Feasibility Study: Detailed Strategic Destination Risk Analysis for French Cuisine Restaurants

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Table of Contents

Introduction
Location and Company Profile
PESTLE Analysis
Market Analysis
Competitive Analysis
Conclusion and Recommendations
List of References

Introduction

Globalization has increased business competiveness. Presently, most corporations recognize the need to utilize comprehensive feasibility studies (Peebles & Wilson 2002, p. 34). This concept is also applicable in various global tourist destinations. French cuisine restaurants are important facilities in the hospitality industry. This report presents a feasibility study for companies with interests in establishing French cuisine restaurants.

The proposed location is Singapore. It is focused on a comprehensive strategic destination risk analysis. Its objective is to provide critical advice to the potential investors on the feasibility to venture in French cuisine restaurants. French cuisines provide critical services including meals and cocktails among several others.

The report contains a brief analysis of the proposed location, the business type and concept. A detailed environmental description is also provided. Furthermore, there is an analysis of the market size, the target clientele and other notable competitive factors. Lastly, a strategic analysis of business factors, conclusions as well as recommendations is provided within this report.

Location and Company Profile

Location Profile

Singapore is a small but highly advanced nation with a stable government. Singapore harbors an approximate population of five million people. Although Singapore is predominantly multicultural, English is extensively spoken. Despite its relatively small size, the country has emerged as an economic monster.

Its strategic location has enabled easy access by international tourists. As a result, the country experiences high levels of international visits. Perhaps, this explains the huge presence of contemporary tourist facilities within the country. Notably, for a long time, Singapore has emanated as the Southeast Asia’s highly contemporary and advanced city (Abeysinghe & Choy 2007, p. 19). Its business investment potential within the hospitality industry is overwhelming.

Amongst some of its unique factors include the blend of different cultures. This distinct racial tapestry provides the tourists with an extensive alternative for sightseeing. Generally, the city provides many culinary opportunities for tourist attraction. These factors contribute to Singapore’s cultural appeal.

The capacity of the city to provide luxury suits, hotels and delectable cuisines cannot be overlooked. The island is located within the South of Asia. The major island is bordered with other several small islands. Agreeable, political stability and peace are basic factors that promote fair development within the hospitality sector (Arthur 2001).

Observably, Singapore has gradually excelled in business and tourism over the past years. The outlined factors have made Singapore to be recognized as a potential model. Particularly, this is applicable to most emergent states. Indeed, Singapore is a potential global hospitality destination.

Company Profile and Concept

French Cuisine restaurant offers a variety of hospitality services for the tourists and other customers. The restaurants provide fresh and innovative dishes. These dishes are mostly of French, Italian or Asian origin. Furthermore, American accents are also provided within most French Cuisine restaurants. The culturally wide coverage of the French Cuisines is appropriate for the highly multicultural Singapore environment.

The French cuisines provide a temperate dining experience (4Hoteleirs 2009). The objectivity of the business is to offer a shared family or friends’ experience. There is utilization of high quality foodstuffs together with ingredients. Most companies employ highly skilled personnel to operate the French cuisine restaurants. The services within French cuisine restaurants are highly appropriate for business, family dinners as well as romantic tours.

Why Invest in a French Cuisine Restaurant in Singapore?

Singapore is a focal destination for global investors with interests in the hospitality industry. Situated within the peak of Malay Peninsula, the city’s tropical climate attracts most leisure and business foreigners annually. Singapore’s highly developed infrastructure increases the tourists’ capacity to visit several unique places (4Hoteleirs 2009). Because of this excellent infrastructure, the travelers are able to access all French cuisines within the island.

The clean and unique environment offers an amiable condition for peaceful business venture. Moreover, its political stability and government encouragement of foreign direct investments is welcome. Singapore has an award winning airport. Changi Airport offers suitable air links to all major global cities. In this context, Singapore experiences huge annual international travels. This is a potential market for hospitality investment within the country.

The high cruising competencies evident in Singapore is a basic indication. It depicts that the city has the capacity to provide unique market. The increasing multicultural composition of the country potentiates the urgent need for establishment of cuisines with international and multicultural appreciation. French cuisines are appropriate for cities with distinct style and trends. They are also better thriving within countries with multicultural and international tourist capacities (Mahtani 2011).

The French cuisine restaurants offer strategically located hospitality services. Apart from international tourism, the country’s capacity to offer efficient domestic tourism market is eminent. Generally, the highly transforming Singapore’s overall economy is a potential enabling factor for investment.

PESTLE Analysis

Political

The country practices a parliamentary democracy system of governance. Singapore’s politics has been dominated by the “People’s Action Party”, (PAP) since independence. Coupled with effective government policies, the harmonious political atmosphere is ideal for economic growth and investment. The government has a unique political culture. Most positions are appointed. The leadership approach follows the top-down strategy.

The PAP has played a critical role in ensuring economic stability (Lee 2000, p. 56). Perhaps, the absence of political dominion within Singapore explains the reason for its immense economic progress. Observably, there is minimal political interference in governance and public policy formulation.

This trend is also observed during policy implementation processes. The system of meritocracy ensures that authority is obtained through expertise and fidelity to the nation. The country also stands out as multicultural. Additionally, it is composed of diverse religions. Fairness is practiced during provision of vital services such as education and housing.

The president is the official leader of the Singapore state. On the other hand, the prime minister leads the government. The country has developed strategic plans to boosts its hospitality sector. In addition, the state considers strategic initiatives to increase potential opportunities for international investment (Toh & Tan 1998, p. 112). Observably, the country targets to transform the tourism sector into a fundamental revenue generator.

This development is projected to transpire by 2015. In its target, the government of Singapore intends to gain an approximate of $21billion. Additionally, it aims to attract about 17 million international visitors by 2015. The Singapore Tourism Board, (STB) has established a tourism roadmap that is properly benchmarked.

The roadmap outlines the development opportunities and mechanisms for the hospitality sector. The notable achievements can be attributed to the effective government policies. The increasingly supportive and innovative government policies on hospitality and tourism provide room for potential growth in the future.

The Hospitality Industry in Singapore Economy

Singapore harbors distinct hospitality and tourist sites. For instance, the Singapore Flyer remains as the globe’s biggest observatory wheel. This was launched in 2008. Apart from these, there are unique landscape features that have magnificent areas for sightseeing. The Marina Sands and Resorts World located in Sentosa provide distinct, contemporary and integrated hospitality facilities and services. There is an increasing competition within the hospitality sector.

The hospitality industry is one of the principal contributors of the national revenue in Singapore (Khan, Phang & Toh1995, p. 65). The government has increasingly polished its policies on hospitality and tourism industry. This is done with an objective to modernize and increase the level of international and domestic investment. There are numerous other exciting developments that have created stimulus impact on the hospitality industry.

The international arrival within Singapore in 2010 was projected at an approximate of 14 million persons. Presently, the standard number of foreigners expected in Singapore during any time is expected to increase. Generally, a 55 per cent increase has been recorded in the past few years. The sustainable development within this sector has forced the government to draw several other plans to increase the accommodation and tourism facilities in the future.

Singapore in the Economic Crisis

The involvement of Singapore’s economy within the international marketplace is notable. It is true that the global economic crunch had severe implications and impacts for most world economies (Koh & Mariano 2006, p. 46).

Evidently, Singapore was not spared. It is notable that Singapore’s economy remained relatively steady despite the severity of the impacts of the economic crisis in many neighboring states. Singapore also weathered the detrimental 2008 world financial crisis. Instead, the country emerged as a steadily growing economy in the entire globe. This forward trend was recorded in 2010.

Comparatively, 2010 was characterized by intensive struggles observed within globally established economies like the U.S.as well as Europe (Glick & Spiegel 2010). The hospitality industry is one of the major drivers of the Singaporean economy. Within the initial quarter of 2009, Singapore recorded a considerable contraction in its GDP rate. This was noted to be at 11.5 per cent. During this same period, the country registered a remarkable reduction in its non-petroleum exports.

Indeed, it is apparent that Singapore also tasted the murky waters of the global recession. The huge foreign exchange reserves that were created by Singapore sustained its survival. It is estimated that up to the present day, the country still holds a $170 billion worth of reserve fund. Notably, this advantage offered a flexible atmosphere for policy makers to solve the impacts of the financial crisis.

Economical

Singapore’s economy has potentially grown from the period of the great global financial crunch. In the past few years, the country’s economy has increased by a recorded approximate of 1.6 % annually. This has been recorded within its first quarters. In 2010, the gross domestic product was generally higher within the first quarter of the fiscal year. The government has projected increased economical growth in the preceding years.

It is critical to note that there have been instances of shrinking economic performance (Kennedy 2011). Particularly, this has been noted within the past few years during the global economic challenge. Singapore still remains optimistic of a recorded high development and growth rate. Effective government polices and political stability offer unique opportunity and ambient atmosphere for potential growth and investment in the future. This environment will provide a potential source of growth for the hospitality industry.

Socio-Cultural

The country has a distinct socio-cultural heritage. In Singapore, there is a combination of the contemporary lifestyle with the customary cultural beliefs and practices. Generally, it remains as a remarkable multicultural destination with English as the predominantly spoken language.

The mixture of Chinese, Asians, Indians and other races provides a perfect recipe for business investment (Arthur 2001). The government of Singapore has noted the potential growth within the hospitality sector. Consequently, in the last few years, there has been an establishment of modernized tourist destination facilities.

The Marina sand is one of the examples of such hospitality facilities. Indicatively, the establishment of French cuisine restaurants within Singapore will be appropriate. This is due to the extensive range of cultures that are predominant in the country.

There is a growing concern whether individuals with diverse cultural orientations within Singapore can adapt to the socio-cultural transformations. The issue of tourism and globalization is increasingly becoming eminent within Singapore. Therefore, there is need for the establishment and investment in globally sensitive businesses within the hospitality sector (MCutler, 2010). Investment in French cuisine restaurants will be appropriate in exploiting the eminent market opportunities.

The effects of modernization on individuals and families within Singapore are notable. The Asian tradition prevalent within Singapore has potentially been transformed and diffused due to the increased inclusiveness of other races. There are effective infrastructural networks within the entire state. This means that investors have the opportunity to locate their intended French cuisine restaurants within unique localities in Singapore.

Other social amenities including electricity, water and health services are also present. The operational social systems offer a basic ground for establishing a thriving business. Particularly, the presently increased instances of terrorist attacks have potentiated the need for high security (Bergesen & Lizardo 2004, p. 40).

This requirement is considerably appropriate within the hospitality sector. In respect to this, Singapore has developed effective policies addressing national security and tourism safety measures. Therefore, security is also guaranteed within the hospitality industry. All these socio-cultural factors provide a basic platform for establishment of a successful venture within the hospitality industry in Singapore.

Technological

The increased technological advancements have remarkable influences on business processes. The application of e-commerce cannot be undermined in this technologically competitive era (Kaynak, Bloom & Leibold 1994, p.25). The French cuisines must appreciate and implement appropriate technology in their processes. Social networking including the use of facebook and twitter are among some of the important ways of marketing.

Media marketing has potential opportunities for businesses to showcase their products or services (Woudernberg, 1991, p. 120). Singapore as an emerging powerful economy also has a huge potential for adoption of efficient technology. Through application of relevant technology, the French cuisine restaurants will be able to enhance customer booking and reservations. They can also advertise their products and attract several customers.

Legal

The Singapore government has effectively streamlined legal policies regarding land acquisition and business processes. There are flexible policies on foreign direct investment. Furthermore, the hospitality and tourism board offers relevant policies that safeguard foreign and domestic investors within the industry (Mahtani 2011). This provides an ambient environment for investment and trade within the sector.

The government has significantly reduced its restrictions on foreign direct investment. Particularly, this is notable within the hospitality sector. This is because the hospitality and tourism industry is regarded as one of the most vibrant and viable revenue generation areas. The STB provides various regulatory measures for the industry. Permission and licensing procedures are flexible and easy to accomplish. Apart from these, the taxation policy favors both the investor and the nation.

Environmental

The stable political environment is a positive factor for potential investors targeting Singapore. The government has recognized the strategic role played by the hospitality industry. Therefore, tourism safety Act has been implemented to ensure high security levels.

However, it is notable that the present global threats from terrorism require more comprehensive approaches. Security is an important aspect in enhancing successful business (Chung & Parker 2008, p. 279). The country is in the process of developing and amending existing policies on tourist security. Additionally, comprehensive counter terrorism policies are yet to be implemented. However, other basic social amenities and infrastructure such as health facilities are adequate.

Market Analysis

Singapore has continually endeavored to improve its hospitality and tourism industry over the past years. With a record of high tourist and international visitor turnover annually, it is indeed one of the global tourist destinations. The country has focused on the development of hotels.

Indeed, it is agreeable that there are relatively limited numbers of French cuisine restaurants that operate within international standards in Singapore. Some of the targeted areas of potential hospitality investment include the Chinatown, Southern Waterfront as well as the central Business District (Mahtani, S 2011).

Notably, the country has experienced four consequent years of successive development in its hospitality industry. Between 2004 and 2007, the country recorded increased cases of tourism receipt as well as international visitor arrivals. The normal occupancy as well as room rates has immensely grown within the last few years. This signifies a positive record in the consumer numbers for the intended French cuisine restaurant products and services.

In 2009 and 2010 a 23 per cent increase in the occupancy rate was been recorded (MCutler, 2010). In addition, the total revenue has also remarkably increased by 23 per cent as observed in 2006. This upward trend has increasingly been noticed in the consequent years. The market analysis clearly indicates that the country still remains a viable hospitality investment destination.

Competitive Analysis

Target Customer

Most consumers of French cuisine restaurant products are international travelers and tourists. Categorically, these include the American, Italian, Asian and even Indian tourists. The age category does not matter. However, honeymooners are categorically associated with high consumption and target rates.

Families on holiday and camping missions also include another group of targeted consumers of the services and products offered within the French cuisine restaurants. Most multinational corporations have also been identified as target groups (4Hoteleirs 2009). This is because they have huge budgetary allocations for employee retreats and meetings that usually require banqueting services.

Singapore being as a renowned investment destination would provide a good location for the French cuisine restaurant. Tourists from Europe, America, Asia and even Africa are highly targeted. Efficient services and products with global recognition must be offered to attract these target groups.

Competition

Competitive Advantage on Actual Competitors

Tourist hostels and hotels such as the Marina sands and Sensota are some of the actual competitors. The determination of the STB to establish new and innovative state-of-the art tourist boarding facilities also offer a remarkable source of competition (4Hoteleirs 2009). However, these actual competitors have a basic disadvantage. This is because they do not specialize in French cuisines and lack the present complete global touch.

The French cuisine restaurant has a competitive advantage in providing specifically specialized services with the taste of French. It provides a multicultural approach that uniquely stands out globally. Since this is a new venture, the French cuisine restaurant has the advantage to note the existing brand weaknesses notable within other existent hospitality facilities. In this regard, it has a potential merit.

Competitive Advantage on Potential Competitors

The major threats for the French cuisine restaurant are the global corporations that have operated for a long time in the Singapore hospitality industry (Kostova & Roth 2002, p. 230). With the growing demand within the tourism and hospitality sector in Singapore, it is possible that these multinationals are eyeing this venture. However, the French cuisine restaurants have the competitive advantage of unique experience and composition. The distinct approach of providing a variety of services with a multicultural appeal is important.

Nature of Ownership

The flexible foreign direct investment policy within Singapore promotes an individual or private company ownership. This is evident even with both international and domestic investors. Joint ventures with the local companies are also encouraged (ADB 2009). The STB include one of the agencies responsible for quality assurance and regulation of the businesses within the hospitality sector.

Sustainability Analysis

A rating scale indicating the level of severity and significance of the Pestle analysis indicates the variances within each identified factor. Basically, both negative and positive effects of the outlined factors are indicated in the report. For verification of sustainability issues, an individual may also conduct a manual count of the positive and negative points for each factor (Adams & Frost 2008, p. 300).

Rating helps to identify the most significant factor. A manual count of the factors discussed indicates a positive score in the matrix. Therefore, it may be concluded that the project is considerably sustainable.

Strategic Considerations

The multicultural approach is an important strategic consideration. This strategy is applied by the French cuisine restaurant. Generally, it is vital within the hospitality industry due to many reasons. In Singapore, the mixed cultural environment and intensive international travels provide a basic niche for development of the business.

The target population is generally wide. This explains why the approach of multicultural competency is appropriate. In strategic business management, corporations are advised to note the basic unique factors within their intended niche (Chung & Parker 2008, p. 275).

Conclusion and Recommendations

The sustainability analysis indicates that Singapore provides the best destination for French cuisine restaurant. However, there are important factors for consideration. Some of these factors include the effects of multiculturalism and globalization on businesses. Other important factors are security measures and terrorism threats that presently affect the entire global hospitality industry. Finally, the area of location of the restaurants must also be considered. Generally, a strategic location within the main island is appropriate.

List of References

4Hoteleirs 2009, S’pore’s RevPAR takes biggest hit in Q1. Web.

Abeysinghe, T. & Choy, M. 2007, The Singapore Economy: An Econometric and Future, Edward Elgar, Cheltenham.

Adams, A. & Frost, R. 2008, Integrating sustainability reporting into management practices, Accounting Forum, vol.32, pp. 288–302.

Arthur, A. 2001, Hospitality 2000-the people: A report on the second global survey of the hospitality industry’s leadership. Web.

ADB (Asian Development Bank) 2009, Enterprise in Asia: Fostering dynamism in SMEs. Web.

Bergesen, J. & Lizardo, O. 2004, International Terrorism and the World-System, Sociological Theory, vol. 22, no. 1, pp. 38-52.

Chung, H. & Parker, D. 2008, Integrating hotel environmental strategies with management control: A structuration approach, Business Strategy & the Environment, vol. 17, pp. 272-286.

Glick, R. & Spiegel, M. 2010, Asia and the Global Financial Crisis: Conference Summary. Web.

Kaynak, E., Bloom, J. & Leibold , M. 1994, Using the Delphi Technique to Predict Future Tourism Potential, Marketing Intelligence & Planning, vol. 12, no. 18, pp.18-29.

Kennedy, A. 2011, Global economic woes hit Singapore, Japan exports. Web.

Khan, Y., Phang, S. & Toh, R. 1995, The Multiplier Effect: Singapore’s Hospitality Industry. Cornell Hotel & Restaurant Administration Quarterly, vol.36, no.1, pp. 64-69.

Koh, W. & Mariano, R. 2006, The Economic Prospects of Singapore, Pearson Addison-Wesley, Singapore.

Kostova, T. & Roth, K. 2002, Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, vol. 45, no.1, pp.215-233.

Lee, Y. 2000, From Third World to First: The Singapore Story 1965–2000, Singapore Press Holdings, Singapore.

Mahtani, S. 2011, Defying Global Recession, Singapore Goes Upscale for F1. Web.

MCutler, R. 2010, Singapore shows its strengths. Web.

Peebles, G. & Wilson, P. 2002, Economic Growth and Development in Singapore: Past Perspective, Routledge, London.

Siriwardana, M. & Schulze, D. 2000, Singapore and the Asian Economic Crisis, ASEAN Economic Bulletin, vol. 17, pp. 233-256.

Toh, H. & Tan, Y. 1998, Competitiveness of the Singapore Economy: A Strategic Perspective, Singapore University Press and World Scientific, Singapore.

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