased during the 1970’s and 1980’s, decreased in the 1990’s, and then has been progressively increasing again since 1996 (Geisler 2008). Although from 1989 to 1995 the U.S. wine consumption per capita fell from 2.3 gallons to 1.7 gallons, in 2007 it increased to 2.5 gallons (Geisler 2008). Even though there is currently an economic downturn, the wine industry is strong due to consumers purchasing low cost brands instead of lowering their consumption (Geisler 2008). As a result of increased demand for wine, there has also been a noticeable increase in producers. The number of wineries has grown 81 percent since 1999 from 2,688 wineries to 4,867 wineries (Hodgen 2008). California has been the America’s top wine producer and has generated the highest revenues for wine amongst all states.
California currently produces 90 percent of all wine in the U.S. and produces $58 billion in economic value (The Wine Institute 2008). Internationally, California is the fourth largest wine producer following France, Italy, and Spain (The Wine Institute 2008). Today, there are 2,843 bonded wineries in California drawing in 20.7 million wine tourists who visit the California wine regions annually (The Wine Institute 2008). One specific wine region in California that has had an evident increase in growth and popularity is Paso Robles. According to www.prcity.com, Paso Robles has grown from 35 wineries, with 13,000 acres of vineyards in the
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1990’s, to more than 200 wineries with over 26,000 acres of vineyards today. The wine region, as explained by www.pasowine.com, grows over 40 types of wine grape varietals, including the region’s “heritage” varietal of Zinfandel. Paso Robles’ wine tourism revenue is approximately $112.8 million each year. Around 1.2 million tourists come each year to visit these wineries. Total winery sales in 2006 were $372 million and retail revenue was 338.4 million dollars, according to www.pasowine.com. As Paso Robles continues to grow into a major wine region, wine tasters are discovering that some of their hospitality needs are not being met.
Paso Robles has two major areas within its wine region which is divided between a west side and an east side. Both areas include countless wineries which are substantially far from downtown Paso Robles, where a majority of the city’s local businesses are located. There are very few establishments on these wine routes, other than wineries, that cater to a wine taster’s needs. Specifically, there is a need for more stores selling food. Although a few select wineries have restaurants, they tend to sell very selective and costly meals. The creation of a general store on the west side of Paso Robles, located at the crossroads of Vineyard Drive and Adelaida Road, will provide wine tasters with the option of buying varying quality foods at an affordable price in a more convenient location. Ultimately, the store aims to help this wine region become a more hospitable, well-rounded wine region. The store will be themed after Paso Robles’ wineries and will include a deli, other small food items, wine-related items like picnic supplies, and Paso Robles wines.
Statement of the Problem
Does a general store at the crossroads of Vineyard Drive and Adelaida Road in Paso Robles have enough positive factors to merit the risk of starting this business? Will a SWOT
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Analysis prove if a general store is a worthy business venture? In addition, will financial analysis schedules prove if the business will be profitable?
Hypothesis A general store would be a viable start-up business in the growing region of Paso Robles because it possesses more positive factors than negative factors. Through formulation, the percentage of weighted scores for strengths will be greater than the percentage of weighted scores for weaknesses. In addition, the percentage of weighted scores for opportunities will outweigh the percentage of weighted scores for threats. A SWOT analysis will be an effective way to assess the internal and external factors of the business. Financial analysis is another method to assess if this is a viable business depending upon how much revenue it could create.
Objectives 1) Find and define strengths, weaknesses, opportunities, and threats of this possible business
and perform a SWOT analysis and formulation. 2) Work with wine industry professionals to evaluate the pros and cons of the store. 3) Accumulate research on SWOT analysis and issues in the wine industry that directly
affect the business of the general store. 4) Create and calculate a forecasted income statement, balance sheet, and financial ratios for
the general store
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Significance of the Study The study that will be conducted is significant because Paso Robles has quickly transformed into one of the most important wine regions in California. With more and more wine tasters and wine tourists visiting the region, there is a growing need for food services in the vicinity of wineries that cater specifically to this group. This study will benefit future wine business proprietors by assessing the positive and negative aspects to starting a wine and food related business in Paso Robles. The general store is a possible future establishment that could help generate more business for wineries while creating a fully hospitable experience. By researching wine consumer trends, wine tourism, and conducting a SWOT analysis, the researcher will be more aware of the background issues to this potential business. The SWOT analysis is the main focus of the study, however; by creating a financial budget, it will be a clear indicator if this potential business will be a good business venture.
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Chapter 2
REVIEW OF THE LITERATURE
As the wine region of Paso Robles continues to expand, it is crucial to investigate aspects of the wine industry if more businesses are to locate in the area. The region of Paso Robles is the fastest growing AVA (American Viticultural Area) in California after Napa, Sonoma, and Monterey counties (“Geography” 2006). One of the reasons behind the proposed creation of a general store on the west side of Paso Robles is to take advantage of an undeveloped gap in “industry cooperation” between the wine and food industries. The wine consumers of this region are vital to understand because the general store would share the same customers as the wineries.
Wine Tourism
With over two hundred wineries in the Paso Robles area, there is a vast market for wine tourism. Hall (2003) defined wine tourism as, “Visitation to vineyards, wineries, wine festivals, and wine shows for which grape wine tasting and/ or experiencing the attributes of a grape wine region are the prime motivating factors for visitors.” The general store would aim to make a profit from the existence of so many wineries and their customers, which is a fairly new strategy. Wine and tourism go hand in hand, but very few wine, hospitality, and food professionals have tried to create economic leverage from the other (Hall 2003). Hall (2003) alluded to the fact that in many wine regions in varying countries like the U.S. and Australia, local businesses are not partnering with the wine industry and supporting each other in order to increase profits and build reputations. Hall (2003) described what is called an “allied industry,” where local businesses and wineries work together to cater to the needs of growing wine tourists by marketing more to
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tourists as main customers. Additionally, if wineries and local businesses form business alliances they will be more likely to be recognized by regional, state, and even national tourism organizations (Hall 2003).
Wine tourism has seen continued success and popularity because of its relation to culinary and agri-tourism in many major wine producing countries like France, Spain, Australia, and New Zealand (Thach 2007). One country that is experiencing an enlargement in wine tourism is the United States, predominantly in small or rather unknown areas of the country. In particular, California has experienced an increase from 14.8 million wine tourists in 2002 to 19.7 million tourists in 2005 (Thach 2007). Thach (2007) explained that wine tourists’ main needs and desires include: wine tasting, educational wine opportunities, visiting a rural place, the presence of culinary tourism specifically pairing food with wine, the chance to enjoy themselves, enjoying culture and the arts, gaining the positive health aspects from wine, and learning about environmentally-conscious viticulture and winemaking techniques. In addition, Thach (2007) explained that the U.S. is becoming a “café society,” where there is a growing trend toward Americans enjoying life through culinary experiences, with wine playing a primary role. Furthermore, Thach (2007) agreed that a strong partnership and cooperation must be present between wineries, local restaurants, and hotels to maximize the potential for profits. One country that now understands the importance of this partnership and cooperation is Australia. Australia has had major success exporting wine worldwide, but has not experienced wine tourism popularity because of a lack of inter-industry cooperation, emphasized Beames (2003). On the other hand, in New Zealand, Hall (2003) stated that west Auckland had experienced success with inter-industry cooperation between restaurants and wineries because the restaurants only sold locally produced wine. If countries with unmet potential increase cooperation, they
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Swot Analysis Of A General Store