Autozone Swot Analysis

AutoZone SWOT Analysis

AutoZone's history began with the ideas of one man named J.R. "Pitt" Hyde III. He received a bachelor's degree in economics at the University of North Carolina. Pitt saw that people needed help with the upkeep of their vehicles so he opened Auto Shack on July 4, 1979, a retail automotive parts store. In 1987 the name Auto Shack was changed to AutoZone. In 1991 AutoZone's Stock, AZO, made its debut on the New York Stock exchange and became the first auto parts retailer to store customer warranties in a computer database. AutoZone is a Fortune 500 company that currently has stores in 48 states, Puerto Rico, and Mexico and has more than 65,000 employees. AutoZone's pledge is, "AutoZoners always put customers first! We know our parts and products. Our stores look great! We've got the best merchandise at the right price." (UNK, 2012)

AutoZone's main organizational strength has been their robust financial performance. According to Dow Theory Forecasts (2012), "Through downturns and upswings, AutoZone ($330; AZO) has delivered higher revenue for more than 20 straight years." The company continues to increase sales and revenue. AutoZone was able to accomplish this in 2011 even with gas prices up 25% and miles driven down 1%, which would suggest the need for AutoZone's maintenance and failure products to be in less demand. This was accomplished by offering superior customer service, products, and quality information over its competitors.

AutoZone acquired ALLDATA in 1996. ALLDATA is "the leading provider of original equipment manufacturer (OEM) automotive repair information and solutions." (UNK, 2012) This software allows AutoZone to access and diagnose automotive computer codes that stat what is wrong with the automobile. This is one of the many things AutoZone offers to its customers free of charge, where as many maintenance shops charge to have the car diagnosed. This helps AutoZone to create customer loyalty and provide better customer service. ALLDATA has given AutoZone a sustained competitive advantage over its competitors. AutoZone's automotive parts store competitors need to purchase this software from them in order to be able to offer the same service as what they have established.

AutoZone's main organizational weakness has been its litigations and legal proceeding. According to Massachusetts Lawyers Weekly (2012), "A consent decree approved by a federal judge is forcing a nationwide auto-parts retailer to adopt a religious accommodation policy after an employee at the chain's Everett location brought a complaint alleging discrimination when he began wearing a turban to work." In 2009 the decree forced AutoZone to adopt a formal policy for religious accommodations. AutoZone was also ordered to pay Mahoney Burroughs $75,000 and pay the attorney fees associated with the lawsuit. Recently AutoZone was ordered to pay John Shepard $100,000 in lost wages and $500,000 in punitive damages. Shepard excelled in all aspects of his job and received many awards in customer service, sales, and loss prevention. Shepard had a neck injury that made it hard for him to use a mop but all employees are required to perform janitorial duties. Shepard asked for an accommodation but the company refused. AutoZone can minimize this weakness by offering additional training to all employees and especially managers that are in charge of handling issues such as these. If handled properly in the beginning the company could have saved lots of revenue.

AutoZone has had a high employee turnover rate in the past years but are slowly working to improve it. Part of the reason for the high employee turnover rate is the low end benefits packages offered. They offer health insurance that is well below average. The benefits are offered immediately when employees are hired but the benefits are not the quality known to come from fortune 500 companies. The company requires employees to wear uniforms but does not supply them. The uniforms come out of the employees pockets. The pay is comparable to that of a fast food restaurant. Managers start with wages around $10 an hour. This is a very large company that can improve on the pay and benefits aspects.