Texas Roadhouse, Inc. SWOT Analysis / Matrix

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SWOT analysis is a strategic planning tool that can be used by Texas Roadhouse, Inc. managers to do a situational analysis of the company . It is a useful technique to understand the present Strengths (S), Weakness (W), Opportunities (O) & Threats (T) Texas Roadhouse, Inc. is facing in its current business environment.

The Texas Roadhouse, Inc. is one of the leading companies in its industry. Texas Roadhouse, Inc. maintains its dominant position in market by critically analyzing and reviewing the SWOT analysis.  SWOT analysis a highly interactive process and requires effective coordination among various departments within the organization such as – marketing, finance, operations, management information systems and strategic planning.


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The SWOT Analysis framework helps an organization to identify the internal strategic factors such as -strengths and weaknesses, & external strategic factors such as - opportunities and threats. It leads to a 2X2 matrix – also called SWOT Matrix.

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis / Matrix helps the managers of the Texas Roadhouse, Inc. to develop four types of strategies:

• SO (strengths-opportunities) Strategies
• WO (weaknesses-opportunities) Strategies
• ST (strengths-threats) Strategies
•  WT (weaknesses-threats) Strategies

SWOT Matrix Strategies Objective

The core purpose of SWOT matrix is to identify the strategies that a company can use to exploit external opportunities, counter threats, and build on & protect Texas Roadhouse, Inc. strengths, and eradicate its weaknesses.

Step by Step Guide to Texas Roadhouse, Inc. SWOT Analysis

Strengths of Texas Roadhouse, Inc. – Internal Strategic Factors

As one of the leading companies in its industry, Texas Roadhouse, Inc. has numerous strengths that help it to thrive in the market place. These strengths not only help it to protect the market share in existing markets but also help in penetrating new markets. Based on Fern Fort University extensive research – some of the strengths of Texas Roadhouse, Inc. are –

Read - Texas Roadhouse, Inc. Porter 5 Forces Analysis & Industry Analysis
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• Highly skilled workforce through successful training and learning programs. Texas Roadhouse, Inc. is investing huge resources in training and development of its employees resulting in a workforce that is not only highly skilled but also motivated to achieve more.
• Superb Performance in New Markets – Texas Roadhouse, Inc. has built expertise at entering new markets and making success of them. The expansion has helped the organization to build new revenue stream and diversify the economic cycle risk in the markets it operates in.
• Successful track record of integrating complimentary firms through mergers & acquisition. It has successfully integrated number of technology companies in the past few years to streamline its operations and to build a reliable supply chain.
• Strong Free Cash Flow – Texas Roadhouse, Inc. has strong free cash flows that provide resources in the hand of the company to expand into new projects.
• Strong dealer community – It has built a culture among distributor & dealers where the dealers not only promote company’s products but also invest in training the sales team to explain to the customer how he/she can extract the maximum benefits out of the products.
• Reliable suppliers – It has a strong base of reliable supplier of raw material thus enabling the company to overcome any supply chain bottlenecks.
• Strong distribution network – Over the years Texas Roadhouse, Inc. has built a reliable distribution network that can reach majority of its potential market.
• Strong Brand Portfolio – Over the years Texas Roadhouse, Inc. has invested in building a strong brand portfolio. The SWOT analysis of Texas Roadhouse, Inc. just underlines this fact. This brand portfolio can be extremely useful if the organization wants to expand into new product categories.

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Weakness of Texas Roadhouse, Inc. – Internal Strategic Factors

Weakness are the areas where Texas Roadhouse, Inc. can improve upon. Strategy is about making choices and weakness are the areas where a company can improve using SWOT analysis and build on its competitive advantage and strategic positioning.

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• The profitability ratio and Net Contribution % of Texas Roadhouse, Inc. are below the industry average.
• There are gaps in the product range sold by the company. This lack of choice can give a new competitor a foothold in the market.
• Days inventory is high compare to the competitors – making the company raise more capital to invest in the channel. This can impact the long term growth of Texas Roadhouse, Inc.
• Financial planning is not done properly and efficiently. The current asset ratio and liquid asset ratios suggest that the company can use the cash more efficiently than what it is doing at present.
• High attrition rate in work force – compare to other organizations in the industry Texas Roadhouse, Inc. has a higher attrition rate and have to spend a lot more compare to its competitors on training and development of its employees.
• The company has not being able to tackle the challenges present by the new entrants in the segment and has lost small market share in the niche categories. Texas Roadhouse, Inc. has to build internal feedback mechanism directly from sales team on ground to counter these challenges.
• Need more investment in new technologies. Given the scale of expansion and different geographies the company is planning to expand into, Texas Roadhouse, Inc. needs to put more money in technology to integrate the processes across the board. Right now the investment in technologies is not at par with the vision of the company.

Opportunities for Texas Roadhouse, Inc. – External Strategic Factors

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• New trends in the consumer behavior can open up new market for the Texas Roadhouse, Inc. . It provides a great opportunity for the organization to build new revenue streams and diversify into new product categories too.
• The new taxation policy can significantly impact the way of doing business and can open new opportunity for established players such as Texas Roadhouse, Inc. to increase its profitability.
• Economic uptick and increase in customer spending, after years of recession and slow growth rate in the industry, is an opportunity for Texas Roadhouse, Inc. to capture new customers and increase its market share.
• Decreasing cost of transportation because of lower shipping prices can also bring down the cost of Texas Roadhouse, Inc.’s products thus providing an opportunity to the company - either to boost its profitability or pass on the benefits to the customers to gain market share.
• Stable free cash flow provides opportunities to invest in adjacent product segments. With more cash in bank the company can invest in new technologies as well as in new products segments. This should open a window of opportunity for Texas Roadhouse, Inc. in other product categories.
• Opening up of new markets because of government agreement – the adoption of new technology standard and government free trade agreement has provided Texas Roadhouse, Inc. an opportunity to enter a new emerging market.
• Government green drive also opens an opportunity for procurement of Texas Roadhouse, Inc. products by the state as well as federal government contractors.
• Organization’s core competencies can be a success in similar other products field. A comparative example could be - GE healthcare research helped it in developing better Oil drilling machines.

Threats Texas Roadhouse, Inc. Facing - External Strategic Factors

• As the company is operating in numerous countries it is exposed to currency fluctuations especially given the volatile political climate in number of markets across the world.
• Liability laws in different countries are different and Texas Roadhouse, Inc. may be exposed to various liability claims given change in policies in those markets.
• Increasing trend toward isolationism in the American economy can lead to similar reaction from other government thus negatively impacting the international sales.
• Rising pay level especially movements such as $15 an hour and increasing prices in the China can lead to serious pressure on profitability of Texas Roadhouse, Inc.
• No regular supply of innovative products – Over the years the company has developed numerous products but those are often response to the development by other players. Secondly the supply of new products is not regular thus leading to high and low swings in the sales number over period of time.
• Imitation of the counterfeit and low quality product is also a threat to Texas Roadhouse, Inc.’s product especially in the emerging markets and low income markets.
• The company can face lawsuits in various markets given - different laws and continuous fluctuations regarding product standards in those markets.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of profits for Texas Roadhouse, Inc.   in those markets.

Limitations of SWOT Analysis for Texas Roadhouse, Inc.

Although the SWOT analysis is widely used as a strategic planning tool, the analysis does have its share of limitations.

• Certain capabilities or factors of an organization can be both a strength and weakness at the same time. This is one of the major limitations of SWOT analysis . For example changing environmental regulations can be both a threat to company it can also be an opportunity in a sense that it will enable the company to be on a level playing field or at advantage to competitors if it able to develop the products faster than the competitors.
• SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself.
• The matrix is only a starting point for a discussion on how proposed strategies could be implemented. It provided an evaluation window but not an implementation plan based on strategic competitiveness of Texas Roadhouse, Inc.
• SWOT is a static assessment - analysis of status quo with few prospective changes. As circumstances, capabilities, threats, and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix.
• SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. There are interrelationships among the key internal and external factors that SWOT does not reveal that may be important in devising strategies.

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Weighted SWOT Analysis of Texas Roadhouse, Inc.

In light of the above mentioned limitations of the SWOT analysis / matrix, corporate managers decided to provide weightage to each internal strength and weakness of the firm. Organizations also assess the likelihood of events taking place in the coming future and how strong their impact could be on company's performance.

This method is called Weighted SWOT analysis. It is better than doing simplistic SWOT analysis because with Weighted SWOT Analysis Texas Roadhouse, Inc. managers can focus on the most critical factors and discount the non-important one. It also solves the long list problem where organizations ends up making a long list but none of the factors deemed too critical.

Limitation of Weighted SWOT analysis of Texas Roadhouse, Inc.

This approach also suffers from one major drawback - it focus on individual importance of factor rather than how they are collectively important and impact the business holistically.

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Example of Weighted SWOT Analysis

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SWOT Worksheet & Template

If you like to do your own SWOT analysis or want to make your own Weighted SWOT SWOT matrix then feel free to download Fern Fort University SWOT Analysis Template.

References / Citations & Bibliography

• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• A. D. Chandler, Strategy and Structure (Cambridge, Mass.: MIT Press, 1962)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975);
• L. Wrigley, Divisional Autonomy and Diversification (PhD, Harvard Business School, 1970)
• R. E. White, Generic Business Strategies, Organizational Context and Performance: An Empirical Investigation, Strategic Management Journal7 (1986)