McCain Foods SWOT Analysis / SWOT Matrix
Posted by David Williamson on Dec-05-2018
A SWOT analysis is a framework that is used to analyze a company’s competitive positioning in its business
environment. This can be used by McCain Foods, and will involve the identification of its internal Strengths (S)
and Weaknesses (W) followed by the identification of the Opportunities (O) and Threats (T) it faces in its
extensivelyrnal business environment.
McCain Foods is among the leading firms within its industry, and it needs to retain this position.
McCain Foods is carefully reviewing its SWOT analysis and using it to make strategic decisions. For a SWOT
analysis to be conducted of the firm, an interactive process needs to be undertaken by coordinating among all
the departments of the firm such as finance, marketing, operations, human resource, logistics, strategic
planning, management information systems etc.
A SWOT matrix is a 2x2 matrix that has the internal strategic factors listed in the first row; Strengths and
Weaknesses. It has the external strategic factors listed in the second row; Opportunities and Threats. This
SWOT strategic framework allows company managers to easily view all of the company’s strengths, weaknesses,
opportunities and threats in one matrix.
The SWOT analysis matrix helps in the development of 4 types of strategies by managers. These are:
- Strengths-Opportunities Strategies (SO): This involves using internal strengths to take
advantage of opportunities.
- Weaknesses-Opportunities Strategies (WO): This involves improving on the company’s
weaknesses by making use of the opportunities.
- Strengths-Threats Strategies (ST): This involves the using of strengths to minimize the
- Weaknesses-Threats Strategies (WT): This involves the elimination of weaknesses to combat
The main objective of the SWOT analysis is to help in identifying the strategies that can be used by the
company to build on its strengths, eliminate its weaknesses while making the most of opportunities and
SWOT Analysis of McCain Foods
Strengths of McCain Foods
- Distribution and Reach: McCain Foods has a large number of outlets in almost every state, supported by a
strong distribution network that makes sure that its products are available easily to a large number of
customers in a timely manner.
- Cost Structure: McCain Foods’s low cost structure helps it produce at a low cost and sell its products at a
low price, making it affordable for its customers.
- Dealer Community: McCain Foods has a strong relationship with its dealers that not only provide them with
supplies but also focus on promoting the company's products and training.
- Financial Position: McCain Foods has a strong financial position with consecutive profits in the past 5
years, along with accumulated profit reserves that can be used to finance future capital expenditures.
McCain Foods has a large asset base, which provides it with better solvency.
- Return on Capital Expenditure: McCain Foods has been successfully able to generate positive returns on the
capital expenditure it has incurred on various projects in the past.
- Automation: of various stages of production has allowed the more efficient use of resources and reducing
costs. It also allows for consistency in quality of its products and provides the ability to scale up and
scale down production as per the demand in the market.
- Skilled Labor force: McCain Foods has invested extensively in the training of its employees that has
resulted in it employing a large number of skilled and motivated employees.
McCain Foods has a diversified workforce, with people of many geographical, racial, cultural and
educational backgrounds that help the company by bringing in diverse ideas and methodologies of doing
McCain Foods has qualified and accredited professionals working under in its team.
- Entering new markets: McCain Foods’s innovative teams have allowed it to come up with new products and enter
new markets. It has been successful in past, in most of the initiatives it has taken in new markets.
- Social Media: McCain Foods has a strong presence on social media with more than millions of followers on the
three most famous social media platforms: Facebook, Twitter and Instagram. It has high levels of customer
engagement on these platforms with low customer response time.
- Website: McCain Foods has a well-functioning and interactive website that draws a large number of internet
traffic and sales.
- Product Portfolio: McCain Foods has a large product portfolio where it provides products in a large range of
categories. It has a number of unique product offerings that are not provided by competitors.
- The geography and location of McCain Foods provide it with a cost advantage in serving its customers, when
compared to that with the competition.
- McCain Foods has a well-established IT system that ensures efficiency in its internal and external
- McCain Foods owns a number of intellectual property rights that include trademarks and patents. These allow
it exclusivity over its products and competitors cannot copy or reverse engineer them.
- McCain Foods is a brand that has been in the market for years, and people are aware of it. This makes its
brand awareness high.
- Its products have maintained quality over the years and are still valued by customers, who find it as good
value for the amount of money that they pay.
- Partnerships: Strategic partnerships are established by McCain Foods with its suppliers, dealers, retailers
and other stakeholders. This allows it to leverage them if need be in the future.
Weaknesses of McCain Foods
- Research and Development: Even though McCain Foods is spending more than the average research and
development expenditure within the industry, it is spending way less than a few players within the industry
that have had a significant advantage as a result of their innovative products.
- High Day Sales Inventory: The time it takes for products to be purchased and sold are higher than the
industry average, meaning that
McCain Foods builds up on inventory adding unnecessary costs to the business.
- Rented Property: A significant proportion of the property that McCain Foods owns is rented rather than
purchased. It has to pay large amounts of rent on these adding to its costs.
- Low current ratio: The current ratio that shows the company’s ability to meet its short term financial
obligations, is lower than the industry average. This could mean that the company could have liquidity
problems in the future.
- The company has low levels of current assets compared to current liabilities, and this can create
liquidity problems for it in operations.
- Cash flow problems: There is a lack of proper financial planning at McCain Foods regarding cash flows,
leading to certain circumstances where there isn’t enough cash flow as required leading to unnecessary
- Integration: McCain Foods's current structure and culture have resulted in the failure of various mergers
aimed at vertical integration.
- Diversification in the workforce: The workforce at McCain Foods is concentrated with mostly local workers,
and low amounts of workers from other racial backgrounds. Lack of diversification makes it difficult for
employees from different racial background to adjust at the workplace, leading to loss of talent.
- Market Research: McCain Foods has not conducted market research within the market that is serves since the
past 2 years. As a result, it is making decisions based on 2 years old data, while customer needs may have
evolved over time.
- High employee turnover rates: McCain Foods has a higher employee turnover rate compared to competitors. This
means that it has more people leaving the job, and as a result, it is spending more on training and
development as employees keep leaving and joining.
- Quality Control: McCain Foods has a lower budget for its quality control department than competitors. This
leads to lack of consistency and the possibility of damage to quality across its various outlets.
- Lack of legal experience and legal department employees are not highly qualified.
- A few products have a high market share, while most of the products have a low market share. This reliance
on a few products makes
McCain Foods vulnerable to external threats if these few products suffer for any reason.
- The workload is a high per worker as there are fewer workers than the actual work required. This puts
workers under psychological stress and is likely to be less productive.
- Worker morale is low due to company culture and politics that have grown in recent years.
- Competition and qualified employees have been leaving the organisation in recent years, which could mean a
shortage of good talent for the company in the upcoming years.
- The decision making is highly centralized, and decisions by teams need to be approved by certain
officials. This reduces efficiency in operations by making them more time consuming. It also leads to
- The performance appraisal is not in a systematic manner. People are often not appraised for their
performance. This leads to lower work morale and lack of promotion opportunities for employees.
Opportunities of McCain Foods
- Internet: there has been an increase in the number of internet users all over the world. This means that
there is an opportunity for
McCain Foods to expand their presence online; by using the internet to interact with its customers.
- E-commerce: There has been a new trend and a growth in sales of the e-commerce industry. This means that a
lot of people are now making purchases online. McCain Foods can earn revenue by opening online stores and
making sales through these.
- Social Media: there has been an increase in the number of social media users worldwide. The three social
media platforms; Facebook, Twitter and Instagram, have shown the greatest number of increase in monthly
active users. McCain Foods can use social media to promote its products, interact with customers and collect
feedback from them.
- Technological developments: technology comes with numerous benefits among many departments. Operations can
be automated to reduce costs. Technology enables better data to be collected on customers and improves on
- There has been an increase in average household income along with an increase in consumer spending
following the recession. This will result in growth in McCain Foods’s target market with new customers that
can be attracted towards the business.
- Population: the population has been growing and is expected to grow at a positive rate for the upcoming
years. This is beneficial for McCain Foods as there will be an increase in the number of potential customers
that it can target.
- Inflation: The inflation rate has been low and is expected to remain low in the next two years. This is an
McCain Foods as its cost of inputs would remain low for the next two years.
- Interest rate: Lower interest rates than compared to previous years provides an opportunity for McCain Foods
to undergo expansion projects that are financed with loans at a cheaper interest rate.
- Green government drive: this provides an opportunity for McCain Foods for the sale of McCain Foods's products
to federal and state government contractors.
- Transport Industry: the transport industry has been flourishing in the past few years, and shows growth
potential in the future. This has reduced the costs of transportation, which is beneficial for McCain Foods as
it will lower its overall costs.
- Tax policy: the governments’ reduction in tax rate is beneficial for McCain Foods as a lower amount would be
expensed out as a tax.
- The government has also announced a subsidy on the sale of environmentally friendly goods in this sector.
McCain Foods can focus on these environmentally friendly products and make use of this opportunity.
- Tourism: growth in tourism is beneficial for McCain Foods as it will provide new potential customers that it
can target in order to gain market share.
- Skilled workers: increase in education and training by numerous institutes has increased the amount of
skilled labor available within the country. This means that if McCain Foods is able to hire skilled labor, it
would have to spend less on training and development, therefore, saving costs.
- The growth in consumer spending in the economy is likely to increase consumption for McCain Foods's
- A number of new niche markets have opened up that are growing. McCain Foods can sell products in these
markets and take advantage.
- Globalisation: Increased globalisation does not restrict McCain Foods to its own country. It can extend its
operations to other countries, entering into these markets and making use of the opportunities that lie in
- Consumers within the industry are becoming more conscious of health, and this is a segment that is
growing. McCain Foods can take advantage by manufacturing products that are beneficial to customer's health.
- Trade barriers have been reduced on the import of goods. This will reduce the costs incurred on inputs for
- Regulations have loosened in recent years making it easier for businesses to carry out their operations.
Threats of McCain Foods
- Technological developments by competitors; New technological developments by a few competitors within the
industry pose a threat to
McCain Foods as customer attracted to this new technology can be lost to competitors, decreasing
McCain Foods’s overall market share.
- Suppliers: The bargaining power of suppliers has increased over the years with the decrease in the number
of suppliers. This means that the costs of inputs could increase for McCain Foods.
- New entrants: there have been numerous players that have entered the market and are gaining market share
by gaining existing companies’ market share. This is a threat to McCain Foods as it can lose its customers to
these new entrants.
- Increasing competition: there has been an increase in competition within the industry putting downward
pressure on prices. This could lead to reduced revenue for McCain Foods if it adjusts to the price changes, or
loss of market share if it doesn’t.
- Exchange Rate: the exchange rate keeps fluctuating and this affects a company like McCain Foods that has
sales internationally, while its suppliers are local.
- Political uncertainties in the country prove to be a barrier in business, hindering performance at times
and making the business incur unnecessary costs.
- The fluctuating interest rates in the country do not provide a stable financial and economic environment.
- Consumer tastes are changing, and this puts pressure on companies to constantly change their products to
meet the needs of these customers.
- Regulations on international trade keep changing, and this requires compliance by companies if they are to
- Substitute products available are also increasing, which is threat collectively for the whole industry as
consumption of current products decrease.
- The rise in prices of fuel has increased in the input costs for McCain Foods. These costs have also
increased as other industries that provide inputs for this company also have suffered from increasing fuel
prices, thereby charging more.
- Increased promotions by competitors have been a threat for McCain Foods. On most media, there is more
clutter than ever, and customers are bombarded with multiple messages. This reduces the effectiveness of
promotional messages by McCain Foods.
- Constant technological developments require the workforce to be trained accordingly as the inability to
keep up with these changes can lead to loss of business for McCain Foods.
Limitations of the SWOT Analysis of McCain Foods
Even though the SWOT analysis is an effective tool, it has certain limitations as well.
- Its major limitation is the fact that there can be an overlap of strengths and weakness, with a single
factor being both a strength and a weakness. For example, a large number of outlets can be a strength in a
growing economy or a weakness if the economy is going through a recession.
- The matrix is not an end as it does not show how to achieve the objectives. It should be used as a
starting point to make strategic decisions.
- The assessment done through a SWOT analysis is a static one and does not take into consideration the
changes that take place in the competitive environment.
- The factors listed down in a SWOT analysis may be overemphasized by the company.
- There are certain interrelationships between the internal and external factors that the SWOT Matrix
Weighted SWOT analysis of McCain Foods
In response to the above mentioned limitations, a weighted SWOT analysis can be conducted for McCain Foods that
involves assigning weightage to each of the strengths and weaknesses mentioned in the SWOT analysis for
McCain Foods. It also involves estimating the probability of an event occurring in the external environment.
This allows managers to focus on the important factors, and give less consideration to the less important
The limitation of the weighted SWOT analysis is that it does not look at how holistically different factors
affect the business when combined.
Example of weighted SWOT analysis
For McCain Foods, the strength for strong distribution can be given a higher weight than the strength for the
skilled labor force.
Advanced SWOT analysis/SWOT Matrix
McCain Foods SWOT analysis lists down the strengths, weaknesses, opportunities and threats to any organisation,
but does not tell management what can be done by these. To overcome this limitation and help develop
strategies that are appropriate, an advanced SWOT analysis or TOWS matrix is used. This lists down the
Strengths-Opportunities (SO) strategies that involve using strengths to take advantage of opportunities. It
lists the Strengths-Threats (ST) strategies that involve using strengths to fight of threats. It involves the
Weaknesses-Opportunities strategies that involve converting weaknesses to strengths by using opportunities.
Lastly, Weakness-Threats (WT) strategies involve overcoming weaknesses to avoid threats.
- McCain Foods has a Strong Distribution network with a large number of outlets.
- It has a low-cost structure, which provides it with an advantage over the competition.
- It has a strong financial position with positive profits reported in the past few years. It also
has a strong asset base.
- It has a skilled labour force that is highly qualified, innovative and diversified.
- It has a strong presence on social media.
- A high proportion of property in use by
McCain Foods is on rent, and rental charges need to be paid.
- Low amounts of spending on research and development as compared to the competition.
- It has a high employee turnover rate, with low employee motivation and working morale.
- It has liquidity problems with low quick ratio; the level of current assets is less than current
liabilities. It also faces cash flow problems.
- Internet users are increasing around the world. E-commerce is also growing with the increase in
- Social media users are increasing worldwide.
- Household income is increasing and so is the consumer spending. Inflation in the economy is
expected to remain low.
- Growth in environmentally friendly products and services. Government is offering subsidies on
- Interest rates are low, which provides an investment opportunity for large projects.
- Increase marketing to attract consumers to spend (S1, S3, O3).
- Use its presence on social media for marketing and to attract customer towards its website (S5,
- Develop environmentally friendly products through innovation, at a low cost so that they could
be sold at a low price (S2, S4, O4).
- Market products at low prices by offering discounts. This would help increase sales in volumes
and is feasible due to low inflation and cost (S2, O3).
- Finance ownership of the property through low interest rate to increase the proportion of owned
property to rented property (W1, O5).
- Increase payrolls, provide incentive packages and benefits to employees to reduce turnover and
improve work morale. This could be possible as costs are low currently. (W3, O3)
- There is a threat of new entrants coming into the market.
- The exchange rate has been devalued.
- Fuel price has risen in recent years making inputs expensive.
- Competition within the industry is increasing.
- More substitute products are now available.
- Use a strong distribution network to reach out to customers and fight off new entrants into the
market (S1, T1).
- Use its strong financial position to invest in intellectual property rights. This would help
compete with increasing competition in the market (S3, T4).
- Use its innovative teams to find cheaper alternatives to fuel so that these could be used,
thereby reducing costs (S4, O3).
- Increase spending on research and development to enable McCain Foods to better compete with
competition (W2, T4).
- Provide incentives, increase engagement, or provide a better work environment to retain talent.
This will ensure that employees don’t leave and join competitors (W3, T4).
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