At this moment, Big Bread is one of the largest retailers of bread in the country. This organization can choose from several options. On the one hand, they can try to increase their presence in the market and subsequently face the opposition of large international competitors.
On the other hand, they can consolidate by merging with some smaller companies, for instance, with their franchisees. This paper is aimed at discussing the future strategies of this enterprise. In particular, it is necessary to focus on their external environment, competition, and the ways in which they can strengthen their position in the market.
The strategy statement
The strategy statement must reflect the main goals and priorities of the enterprise. In the case of Big Bread, the strategy statement can be as follows: to become the leading retailer of high quality bakery products in the domestic market. In the following sections of this report, we will explain the rationale for this objective.
The global trends and external environment
Overall, the main tendency among food manufacturers and retailers is to emphasize the nutritional value of their products, and, most importantly, their safety (McElhatton & Marshall 2007, p. 53). This tendency can be explained by the increasing monitoring by various governmental agencies.
Currently, food manufacturers have to meet the highest production standards. Additionally, modern customers have also become more aware about the risks of consuming unhealthy food (Budde, Felcht, & Frankemolle 2006, p. 100). Thus, by focusing on the healthfulness and nutritional aspects of their goods, these organizations try to create extra value. This tendency can be relevant to the management of Big Bread.
Additionally, we need to speak about the trend of many food companies to diversify their products. The representatives of baking industry also try to expand the range of their products that they sell to the customers (Suas, 2008, p. 122). For example, they often offer various kinds of bread-rolls, pastries, cakes, tarts, and so forth. To a great extent, this strategy enables them to increase their market share and attract new buyers.
Finally, one should bear in mind these organizations have to compete with large grocery retailers that are able to offer a wide scope of products at a reduced price. In this case, we can speak about such organizations as Wal-Mart, Kmart, Tesco, and so forth. The presence of such competitors prompts other food competitors to consolidate through acquisitions or merging.
This pattern can be observed in Australia, Europe, and the United States (Hui & Clark 2007, p. 946). This strategy is a response to the increasing economic instability and growing competition. These are the most important global trends that can very important to Big Bread.
Competitive analysis report
First, it should be noted that in recent years the main competitive strategy of Big Bread has been based on franchising and expansion of its distribution network. They added more than 300 stores by allowing small entrepreneurs to use their brand. This approach enabled them to increase their market share.
However, the local market has reached the so-called saturation point. At the given moment, Big Bread cannot expand any further without eroding the market share of larger competitors. One should bear in mind that the industry in which this organization operates becomes more consolidated.
For instance, the local market is dominated by three companies whose market share constitutes 25 percent. The main issue is that the competitors of Big Bread are owned by large international companies. This organization is hardly able to compete with them by means of price-differentiation. This is the reason why it is dangerous for the Big Bread to encroach on their market share.
It seems that the main venture opportunity for this company is to form alliances with the main suppliers of flour, salt, sugar, baking soda, and so forth. This will enable them to better monitor the quality of the products and expand their production line. More importantly, they should merge with smaller bakeries in order to increase the scale of their production. Thus, we can say that they scale and scope will be the most important preconditions for the success of Big Bread.
The questionnaire and capabilities report
In order to better understand the capabilities of this organization, the main stakeholders of Big Bread should answer some of these questions. They are as follows:
What are the main strengths of the organization?
To what extent are customer’s loyal to it?
What attracts the customers to the products of Big Bread, for instance, variety, quality, the location of shops, or something else?
What are the areas of this company that need improvement?
How can this company be compared to major competitors? What are the obstacles preventing Big Bread from increasing their market share?
What kind of partnership or alliances can increase the position of Big Bread in the market?
These questions will be particularly important for the capabilities report. They are related to the structure of this company, its products, competitive environment, and strategies.
Overall, it is possible to single out several capabilities of this organization. First, one has to speak about its large distribution network. As it has been pointed out they added 300 hundred stores within the last three years. To a great extent, it gives them competitive advantage over other enterprises. Moreover, one can also assume that their brand is quite familiar and popular among the local customers. The popularity of their brand is the main reason why many small entrepreneurs want to become their franchisees.
Organization direction report
At this stage, the main focus of the company should be the variety and quality of their products. They can enlarge their market share not only by increasing the number of shops. They can also do it by offering a wider range of breads and pastries, for instance, croissants, bagels, baguettes, buns, and so forth. By adopting this marketing strategy the company will be able to attract a larger number of domestic clients.
This enterprise should increase the scope of production and maintain their high quality (Grant, 2005, p. 323). This is why in the previous section we have argued in favor of forming strategic partnership with the suppliers of flour, salt, sugar, and so forth. These are the main goals that they need to attain. Furthermore, by consolidating with its franchisees and other smaller bakeries, this company can intensify their production rates.
Summary
Big Bread has to adjust itself to the forces of competition. Their market tends to be more and more consolidated. Under the circumstances, the best strategy for them is consolidation and expansion of the scope of their products. In this way they will succeed in increasing their market share. Most importantly, they will manage to withstand the completion of international retailers.
References
Budde, F., Felcht, U., & Frankemolle H., 2006 Value creation: strategies for the chemical industry. Munich: Wiley-VCH.
Grant R., 2005. Contemporary strategy analysis. London: Wiley-Blackwell.
Hui, H. & Clark. S., 2007. Handbook of Food Products Manufacturing: Principles, bakery, beverages, cereals, cheese, confectionary, fats, fruits, and functional foods. NY: Wiley-Interscience.
McElhatton, A, & Marshall R., 2007. Food safety: a practical and case study approach. NY: Springer.
Suas, M., 2008. Advanced bread and pastry: a professional approach. NY: Cengage Learning.
Panera Bread Company is one of the leading firms in bread industry in the United States. However, the management should be able to come up with a detailed plan of how to manage the dynamic market in order to achieve the desired success.
For this to be possible there is a need to have a clear mission statement that would help define the path that a firm plans to take in achieving its success. Mission statement shows the promises that a firm makes to its customers, and defines how it seeks to keep this promise. The following mission statement would be appropriate for this firm.
We strive to be the leading firm in offering quality bread and related products not only in the United States but also in other regions around the world. To achieve this, we believe in offering products that meets standards of our customers. We also plan to open a number of franchised cafeterias in various parts of the world to help in this growth.
The above mission statement defines the path that this firm plans to take in meeting its objectives in the market. The market is increasingly becoming competitive, and it is only firms that have clear objectives that can be able to withstand the competition. The dynamism also poses a serious challenge because it forces firms to be able to change with the changing market forces.
The principles defined in the mission statement would be a clear indication of the extent to which a firm is willing to go in offering quality to their customers as a way of making them satisfied. It is necessary to understand how the above mission statement meets this criteria. In the first part of this statement, it is clear that the firm’s main focus is to offer quality products to its customers.
This is important in attracting more customers to make purchase of the firm’s products. It may not be easy to achieve this because it would require the firm to make some sacrifices in order to offer this quality. In this first part of the mission statement, it is also clear that the firm seeks to go beyond the current market boundaries of this firm in order to explore the world market. As stated in this statement, the firm will not be ignoring the current market.
It will continue serving the current market while looking for other foreign markets abroad. Expanding the market share beyond the current markets means that this firm will have a higher capacity of dealing with competitors in the market.
The second part of the statement explains how the firm plans to meet the promise of offering quality products to the firm. It states that Panera Bread Company will be keen on the standards in the market. This statement emphasizes on meeting and even exceeding market standards when meeting customers’ needs.
This section explains how quality will be met by this firm. The last part of the mission statement explains how the firm plans to achieve its objective of moving to various parts of the world. It may not be an easy task moving to foreign markets around the world. However, this firm must find a way of doing so because of its commitments in the first part of the statement. This section explains that this will be achieved through franchising.
Panera Bread is a company that has a chain of caterings all over the USA. The executive chairman of the board, Ron Shaich, has decided to open a nonprofit restaurant in St. Louis that declares “Take what you need, leave your fair share”.
The restaurant offers bakery products and customers pay the price they consider appropriate, or, those who can’t pay, are able to get food by donating their time. One of the main ideas of this restaurant is to sell day-old baked goods other restaurants of the chain produce (Panera: Pay what you can afford, 2010). Sharing experience is one of the main problems the organization faces.
Dwelling upon the main idea of this nonprofit restaurant, it is important to state that it offers people bakery products which are not paid to the cashiers as in usual restaurants. Cashiers offer only the information about their cost and receive credit cards. When people have selected what they want, they are not offered to pay their bill, they are asked to donate. Those who have no money have an opportunity to donate their time, to work in the restaurant.
Money donated by the visitors is delivered to different communities which need support. Volunteer work is extremely important as it allows the company not to pay salaries and deliver more money to those who really need it (Horovitz, 2010). Sharing experience and knowledge is considered to be one of the main problems the community of practice faces, and the following steps should be considered to solve it.
First of all, the community of practice should identify the goals, objects and the scope of work to do. Considering the case under consideration, it is necessary to identify the organizations in the area which want to have the same practice. According to the number of objects, a group of people should be created which should be aware of the main principles of this kind of business. The volunteers who participated in the restaurant business may be considered as the best candidates.
Secondly, it is necessary to create a plan according to which the information is going to be shared. Specific meetings, Internet forums or leaflets with the specific data are the central means of sharing the information among those who are interested in the affair.
The managers of the restaurant should always be ready to answer the questions asked by those who are interested in running this kind of business. Panera Bread is not the first company which has decided to run this kind of business, so the information from other companies may be interesting. The Internet is a great opportunity to get it.
The policy of actions in the relation to the sharing of knowledge and experience in running donation business is created on the basis of the community of practice. It does not have any financial basis as this organization is nonprofit.
The community of practice is “made up of individuals who are informally bounded to one another through exposure to a similar set of problems and a common pursuit of solutions” (Daft & Lane, 2008, p. 216). Keeping in mind this specific definition, it is possible to create a set of nonprofit organizations which are aimed at helping foundations which need specific assistance or financial support.
Thus, it may be concluded that Panera Bread nonprofit restaurant based on donations and volunteer work may become a center of the community of practice aimed at helping other companies create the same kind of business in different spheres. Information sharing may be considered as the main problem the company may face, but it is important to remember about the communities which are always ready to help.
Reference List
Daft, R. L. & Lane, P. G. (2008). The leadership experience. Stamford: Cengage Learning.
Horovitz, B. (2010, may 18). Non-profit Panera cafe: Take what you need, pay what you can. USA Today. Web.
Panera: Pay what you can afford. (2010, May 18). St. Louis Business Journal. Web.
Panera bread is a product of Panera Group that specializes in baking of breads, doughnuts, cakes and other bakery products. Over the years, the company has succeeded in offering high quality products in the entire North America.
The company’s financial performance has been significant, a progress driven by high sales volume due to high customer base and the company’s ability to serve them well.
The following brief report tries to examine the company’s financial performance, its strengths and weaknesses as well as the strategies it has been applying to beat the other market competitors and still remain the consumers company of choice.
This is not to say the company is free from troubles or the company is not facing any problems. One of the major problems facing the company is the stiff competition from other market participants and this may threaten the company’s survival unless appropriate counteractive measures are adopted.
The company’s overall goal of producing great bread is highly being compromised and the best strategy that the firm can now use is the one that can guarantee the organization’s survival. The possible course of action needs full implementation if indeed any tangible benefits are to be realized.
Though the company has tried as much as it can to beat its competitors, a lot remains to be done to enable it achieve its set goals and objectives. This call for change of strategies and a different direction need to be taken.
This means looking for new customers and expansion of its business activities will come after the existing customer retention strategy has worked out successfully. The organization has already large customer base who can guarantee future good prospects if well maintained.
Introduction
It is the prime goal of every organization to achieve high and perpetual revenue growth. This has been the main driving force for Panera Group since its establishment in the year 1981. Revenue maximization and costs minimization are the only strategies that can help a profit-minimizing firm achieve this goal (Wheelen & Hunger, 2010).
Other non-financial concepts have to be put in consideration since they are equally important in maintaining a good reputation for the company as well as improving its financial performance for instance customer satisfaction and community social responsibility.
The most successful firms have devoted their resources towards meeting customer needs and balancing their growth and development with environmental protection to gain an economic status commonly referred to as circular economy. In addition, market risks have to be well understood and the means to deal with them appropriately put in place.
Problem Statement
The major problem facing the company at hand is the rising competition and the economic uncertainties mostly recession and depression (Wheelen & Hunger, 2010). The recession has not only affected Panera restaurant section but also the entire bakery industry.
Only the efficient and strong market players are able to achieve under these hard economic times. The competition is highly threatening the existence of Panera and the only solution to combat this is to use the best strategies ever to avoid it.
How Panera Company has survived the prevailing Economic Recession
Since the beginning of US recession in late 2007, many bakery companies have suffered to a greater extend. There has been decline in revenues and loss of customers on the part of the baked products, which is partially caused by the rising unemployment that accompanied the recession.
Despite the challenges Panera faced in containing this hard economic time, the Group’s revenue rose by 24 percent and at the same time it added 191 café-bakeries (Panera, 2006). In addition, the workforce rose by 20 percent and was able to recruit 4001 extra workers.
From the look of things, it is as if the company took the period as an opportunity since while making this significant progress, the entire US restaurant industry registered an overall drop in sales by 2 percent in the year 2009 that included 4.7 percent decline at casual restaurants.
During this recession period, Panera had to act differently to convince its consumers devote their spending on their products. As noted out by one of the company’s associates, the best time for business expansion and better performance is during recession while the worst time to grow is when there is prevalence of booms (Shaich, 2003).
During the booming periods, the company tightened its real estate standards. One of the common struggles during the beginning of recessions is that real estate markets become under disruption just like the residential housing market. During this recession, commercial landlords demanded the rents they would get six months earlier.
This affected the company’s productive space to some extend and getting extra stores in which the company would operate was a major problem. They had to wait until the economy improved slightly and in the year 2010, the company built high-class cafes that boosted the company’s performance.
This has been accompanied by high sales volume and increased revenues. As the company was looking for the best means on how to survive the recession, other competitors were talking on how to pull costs of the menu.
According to Panera Bread chairman, pulling costs out at a faster rate than sales fall off is likely to tax customers more. Recession represented a greater change for Panera since the company got an opportunity to create substantial competitive differentiation and thus increasing its competitive advantage (Shaich, 2003).
When all the market competitors pulled back, Panera invested heavily in the customer experience, marketing strategies, operations development, and product development.
Panera’s Counter- strategies in fighting increasing Competition in US
The increasing global competition has posed a potential threat to many profit maximizing firms. The organization’s revenue generation is being compromised. The situation is severe in perfect competition markets where there are many firms producing similar good. Panera Company is not an exception in this case.
Since competition is unavoidable, the firms need to adopt strategies that will increase their chances of survival (Wheelen & Hunger, 2010). However, the strategies to be used depend on the nature of the competition.
In the recent past, Panera Company has been facing stiff competition from its rival though it has somehow succeeded in beating them from the company’s financial performance outlook.
Quite number of eateries in the United States has upgraded their quality and thus improving the value of products and services they are offering. Many people have always believed that cheap prices will attract many consumers for particular products.
According to Panera, this is not the case since as long as the product has the right appeal and the highest quality is maintained for that particular product, consumers will go for it regardless of the price charged. Many consumers do not care how cheap a product is, what matters to them is quality.
The chairman of Panera asserts that his company has been able to offer high quality baked products across the United States than the company’s key competitors. Nevertheless, the prices are not expensive to an extend of discouraging the potential consumers.
The price of a commodity must always equal the value attached to that particular product (Wheelen & Hunger, 2010). The company has been providing, protecting and having price that is manageable by consumers and avoidance of unnecessary price fluctuations has been guiding philosophy.
During the recession, when market competitors were talking of pulling out their costs, their restaurants were characterized by long queues and the tables in their restaurants had dirty dishes. This was an advantage to Panera as it continued to invest in labor improvement in their cafes that led to subsequent productivity.
The quality of foods is excellent. When the other competitors tried to pull back, the difference between the Panera and its competitors widened. In the market share, the same-store sales tripled during the recession (Panera, 2006). Currently, Panera is running 1467 bakery-cafes in Canada. This is an expansionary plan aimed at opening many outlets across many parts of the world.
SWOT Analysis
The financial strengths of Panera can easily assist it in encountering the problems it is facing and the ones it is likely to face in future. For instance, economic problems such as recession and depression can only be handled by those firms with strong financial base.
In the financial year 2010, earnings per share grew by 30 percent. In addition, shareholder value increased by $1.9 billions (Panera, 2006). This progress can be primarily attributed to high product differentiation that has boosted the organization’s competitive advantage.
The other strength that the company can boast of is its ability to produce high quality products and its operational size that enables it to enjoy the economies of scale. So many opportunities are available for the company to increase its productivity and expansionary process.
The competitor’s inability to produce high quality products and their highly costly production processes presents an opportunity to Panera. Despite the potential strengths and opportunities, there are still weaknesses and threats that may not favor the smooth production of Panera.
One of the weaknesses of Panera bread is its inability to successfully implement important strategic initiatives. The success of this company is highly dependent on these strategies and may bring about devastating effects if not properly implemented.
The other weaknesses are the company’s inability to protect its trademarks and high rate of its brand damage that has ruined its reputation. The threats facing the company are increased costs of food and other supply costs (Panera, 2006).
Supply complications in its fresh dough facilities and the prevailing hard economic situations that are so uncertain together with the increased competition are also possible threats.
Alternative course of action
Having identified the major problems facing the Panera bread Group, the company can take a different direction that will see its performance change to a greater extend. Panera can diversify its markets and distribution channels across many countries and in particular countries that are likely to have stable economies.
This will cushion out the firm from the effects of recession or depression in the event that these happenings are taking place in particular countries. It is a form of horizontal integration. Alternatively, the company may opt to apply vertical integration (Wheelen & Hunger, 2010).
This may be enhanced through acquiring huge land that will see the company grow its own wheat, do the processing to produce its own floor that will be used for bakery purposes.
If possible, the company may create efficient distribution and marketing channels that will be handled by the company itself. The integration of such activities will see the company cut down its operational costs by a great percentage.
Recommendation
From the analysis of Panera Group, it is recommendable that some aspects need to be adjusted if in deed the company plans to maintain its existing image and good performance. Product differentiation and improvement of its services must be encouraged in order to increase the firm’s competitive advantage.
Creation of new brands will also help the firm increase the volume of sales since consumers are always interested in new brands (Wheelen & Hunger, 2010).
Again, the marketing of the company’s products need to be modified for instance the adoption of e-commerce in order to make the marketability easier. The interested consumers may be in a position to order the products they require online.
Conclusion
Panera group has had impressive financial results and significant performance ion the past years. Despite the progress, the company is likely to face some problems that are likely to disrupt its operations (Panera, 2006). The company has the ability and capacity to employ the available resources to combat any problem like competition and recession.
Founded in 1981 by Ron Shaich and Louis Kane, the famous Panera Bread Company started operating under the brand name Au Bon Pain Co. Inc. It first grew along the United States’ east coast before it was internationalized between early 1980’s to 1990’s.
This immense growth had the implication of making the company a dominant business operator in the category of bakery-cafe. In 1993, Au Bon Pain Co. Inc. bought St.Louis Bread Company. At the time of this acquiring, St.Louis Bread Company had 20 bakery cafes. In 1993 to 1997, the company recorded an increment of 75 percent in its mean unit volumes.
This prompted the alteration of the brand name from Au Bon Pain Co. Inc. to Panera Bread Company. In 1997, the Panera Bread Company recognized its capacity for growth to become a leading bread maker in the United States. However, to achieve this noble potential, heavy investment of monetary resources was required.
Indeed, in 1999, the company completed a transaction involving a sale of the business units of Au Bon Pain Co., Inc. only remaining with those of the Panera Bread Company. With regard to Panera Bread, after the completion of this transaction, “the company’s stock has grown thirteen-fold, and over $1 billion shareholder value has been created” (Para. 5).
The company acquired the title of the best performer under the category of restaurants with 1, 5, and 10-year shareholders’ returns. Later, in 2007, Panera Bread Company also purchased paradise bakery and cafe. As Panera Bread points out, “in March 2012, the company announced that Bill Moreton and Ron Shaich would both assume the roles of chief executive officers” (Para. 2).
Currently, Shaich acts as the co-CEO and the chairperson of the board of directors. On the other hand, Bill Moreton is the co-CEO and the president of Panera Bread Company. As at September 2012, the company had established business presence in 44 states where it operated 1,625 bakeries.
SWOT Analysis
SWOT analysis involves strategic planning approaches engineered to evaluate strengths, limitations, and opportunities without negating threats that businesses face in their operation environment. Strengths are the traits that make it possible for an organization to have an advantage in comparison to other organizations.
For the case of Panera Bread Company, the strengths include appealing and attractive food menus that comprise a variety of products from which customers can choose. According to Panera Bread Company Quarterly Report on Form 10-Q, these products include “fresh baked goods, made-to-order sandwiches on freshly baked breads, soups, salads, custom roasted coffees, and other complementary products” (10).
Due to the company’s strong financial position, it has managed to invest in cozy cafes, which create a smoothing environment for the customers. This has the impact of making the company build a strong customers’ experience.
The strength is implied in the company’s statement of goals, missions, and aims in which it stipulates that the central goal is to ensure that Panera Bread Company is the first choice of all customers who crave for sandwiches, soup, and salads. In addition to these strengths, the company has an enormous distribution ability covering a large geographic area (44 states as of Septembers 2012).
It has products having relatively better quality while compared to its competitors. It has differentiated its services with the rival companies besides accumulating customers’ beliefs that the company stocks fresh breads. Besides, it has developed a powerful and winning business strategy. Amid the above-cited strengths, Panera Bread Company encounters some weaknesses.
These include the traits of Panera Bread Company that place it at a disadvantage in comparison with rival companies operating in the same industry. One of the weaknesses is the heavy investments in bread centric line of business, which means that Panera Bread Company has a narrow product line.
Other weaknesses are higher prices at the company-owned stores in comparison to the franchises, declining customer service, and customer preferences. In particular, alterations of preferences and customer tastes may make them consider opting for buying more nutritious food items in other restaurants.
Contextualization of this weakness introduces some chances that the company may consider as existing external chances, which, while utilized, may make it improve its performance. They include international expansions and opening of new outlets to tap the growth potential within the suburban markets.
The fact that the company has a weakness of narrow product line introduces an opportunity for introduction of new items in the product line. On the other hand, Panera Bread Company encounters external chances that impair its performance. These are threats to the operation of the company.
They include lawsuits, government regulations, and competition from rival companies such as Sturbucks and Mc Donald among other local and international restaurants offering fast foods. In the context of lawsuits and drawing from Panera Bread Company Quarterly Report on Form 10-Q, the company admits that it is “subjected to other routine legal proceedings, claims, and litigations in the ordinary course of its business” (10).
This requires heavy commitment of financial resources and management attention. Saturation of the market creates another incredible threat. The company would encounter challenges in getting strategic places for opening new outlets consistent with its strategic plan of enhancing profitability through rapid expansion.
Strategies to attack major problems faced by Panera Bread
Panera Bread Company encounters several problems in the derivation of its strategic plans to enhance a continuous growth in an environment that is saturated by a variety of companies offering similar or substitute products. One of the problems of the company is that it offers products in its company-owned stores at prices that are higher than the franchises.
A significant reason for these differences is the need to gain higher profit margins to cater for the costs of running the business-associated issues that are extrinsic from the control of the company such as the cost of settlement of lawsuits filed against the company by past employees.
For instance, in 2009, Nick Sotoudeh filed a case costing the company 5 million dollars in its settlement (Panera Bread Company Quarterly Report on Form 10-Q 2 4). In 2010, Corey Weiner, Caroll Ruiz, and Denarius Lewis filed another case against the company costing 1.5 million dollars in its resolution (Panera Bread Company Quarterly Report on Form 10-Q 2 4).
To meet this cost to ensure that Panera Bread Company is able to offer bread at its own stores at competitive prices, it is crucial that the company results to intensive growth. On the positive side, growth is vital since it will provide the necessary economies of scale. This means that the company will remain profitable amid making small profit margins for every product sold.
The negative side of this strategic move qualifies as a technique of enhancing growth such as forming joint ventures with other big competitors such as McDonald who will deprive the company of its executive control power. Panera Bread Company is likely to experience the problem of reduced profitability due to narrow product lines. To resolve this problem, it is crucial that it focuses on widening its product lines.
This strategic move will, on the positive side, help in drawing more customers to its stores. Hence, the revenue will also hike. On the other hand, the strategic move will increase the logistical costs and other costs associated with service delivery at the stores. Therefore, under certain circumstances, increment in revenues would be outweighed by the resulting additional costs.
Somewhat different from the above two strategic moves, to address the challenge of how to increase revenues, the company can resolve to recruit more franchises besides opening more stores that are company-owned. On the positive end, this would increase revenues.
On the other hand, increasing the number of company-owned stores would truncate into recruiting more staff, a case that increases the risk of experiencing more employees’ filed lawsuits. Another strategy that has not perhaps been considered by the company is focusing on extending its services away from America and Canada to other continents of the world.
On the positive side, this would increase the sales of the company since being global implies meeting new fresh markets in which the company can develop products consistent with the demand requirements. Unfortunately, the option would expose the company to different political, legal, and cultural environments.
Consequently, Panera Bread Company would have to change some of its practices to match the new demand. For instance, there might be a conflict between the accounting standards. The company deploys the U.S’ GAAP, which might contradict the national generally accepted accounting principles of the new nations in the global space.
Strategy that works
With the current financial and business environment of the Panera Bread, the best option for dealing with the challenge of the need to increase profitability of the company is via recruitment of more franchises besides opening company- owned stores within Canada and America. Hence, I would open 300 new company-owned stores and franchises at the first phase of expansion of Panera Bread Company.
The rationale for this strategy is based on the argument that, as evidenced by the estimations of good will in its balance sheet, the company has an immense market value. Additionally, in comparison to potential competing companies, Panera Bread Company has an incredible market position by virtue of its strengths. However, as argued before, the market is highly saturated with restaurants.
Hence, there is a dominant challenge of acquiring buildings in strategic places within many cities where the company may consider as having the requisite market segment it targets. Additionally, at the entry level, many of these competing restaurants have the will and ability to pose competitive challenges to the company at the new franchises and or company-owned stores since they will have secured their market share.
However, given the brand image and the quality of products and services offered by Panera Bread, the company has probabilities of getting some of this market share to build the clientele level at the new stores and franchises. The claim holds especially when it invests to improve its service delivery experience to levels above those of the existing restaurants in the new markets.
Utilizing the strategy of growth through recruitment of more franchises and company-owned stores is particularly significant in enhancing Panera Bread Company’s competitive position since it will make it develop the capacity to take a full advantage of the economies of scale.
At the current size of Panera Bread Company, attempts to exploit the markets of all continents of the world are found unworthy due to many standards and legal compliance issues, which go into adding the cost of running the company.
Implementation of the strategy
In the implementation of the strategy of recruiting more franchises and opening of new company-operated stores, several considerations are vital before the implementation process kicks off. In the first place, this strategy needs financing. It is thus vital to consider whether the financial position of the company and the anticipated incomes can support the strategy.
If not, it is critical to consider whether there are alternative sources of finance. Fortunately, with regard to Panera Bread Annual Report on Form 10-K, the company charges a “franchise fee of $35,000 per bakery-cafe (of which it generally receives $5,000 at the signing of the ADA and $30,000 at or before the bakery-cafe opening)” (4).
By noting that Panera Bread Company does not support the construction of the franchises, the money raised through the fees is utilizable in opening of the additional company-owned stores. According to Panera Bread Annual Report on Form 10-K, the company also has accessibility to a loan facility of 250 million dollars as an additional source of capital (3).
Similar to the old food dealers like Mc Donald, the implementation of the strategy proposed above means the focus would entail opening a store or franchise and then waiting for the customer to do the purchasing. Based on the experience he or she gains with the product, he or she becomes loyal and hence a regular customer. Therefore, the strategy is customer-centric.
For the success of such a strategy, it is crucial that an organization possesses the capability to penetrate new markets. It should develop services and products, which create an immense appeal to the customers besides possessing the capacity to offer outstanding customer services (Wheelen and Hunger 851).
Fortunately, these are some of the strengths of Panera Bread Company. With these strengths, the challenges in the implementation process rests in the development of customer-centric growth strategies in the new company-owned stores and franchises. I would accomplish the implementation of the strategy from three customer-centric paradigms.
These are identification of core business, creation of propositions that have high value and impacts, and focusing on businesses that are highly linked to the core business of the company. Determination of the core business of the new stores starts with the identification of the core business that will be conducted in the stores and the franchises.
In other words, expansion through the opening of new stores and franchises is not done blindly but rather with considerations of geographic areas and channels that would help to generate the highest amount of revenues.
Therefore, before the company’s financial resources are committed to opening and subsequent running of the stores, profitability benchmarking and evaluation of the reputation of the company within the new geographical areas are necessary. In this approach, the stakeholders of the company are fully involved in the implementation process.
Some of the stakeholders that I would include are non-loyal and loyal customers of the existing stores. The views of the loyal customers on why they embrace the products of the company are critical success factors of the strategy implementation. They would help in incorporating the attributes of the company that attract them in the new stores and franchises.
On the other hand, the views of the disloyal customers create opportunities of establishing new stores that have improved customer service experience. This would help to avoid replication of the past mistakes in the new franchises and stores. Arguably, this step of implementation of the project involves planning and analysis stage. It would take six months and an estimated cost of $ 210, 000.
The second implementation step is the creation of propositions that have high values and impacts on the sub-segments of the potential customers.
Based on the results of the first step discussed above, sub-segmentation of the customers’ groups in the new franchises and stores based on the found needs and anticipated buying patterns coupled with the profit contributions of the forecasted sales are vital in setting of a mechanism of reaping most from the new markets.
This mechanism encompasses creation and innovation of value propositions targeting the sub-segments that are likely to be most attractive. This step is followed by conducting a field test of the impacts of the propositions. Based on the results of the field tests, scaling up is done. This step of the implementation process of the strategy is the analysis phase of the project. It is anticipated to take about 3-31/2 months.
Its budget is $1 million. Most of this money caters for the wage expenses of analysts and data collection staff. Lastly, there is a need to focus on businesses that are highly linked to the core business of the company.
The need implies that, after conducting a number of field tests and analyzing the potential of the success of the growth strategy, the next course of action will be to channel the resources of the company to open stores and accept franchise requests in areas that are likely to have large clientele.
The point here is that there is no need of investing in an area where no substantive sales can be made to make the stores break even in the shortest time possible. Thus, the idea is to open stores selectively depending on the competitiveness of the market segments and sub-segments.
Conclusion/Evaluation of Strategy’s success
Upon implementation of the growth strategy, it is crucial to evaluate its success capacity. In the context of the proposed strategy for solving the problems of the Panera Bread Company, success refers to the accomplishment of the predicted outcomes when the strategy is implemented.
The desired outcome is the increment of the revenue levels of the new stores and franchises such that the stores would be able to break even in the shortest time possible. On the other hand, it is desired that the new franchises end up being profitable so that Panera Bread Company can get substantive royalties. Measuring success calls for the evaluation of the strategy on its capacity to realize the core objective of the company.
Measuring success in the context of the strategy for growth of the Panera Bread Company takes six approaches. In the first place, the strategy is implemented within fixed timelines. Therefore, one of the measurable success factors is whether the various time schedules for the strategy implementation were accomplished within the set timeframes. The other success factor is the degree to which the scope of the growth strategy has been released.
The original plan is to open 300 stores and franchises. Thus, success is measured in terms of the number of the new company-owned stores and franchises opened. Thirdly, the implementation of the strategy must be consistent with the set budget. Consequently, the degree of success of the strategy is measurable from the context of the degree to which the implemented strategy complies with the budget constraints.
Fourthly, it was argued in the implementation section that the overall goal of the strategy is to focus on opening stores in regions that will attract large clientele only who would get loyalty based on the company’s products. Thus, success may be measured from the dimension of the degree of customers’ loyalty, which is measurable through customers’ satisfaction levels.
Unfortunately, satisfaction is only measurable qualitatively (either happy or unhappy). A subtle strategy of organizational growth needs to reduce the weakness and threats of an organization within the new operational centers.
For this purpose, SWOT analysis is vital in determining whether the threats and weaknesses of the old stores and franchises have been replicated in the new geographical locations of the Panera Bread company-owned stores and franchises. Lastly, the success of the strategy may be measured in terms of the improvements of service quality in the new company-owned stores and franchises.
Therefore, the growth sort for Panera Bread Company is not only in terms of numbers of stores and franchises but also in terms of increased quality service delivery in every new company-owned store or franchise that opens. Measuring success this way is inspired by the argument that learning organizations stand better chances of success than those, which do not learn.
Works Cited
Panera Bread Annual Report on Form 10-K. Annual Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934 For The Fiscal Year Ended December 27, 2011. Web.
Panera Bread Company Quarterly Report on Form 10-Q. Quarterly Report Pursuant To Section 13 Or 15(D) of the Securities Exchange Act Of 1934 For the quarterly period ended September 25, 2012. Web.
Panera Bread. Company Overview. Web.
Wheelen, Thomas, and David Hunger. Strategic Management and business policy. New Jersey, NJ: Prentice Hall, 2007. Print.
The Panera Bread Company manages and owns bakeries, as well as retail cafes, in major cities and towns located in America and Canada. Louis Kane and Ron Shaich founded the Panera Bread Company in the 1980s as Au Bon Pain Company. It began its operations in the east coast of America and spread across Canada and other parts of America with time (Boone & Kurtz, 2014). The company ranks top among the best bakery-cafes in the industry despite its operations in only three major segments.
The Panera Bread business deals in three major operations that include franchise operations, bakery-cafe operations and fresh dough. In addition, it manages other operations involving the products it offers. In 2013, the business increased its overall revenues through its ownership and operations in1777bakery-cafes. The essay details an overview of the corporation as well as its products/markets, industry, and major competitors.
Overview of the Company and its Products/Markets
Previously known as Au Bon Pain Company, Panera changed its name in 1999 to the currently recognized Panera Bread Company. As a result, in 1993, the business purchased Saint Louis Bread Company, which was a retail chain of about 20 bakery-cafes, thus increasing its unit volumes by 75% (Schermerhorn, 2011). The Panera Bread Company mainly engages in baking bread as its name suggests. It is the dominant operator within the bakery-cafe delivering fresh bread in a warm environment to its numerous customers. The Panera Bread Company delivers its products in the market based on its three major segments. The franchise operations, the bakery-cafe operations, and the fresh dough operations sector are the major sections of the company (Spinelli, Rosenberg & Birley, 2004).
The licensed Panera Bread and/or Paradise Bakery & Cafes names are controlled in the franchise operations section, which also foresees the bakery-cafes. In addition, the Bakery-Café Operations sector is in charge of the bakery-cafes registered as companies under the Panera Bread Company and the Saint Louis Bread Company names. Through the on-premise sales, Panera supplies and franchises salads, freshly baked goods and soups as well as catering services. Together with its subsidiaries, the Panera Bread Company sells its products in cities and towns that are located in Canada and the US because the company’s markets and customers are in the US and Canada.
The Company’s industry
The Panera Bread Company franchises and operates in the Specialty Eateries industry. The industry consists of about nine companies that fall under the service sector. Considering market capitalization, the Panera Bread Company mostly ranks third in performance among other businesses in the industry (Boone & Kurtz, 2014).
Its financial strength, growth rate, and level of valuation place it third in the industry. Through the information regarding calories on its products, Panera’s reputation improved ranking it second in the industry. The Specialty Eateries industry has few firms, thus making the company under study dominate the market in providing products. The firms make substantial profits from their sales, thereby remaining competitive in the business. The Specialty Eatery industry in the US is the most profitable company that deals with eateries that targeting the young generation (Schermerhorn, 2011). This strategy is evident from the investment performance and revenues of the companies in the industry. The industry also engages in social corporate responsibilities such as donations to the less-privileged persons in an effort to build a good reputation.
The Company’s Major Competitors
The Panera Bread Company’s major competitors lie within the Specialty Eateries industry. However, the business also has both direct and indirect competitors in the sale of its products. Panera’s top competitors include Starbucks Corporation, Chipotle Mexican Grill, and Einstein Noah Restaurant Group (Hitt, Duanne-Ireland & Hoskisson, 2006). These companies operate within the eateries industry to create an epochal change in the eating habits of their customers. The Panera Bread Corporation has only half the market capitalization of Chipotle and one tenth of Starbucks, thus showing the exemplary performance to its competitors who have higher PEG ratios and Price Earnings (P/Es) in relation to Panera. Einstein Noah Restaurant Group is the closest competitor for Panera with a PEG ratio of 0.97 and a P/Es of 19.82 (Pride, Hughes & Kapoor, 2011). However, it does not have a big lunch and dinner business as Panera. In addition, Panera enjoys steady growth and opportunities for expansion. Thus, the competition offered is healthy as it fuels the provision of quality products in the industry.
Conclusion
Panera continues to rank top in the quick-casual restaurant business despite the competition and other challenges it faces. The company operates under the banners Saint Louis Company, Paradise Bakery & Café, and Panera Bread to record high annual revenue of about $2385 (Boone & Kurtz, 2014). The overview shows the development of the company from a small business to the currently competitive Panera Bread Company. It also shows the company’s diverse products such as the made-to-order sandwiches and pastas. The industry in which Panera operates also shows its major competitors who are significant for every competitive company. Potential investors require such an overview of information in making informed decisions regarding their investments.
As for the social aspect of the analysis, it focuses on demographics, various cultural trends, and so on (Harrison et al. 2016). According to statistical data, the average age of people living in the city is 39 (Plymouth Census Demographics United Kingdom 2011). At that, the median age is under 39, which makes it possible to assume that the city is ‘quite young but mature’. The majority of inhabitants of the city are working people who have an opportunity (especially financial) to engage themselves in entertaining activities. Going to pubs and restaurant is one of the common ways to spend an evening across the country, and Plymouth is no exception.
It is also important to add that such pastime is a part of the cultural heritage of the population. It has been estimated that Plymouth is an important cultural destination as the city hosts various cultural venues including festivals and sports events (Plymouth Cultural Board 2011). People of Plymouth are eager to attend various venues. The pub also hosts various events such as poem readings, DJ music playing, performances, and so on (Bread and Roses n.d.). This shows that the pub addresses the needs of the community and is a hub for various cultural events.
Furthermore, the city is one of the oldest in the country. This draws the attention of those who love history and traditions. The pub represents a mix of the traditional design and modern features (Bread and Roses n.d.). The pub can be a spot for those who value traditions and want to feel the atmosphere of a traditional English pub. At the same time, the venues held in the pub can appeal to those who focus on modernity. Another trend existing in the UK is social and environmental responsibility. Consumers try to buy from local producers who provide organic products. The pub is the place where this demand is addressed.
PESTEL Analysis: Technological Aspect
Technological aspect focuses on various factors involving research and innovation that affect the development of the market (Harrison et al. 2016). One of the major values of modern consumers is being connected. Therefore, companies make use of social networks to attract more customers and create a community (Harrison et al. 2016). Bread & Roses also pay specific attention to this aspect. The pub has a website, a Facebook and Twitter account (Bread & Roses Plymouth 2016). This helps the company to create the community as well as market its products and services.
It is necessary to note that such technological features as the use of cards are also valued for convenience, and the pub addresses this need. It is possible to note that some restaurants and pubs try to surprise and attract people using high-tech designs. However, the pub in question does not need that as it is characterized by adherence to traditions. The traditional look and the specific atmosphere are major values that help the pub sustain its competitive advantage.
Reference List
Bread and Roses n.d. Web.
Bread and Roses Plymouth n.d. Web.
Harrison, M, Cupman, J, Truman, O & Hague, PN 2016, Market research in practice: an introduction to gaining greater market insight, Kogan Page Publishers, London, UK. Web.
The main performance objectives for the Hovis Crusty Loaf concept
The main performance objectives include achieving low costs in a fierce price-sensitive market with low margins and dependability. Low production costs, with quality being critical, speed, flexibility, and continuous assessment of the production process are critical to adding new varieties of loaves into the production line.
The product development process
High-level strategic intent
The product development process follows critical phases with high-level strategic intent, using effective communication organization-wise with strategic objectives, intent, and congruence of aims.
With focused stages A and B, when reviewing brand portfolio for each market sector.
Further market analysis
Comprehensive information about market style and dynamics by determines attractive for Hovis, feasible, and profitability in line with the aims and strategic objectives.
Formation of the project team
That was achieved by varying the composition of personnel with varying production and skill needs.
Brainstorming
Meetings were called to generate new ideas required for innovation.
Technical Screening
Here, ideas were analyzed for feasibility using technical and external experts.
Technical innovation
Here, practical solutions were integrated into parts with a focus on bespoke innovative processes.
Management and Employee Involvement
Here, regular meetings were addressed.
Planning for the Launch
A collaborative cross-functional effort using skilled expertise saw a successful launch of the Hovis brand.
Summary
The launch of Hovis bread was successful with rising demand inducing parallel processes to address the problem.
What impact, if any, would the introduction of Hovis Crusty have had on the volume and variety characteristics of a British Bakeries operation?
The impact is an increase in volumes and variety characteristics of the Hovis production process in brand extension bread variants. To minimize the impact because of the new varieties, a contingency integration strategy, staged rollout production process for six months addressed changing demand, with minimal changes to specifications with prioritized technology. That is in addition to using standard equipment.
References
Watt, A., & Chambers, S. (2003). Case 12 The Development of the Hovis Crusty White Loaf. In R. Johnston (Ed.), Cases in Operations Management (3rd ed., pp. 62–68). Prentice Hall.
The demographics of Thailand and Bangkok, in particular, represent the recent changes in the nation’s population. Overall, the number of people living in Bangkok has exceeded 10,5 million in 2020 (“Bangkok Population 2020”). This is a significant increase in comparison to 2016 when Bangkok had about 8 million citizens (“Thailand Demographics”). Moreover, if one includes people commuting to the city from neighboring regions, then the population grows to 15 million (“Bangkok Population 2020”). This shows the vast popularity of the town and its place as the center of business, commerce, and tourism.
The population pyramid for the country reveals the prevalence of the working-age group. Currently, the largest part of the residents is 25 to 54 years old – about 40%, and the second largest group is infants and children below 14 years – around 16% (see fig. 1). Nevertheless, the birthrate in Thailand continues to fall as the country disseminates knowledge about sexual health and birth control. Furthermore, the infant mortality also declines, but remains rather high at more than 6 infant death per 1,000 births (“Thailand Demographics”). These facts imply that the population is slowly aging, although the dominant youth population is still significant.
It is also notable that Bangkok’s population density is much higher than that of other cities and areas of Thailand. While Bangkok has more than 10 million residents, the second-largest city has less than 400,000 people (“Bangkok Population 2020”). The population density in the capital is about 136 people per km2 (“Bangkok Population 2020”). The city’s population growth also resulted in an increased stress to the infrastructure which led to traffic and population. Nonetheless, Bangkok remains a popular destination for both tourists and locals. The absolute majority of the citizens are Thai, but the city is also home to Chinese, Japanese, Indian, Arab, and other communities. Immigrants from North and South America, as well as various European countries, are present as well.
Religion plays a major role in the country’s traditions and cultural standards. About 90% of all citizens practice Buddhism; Islam, Christianity, Sikhism, and other faiths have minor followings (“Thailand: Statistics”). The country and its capital place Buddhism at the basis of cultural and societal norms, thus making it a prominent factor in business development. For instance, most religious holidays are connected to Buddhism – Songkran, Buddha’s birth, and other celebrations have specific rituals (Lopez 156).
Other holidays are secular and tied to the governmental system (monarchy) and the royal family. The latter factor is especially relevant to interpersonal communication – the monarchy cannot be criticized in any way (Haberkorn 937). Furthermore, Buddhism is also protected from criticism by law, but, otherwise, the freedom of expression is present in the city.
The official language in Thailand and Bangkok is Thai, but other languages are spoken due to the multicultural nature of the country. Moreover, English is taught in schools, and, since education is free and compulsory, the level of literacy and the knowledge of both Thai and English are very high (“Thailand: Statistics”). Thailand is also a destination for many tourists, making its people used to talking in English.
Media often use Thai and English to deliver information, and businesses use both languages to hold meetings (“Thailand: Foreign Investment”). However, this does not mean that Thai people also follow Western standards of communication. In contrast, their manner of interaction is rooted in their culture.
Hierarchy and respect for status play a substantial role in the ways people greet and address each other. It is apparent that younger people are expected to show respect to older ones, and nobility is still placed in a separate group. However, the modern class system also separates people according to wealth and corporate hierarchies (Haberkorn 939). Thai people also pay increased attention to small children – mothers rarely leave their young children at home.
As for traditions, people use a special greeting gesture (wai), remain calm and positive during negotiations, and aim to keep their and others’ “face” at all times (Haberkorn 935). The latter may pose problems in business negotiations and conflict situations, as Thai people may not disagree openly and expect that their response will be understood from the context.
When discussing Thai culture, one cannot avoid talking about food. Thai cuisine is extremely popular around the world, and Thai people also have many standards for preparing their food. Rice is the foundation of all meals, but different regions use specific rice types (Aoki et al. 276). Furthermore, fish and meat added to most recipes, but many Buddhist followers are vegetarian (Aoki et al. 276). According to Chanruechai and Fernando, taste and presentation are the most important to consumers, while healthiness may not be as significant (9). Thus, it may be difficult to challenge Thai cuisine with the traditional menu of Panera Bread.
Considering the city’s makeup described above, the company Panera Bread should adapt to the Thai culture in negotiations and business decisions. First, it is vital to emphasize the quality of its foods and adhere to the rules of interaction expected by the locals. Second, religion is essential to all citizens, and the business should recognize the role of religious celebrations and rituals for customers and employees. A special place in the store should be allocated for children, and toys or activity tables may be viewed positively by visitors.
Assessing the Political-Legal Environment
Thailand is a constitutional monarchy, but, in 2014, the government was overtaken by a military junta (Haberkorn 935). As a result, some of the previous policies included in the country’s constitution were annulled, but the state continues to uphold hereditary monarchy. In fact, the kind and the monarchy, as a whole, are revered and highly respected by the population. Federal entities usually appoint local authorities, but, in Bangkok, the governor is elected.
The Bangkok Metropolitan Administration governs the area, and the city is further divided into locally-governed districts. Nonetheless, the central government remains the primary source of legislation and enforcement, while local authorities have limited power.
In 2020, the city will hold an election for the new governor, and this political event may impact the situation in the region (Wancharoen and Kongrut). The city is the center of political and economic life, as most international and national organizations place their headquarters in Bangkok. Thus, civil unrest, demonstration, and violence are common in the city. While these events happen due to changing governments and military action, their occurrence does not significantly affect the current ruling organization.
A major change in food-related political action happened in 2015. The Bangkok Metropolitan Administration, with the help of the military junta (affiliated with the National Council for Peace and Order), started a conflict with street vendors (Wancharoen and Kongrut). As a result, many street food markets were eliminated, and vendors were evicted from the public areas. While it was a response to the increasingly congested spaces, many argue that this decision would negatively affect the appeal of Bangkok and remove its charm (Wancharoen and Kongrut).
Recently, these prohibitions were relaxed, allowing some food vendors to return to their business in some regions of the city (Wancharoen and Kongrut). This change may pose challenges for companies such as Panera Bread since it increases the competition for affordable meals.
Thailand has a strong relationship with the United States and China both in import and export. Some prominent areas of trade are technology, transportation, and metals (“Thailand (THA) Exports”). However, foodstuffs are also a broad category, and Thailand is interested in working with other nations due to its consistent tourism industry. Furthermore, it is possible to source many types of food from Thailand, since its agriculture produces rice, fruit, and sugar (“Thailand (THA) Exports”). It is also a part of free trade, which allows the majority of the world’s countries to export and import goods.
The possible barrier to trade and successful business is based on the political conflicts described above. The principles of the ruling military junta may not align with those of international companies. Furthermore, the unstable position can endanger the company in the long run, as the country has had many protests and government changes over the last few decades. The sudden change in policy regarding street vendors is a clear sign of quick changes in policy that may either relax or strengthen the government’s control.
Nevertheless, the Thailand Board of Investment offers some benefits to businesses in certain industries to promote the country and the city of Bangkok as well. Agriculture and food are among these sectors, providing companies with tax exemptions for eight years, and a reduction in taxes for 50% for five years (“Thailand: Foreign Investment”). Furthermore, the food business may get increased deductions for utility payments, including electricity, transport costs, and re-supply (“Thailand: Foreign Investment”). Finally, Panera Bread may expect to receive additional tax deductions on its net profits and some assistance with materials produced locally.
Intellectual property laws in Thailand require the company to have a local presence. The infringement of these rights is a criminal offence, and the country’s legal system fights counterfeit goods’ production and dissemination (“Intellectual Property Law”). In order to register intellectual property or a trademark, the company has to ensure that its brand is unique in the country, distinctive and recognizable, and be connected to the goods sold by the owner. Moreover, the business has to have a fixed place or address in Thailand, and all documents have to be translated into Thai. The Department of Intellectual Property oversees such contracts and makes final decisions.
Overall, the legal-political environment of the country has both negative and positive points for international businesses. Panera Bread should consider the benefits of tax deductions and exemptions and research the possibilities of establishing local resource channels for foodstuffs. Next, it should evaluate the location of its future business to minimize the impact of political changes and possible future involvement of street vendors. Finally, the company should register the brand’s intellectual property to ensure its rights to the name and design.
Works Cited
Aoki, Keiko, et al. “A Choice Experiment to Compare Preferences for Rice in Thailand and Japan: The Impact of Origin, Sustainability, and Taste.” Food Quality and Preference, vol. 56, 2017, pp. 274-284.
“Bangkok Population 2020.” World Population Review. Web.
Chanruechai, Tipjaree, and Maria Socorro Cristina L. Fernando. “Factors Affecting Customer Satisfaction on Brand X Green Tea: A Case Study of Bangkok Consumers.” International Research E-Journal on Business and Economics, vol. 3, no. 1, 2017, pp. 1-12.
Haberkorn, Tyrell. “Dictatorship, Monarchy, and Freedom of Expression in Thailand.” The Journal of Asian Studies, vol. 77, no. 4, 2018, pp. 935-943.
“Intellectual Property Law in Thailand.” Thailand Court. Web.
Lopez, Greg. “Heritage and Identity in Contemporary Thailand: Memory, Place and Power by Ross King.” Journal of the Malaysian Branch of the Royal Asiatic Society, vol. 91, no. 1, 2018, pp. 155-158.
What components of stockholders’ equity do each of the companies disclose?
Danish Crown’s disclosures contributed capital, other reserves and retained earnings in its equity section. While Panera Bread discloses common stock, treasury stock and preferred stock in its equity.
Do the companies have preferred stock shares outstanding? If so, what special features do these shares contain?
Only Panera Bread has preferred stock outstanding.
The main feature of preferred shares is that they have fixed dividends. Whether the company suffers losses, it has the obligation to pay them.
Do either of the companies report treasury shares? If so, do the companies disclose the reason for reacquiring the shares?
Panera Bread has reported its treasury shares in the annual report and all the reasons for reacquiring the shares turn out to be under authorized share repurchase authorizations.
Income Statement
What are the basic and diluted earnings per share for each company?
The basic EPS for Panera Bread is $5.94 and the diluted EPS is $5.89.
Have the companies reported any discontinued operations?
Both companies have failed to do so.
Do the companies disclose any stock compensation plans? If so, are they reporting such plans under the fair value or intrinsic value methods? What was the value of compensation expense measured for any outstanding stock option plans?
Stock compensation plan of Panera Bread was disclosed. The company reports its plan under the intrinsic value method. The compensation expense was measured to be $395,072.6 ($68.90 x 5734).
Financial Ratio Analysis
Gross Profit Margin
The gross profit ratio is the key financial indicator to assess a company’s profitability from its core activities. It reveals the financial health of a firm. The Danish Crown’s gross profit ratio has decreased to 12.57% in 2012/13 from 12.99% in 2011/12. But for Panera Bread, it has increased from 12.09% in 2011 to 13.28% in 2012. This is because the profit has also increased in same proportion as compared to sales for Panera Bread but not in the case of Danish Crown (Drake, 2011).
Net Profit Margin
Danish Crown’s net profit ratio has decreased from 3.07% in 2011/12 to 2.72% in 2012/13. This decrease is due to ineffective control of cost and expenses associated to the company’s operations and other expenses. Pricing strategy and operating efficiency of a company is measured through the net profit margin of that company.
Panera Bread’s net profit ratio has increased from 7.46% in 2011 to 8.14% in 2012. Increase in net profit margin means that Panera Bread is earning more against its sales as compared to the previous period (Walther, 2012).
Return on Stockholders’ Equity
Return on Equity indicates how much profit is being made on the amount invested by shareholders. Danish Crown’s return on equity has decreased from 29.88% in 2011/12 to 26.55% in 2012/13 which indicates that the company has not been efficiently generating profits against the money invested by its shareholders.
However, this ratio has increased for Panera Bread from 20.75% in 2011 to 21.10% in 2012. Higher return on equity also indicates higher competition because it is very much easier to start a business within such industries. This ratio also provides useful information for the comparison of profitability for two companies operating in the same nature of the industry (Drake, 2011).
Current Ratio
The current ratio measures ability of a company to pay its debts over the next 12 months or over its business cycle by comparing the company’s current assets to its current liabilities. The current ratio of Danish Crown has increased from 1.46 times in 2011/12 to 1.75 times in 2012/13.
So is for Panera Bread. It has increased from 1.48 times in 2011 to 1.73times in 2012.
Higher the current ratio, the higher is the ability of the company to pay off its obligations. An increase in current ratio of both companies indicates more efficiency compared to previous periods and safe liquidity. This ratio indicated capacity of the company to generate cash from its products and how efficient it is in doing so (Drake, 2011).
Quick Ratio
Quick ratio is also known as acid test ratio. It takes into account the ability of a company to pay its short term debts. It is a more reliable test of short term solvency than current ratio as it shows the ability of any company to pay its short term debts immediately. Quick assets are actually current assets with less inventory. For Danish Crown, quick ratio has increased from 1.02 times in 2011/12 to 1.14 times in 2012/13 which means the company is more stable during this period against its current liabilities compared to the prior period.
Similarly, in Panera Bread, this ratio has increased from 1.41 times in 2011 to 1.65 times in 2012. Current ratio could overestimate the short term financial strength of a company, but the quick ratio is more conservative and depicts the true picture of a company’s ability to pay its short term obligations (Drake, 2011).
Inventory Turnover
Inventory turnover measures how well a company is utilizing its investment in inventory. The inventory turnover for Danish Crown Has decreased from 15.25 times in 2011/12 to 14.14 times in year 2012/13. This indicates that company has been invested too much in inventory and is owed a lot higher by account receivables. This may lead to bad bebts and obsolete inventory.
While the inventory turnover for Panera Bread has increased from 107.08 times in 2011 to 108.05 times in 2012. This is the clear indication that the management of this company has been using inventory efficiently to support sales (Drake, 2011).
Debt-to-Assets
The debt to assets ratio for the Danish Crown was 0.77 times in 2011/12 which decreased to 0.76 times in 2012/13. While in case of Panera Bread, it has decreased from 0.36 times in 2011 to 0.35 times in 2012. This ratio determines the amount of the debt element in relevance to the total assets. It tells how much the company is dependent on its own assets and how much on the debt taken from lenders. It is a financial ratio, which indicates the proportion of an entity’s assets and debt used to finance the operations (Drake, 2011).
Debt-to-Equity
This ratio is used to gauge the ability of the company to repay its obligations once they are due. Increase in this ratio means that company is relying on creditors to finance its operation, in the long term this avey dangerous trend and the company should think to issue some equity to compensate that. Danish Crown’s debt to equity ratio was 3.40 times in 2011/12 and it has decreased to 3.14 times in 2012/13 which is a good indication. Lenders and creditors’ interests are better protected when this ratio is low. Thus, companies with low debt to equity ratio like Danish Crown might be attractive for lenders and creditors.
Same is the case with Panera Bread. Its debt to equity ratio has also decreased 0.56 times in 2011 to 0.54 times in 2012 (Learning, 2010).
Times-Covered Ratio
It measures the ability of a company to pay interest. It measures how easily a company can pay interest on the debt, it owes to lending parties. Danish Crown’s times-covered ratio was 17.02 times in 2011/12 and decreased to 16.50 times in 2012/13. It indicates that Danish Crown is financially unhealthy by the end of this period.
Similarly, Panera Bread’s times-covered ratio has also decreased from 267.95 times in 2011 to 261.43 times in 2012. This is, however, too much for a company and Panera Bread is capable of meeting its interest obligations from gross earnings. This lower time-covered ratio indicates that Panera Bread is safe, but is neglecting opportunities to increase earnings through leverage compared to the previous year.(Mongiello, 2009)
What type of information do you find in the footnotes to the financial statements?
The footnotes to the financial statements provide the information regarding the intangible assets, property, plant and equipment, biological assets, deferred tax assets, inventories, receivables, other investments, pension obligations, deferred tax liabilities, other provisions, subordinate loans, mortgage debt, other debt, issued bonds, other credit institutions, bank debt, finance lease commitments etc.
Do you find the balance sheet, income statement or other measures such as ratios the most informative? Comment on the advantages and disadvantages of using ratios for analysis.
Balance sheets and income statements are not the most informative for an analyst. The information provided in the whole annual report is farther more informative than the mere figures provided in the balance sheet and income statement.
The ratios are simple to calculate and easy to understand. But the biggest disadvantage of ratio analysis is that it does not provide useful information until it is compared to any relevant period’s data. The benchmark is necessary to be provided to make the analysis useful. However, the ratios if properly examined can cater the potential investors in the decision making process.