Environmental scan and SWOT analysis for competitive positioning

SWOT Analysis: Bed & Breakfast

Bed & Breakfast

Since 2011, a new quaint bed and breakfast business in California's central coast opens, called Charmed. Located in Santa Cruz, California along Monterey Bay, its meager beginnings wowed the locals, which created quite a demand. However, Charmed became concerned, as another nearby bed and breakfast business opened shortly thereafter. Undoubtedly, the wine country area was an ideal location that parlayed many other quaint and unique businesses, such as wine tasting establishments, coffee houses, art galleries, antique shops, and now six bed and breakfast homes. Charmed never conducted a thorough scan of its external and internal environment to assess its viability. If specified variables and contingencies were outlined, it would have heightened awareness as to the strategic direction that is needed for business sustainability. Viability and sustainability are key factors for business survival. Therefore, an effective research approach for a bed and breakfast venture begins with establishing a SWOT analysis. To enhance its competitiveness, Charmed must evaluate its strengths, weaknesses, opportunities, threats, and trends in the marketplace to improve its position.

Strengths

Assessing existing resources and capacities, by taking inventory of the organization's strengths is a prudent start. Charmed's location is prime. Santa Cruz is part of Santa Cruz County is located on the Pacific coast of California, just south of the San Francisco Bay Area, along the northern coast of the Monterey Bay. Santa Cruz County was one of the original counties of California, created in 1850 at the time of statehood. As of 2009, its population is Santa Cruz County has a population of about 266,776 with the following population spread: Santa Cruz City: 58,982; Watsonville: 51,882; Scotts Valley: 11,764; Capitola: 10,073. Approximately half (135, 936) of the population lives in unincorporated Santa Cruz County

(City of Santa Cruz 2009).

With a median income of $74,600, most residents work for private organizations and own their own home with a median purchase price of $742,000. Santa Cruz has a higher population of white citizens than the CA average with 56.6% compared to the state average of 42.5%. The complete Age group breakdown is as follows: 15 -- 24: 38,947; 25 -- 44: 80,299; 45 -- 65: 76,031; 65+: 23,743. With respect to gender, Santa Cruz County has slightly more females than males, with 50.1% females (133,475) and 49.9% males (133,300) (City Data, 2010).

As part of the business plan, an old 6-room Victorian home, was purchased and renovated. Working with a realtor was essential to ensure a comparative market analysis was conducted. With the realtor's guidance, obtaining favorable pricing will yield an acceptable return of investment. Hence, Charmed exercised due diligence during its research of the housing market with, ensuring that property's price was aligned with other B&Bs in proximity.

Weaknesses

Comparatively, Charmed's ranking with other bed and breakfast is not very strong because of constrained resources. Working capital is a primary concern, thus rendering challenges to add new services, such as concierge, to an upscale target population. Its perceived affluence does not align with the financial demands needed to stay competitive. Annually, tourism is ranked exceptionally high, but Charmed must be able to capitalize and capture potential tourists to increase its revenue. Hence, finding potential investors will be critical for sustainability; otherwise, Charmed will be closing its doors within the next couple of years.

Opportunities

Evaluating market opportunities for another bed and breakfast is necessary to determine if there is a niche to be filled. According to the Santa Cruz Chamber of Commerce, tourism will continue to grow, thus being a viable revenue source. Visiting the beach or boardwalk is the number one attraction. Attracting such affluent tourists will require a strategic move to creatively to fill a niche. Perhaps offering accommodation for small pets or a personal assistant service would appeal to some constituents. An effective customer survey forum would be focus groups, purely ingenious way to gather primary data.

Threats

Assessing threats or competition is crucial for being armed with the right information because being disarmed can be very costly if proper research is not conducted. By scanning online directories and consumer review sites, another historic bed and breakfast, called the Hind House, has garnered a market position catering to patrons staying longer than one week. However, it has an additional bed and breakfast for patrons staying shorter than one week. By operating two types of bed and breakfast establishments, it has captured two types of clientele.