A business enterprise is highly affected by its environment that includes economical, marketing, social, and locality factors. All these factors are collectively regarded as the business environment. Business environment is considered as all the external factors that affect the performance of an enterprise in one way or the other.
The economical factors include the economical status of the region where the business is to be located. Other economical factors that are imperative to factor in while considering an appropriate niche to start up a business enterprise are the capital market as well as the social-economical factors.
It is important for a businessman to visualize the economic factors that will affect the business and anticipate appropriate market situations. This will help the business to receive maximum returns with minimal costs. The social environmental factors are also very significant for the success of any business.
The social aspects of a region determine the values of the society that in turn affect the business enterprise greatly. The most vibrant sociological considerations include cultural orientations, customs as well as mobility of labor. Sociological factors affects the work culture, team work as well as the goods and service to be produced that are highly affected by peoples attitudes customs and cultural values fashions.
The social cultural factors determine the code of conduct the business should adapt, the trade unions to follow. Failure to observe the right code of ethics may lead to poor performance of a business enterprise. In some cases, unethical practices such as paying unfair wages or black market may result to intervention measures being taken against such a business enterprise by some government agencies.
The marketing environment is also a very important factor to consider in order succeed in any business venture. The company should adapt appropriate marketing strategies in order to establish a strong brand in the targeted region. Good position of a firm’s products and services is imperative for the success of the business enterprise.
This can be ensured by appropriate differentiation of products and hiring highly skilled workforce that is regularly equipped with appropriate knowledge and skills (Lopez, 2006).Similarly, the shareholders should invest in strategic locations in order to realize returns from their investments.
Densely populated areas and areas that are situated along busy highways are appropriate locations for restaurants investments (Chen, 2003). Therefore, the Wendy’s restaurants should identify such a niche to extend its operations to.
Problem Statement
The Wendy’s Restaurant is facing a lot of competition from its rival brands such as McDonald and Barger King Restaurants among others. The restaurant is therefore in a process of opening new restaurants as an expansion strategy to help it enjoy the benefit of economies of volume.
This will help it cut down its costs of operations in order to help it reduce the prices of its menus which are slightly higher than the prices that are charged by McDonald and Burger King Restaurants.
Literature Review
Effective marketing process is very important for the success of any company. The branding process helps people to form a positive perception towards a company’s products and services. The marketing process helps a business enterprise to close up the gap between what a firm promises and what it delivers (Treacy & Wiersema, 1997).
A strong brand is the brand that is successful in delivering what it promises its customers. One important factor that a firm should consider while branding is establishing a competitive edge over its rival brands. The only way that a company can be able to establish a competitive advantage over its competing brands is by strategically positioning its brands (Sharp & Dawes, 2001).
A sure method of positioning the products of a company is by the use of differentiation process. The differentiation process helps an organization to differentiate its products or services from the others in order for them to be in a position to stand out more effectively. The company can differentiate its products/services by the use of Unique Selling Proposition (Piana, 2003).
This strategy involves the use of advertisement to relay a product’s/service differentiation. The differentiation process is known to cause monopolistic competition. This gives such a company a competitive advantage since monopolistic competition requires the substitute products from the rival brands to be perfect substitutes.
A company can differentiate its products through unique packaging or an advertizing theme. Through this process, the company does not necessarily require to alter its product.
Thus, the differentiation process occurs as a result of the buyer’s perception of a difference. In some other cases the differentiation process is functional. Through this process differentiation results to a change in the quality that is often accompanied by a rise in the price, a change in functional features or design (Wilsons, 2007).
The differentiation helps a brand to enhance its sales by overcoming direct competition. This is because as a product/service becomes more unique, categorization decreases and thus draws fewer comparisons with substitute products from competing brands.
An effective product differentiation helps a brand not to compete with substitute products based on the prices, but on other factors such as distribution and promotional strategies (Porter, 1998). The differentiation process is a very effective strategy in the restaurant industry which is very competitive.
The use of effective differentiation is the reason that has helped restaurants such as McDonald, Burger King and Wendy’s flourish well despite the thriving stiff competition (Treacy & Wiersema, 1997).
The success of any business is highly determined by its location. The successes of restaurants are highly affected by the location of the restaurants. The location of a restaurant determines many aspects of the hotel. For instance, the location of the restaurant will determine the type of menu to be offered.
Customers from various cultural backgrounds differ in their dieting habits. The Asian, white and blacks differ greatly in type of foods that they like. While the Asian prefer a lot of spices in their foods, the white and especially the Americans prefers fasts foods, while the African likes heavy foods.
Therefore, identifying strategic locations will determine the type of menu to offer to your customers depending on their cultural orientations. The location of the restaurant will also influence the number of customers who will visit the restaurant. The restaurant should be located in those areas that are densely populated in order to attract many customers.
Alternatively, the restaurant should be located in an area where many people pass so that to increase those people that visits it (Matere, 2003). A restaurant should be located in an area that has enough space for parking. Adequate parking space will facilitate the number of customers that will visit the hotel.
If the hotel does not have sufficient parking space, it should ensure that where it is located there is a nearby public parking. Since most restaurants are located along highways and free ways. The restaurants owners should make sure they locate their restaurants in places where they are easily accessible.
Locating hotels in areas where they are concealed hinders the number of people visiting such hotels. New restaurants should also be located in areas where they are highly visible. That is the reason why property prices in down towns and developed places are higher than other areas (Kotler & Kevin, 2006).
The pricing of the Menu is another important factor to put into consideration when designing the menu. This helps to determine the amount of money to charge in order to realize a profit. The costs of food and food proportions are two vital methods that help in the pricing process (Tabby, 1999).
Food cost is the menu price of a certain meal in relation to the cost of the food used to make that dish. The amount of money one uses to pay for the food determines how much you will sell the food. It is advisable for a new restaurant to make sure that it charges its customers a price that relates with the prices charged by other local restaurants (Lin, 2003).
Mostly the prices of menus should be approximately 30-35% above the cost of foods. This pricing is reasonable since one has to consider other factors involved such as paying the employees and paying for other bills such as electricity and water bills. Portion control is another factor that determines the success of any restaurant.
Those restaurants that are successful are experts in handling food portions (Mealey, 2004). Mergers, acquisition and franchise are appropriate strategies that restaurants should adapt to extend their operations in order to maximize their returns (International Franchise Association, 2006).
This study will entailed both primary and secondary research methods. The secondary research involved a review of articles, Journals and books that discuss about running and managements of restaurants. On the other hand, the primary research will be a survey. The survey will include sampling a number of people that will help in realization of the research objective.
The number of those people that will be sampled will be 50. The people that will be interviewed will consist of those people that resided or work close to the region in the United State where the Wendy’s restaurant s aspires to extend its operations. The researcher will use random sampling in order not to be biased.
This will help to increase reliability of the research outcomes. The researcher will first conduct a pilot study prior to the actual research in order to help him/her to eliminate any errors that may be present in the questioners anticipated to be used.
Objectives
The main objective of the research is to establish the viability of the Wendy’s expansion in the desired niche.
Specific Objectives
To find out whether majority of those people that live nearby take their foods from home or restaurants.
To find out whether the people around are comfortable with the quality of meals and services they receive from the local restaurants.
To find out the type of meal those people prefer.
To find out how much money these people spend on their meals daily
Research Questions
Do you prefer taking your meals from home or in restaurants?
Are you happy with the amount of money you pay for your meals?
What type of meal do you take for breakfast, lunch and supper?
How much money do you spend on your meals?
The researchers will use both closed ended and open ended questions as its instrument for collecting the required data. The closed ended questions will help the researcher to limit the respondents to specific questions. On the other hand, the open ended questions will help the researcher to get new insight in the research which he/she could have ignored (Cooper & Schindler, 2003).
Ethical Considerations
The respondents will be assured that the information that they will be given will only be used for the purpose of this research only. In addition, they will be guaranteed about the confidentiality of the information they will give.
Anticipated Results
The researcher is likely to find that approximately 40% of those people that he will interview prefer taking their meals from restaurants. The researcher is also likely to learn that more than 50% of those people that will interview are not happy with the quality of meals and service they receive from the local hotels.
The large number of dissatisfaction is likely to result because the place where Wendy’s intends to extend to is not served by well established restaurants such as Wendy’s, McDonald, or Burger King that have high quality meals and services (McDonald’s Holdings,2006). Because the area is mostly habited by middle class group, the researcher is likely to identify that the respondents spends approximately $ 300 per day for their meal.
List of References
Chen, Y. D., 2003, Food and Beverage Management Theory and Practice, Taipei: Yang-Zhi Culture.
Cooper, D. R. & Schindler, P. S., 2003, Business Research Methods, NY: McGraw-Hill. International Franchise Association. 2006. Web.
Kotler, P. & Kevin, L., 2006, Marketing Management (12 Ed.), New Jersey: Prentice Hall.
Lin, Z. M., 2003, Quality stems from customer’s needs, Journal of quality, 39(9), 51-52.
Lopez, J., 2006, The Importance of Workforce Trainings, New York: Prentice Hall
Matere, J., 2003, Strategic Location for Restaurants, London: Cambridge Press.
Mealey, L., 2004, How to Price Your Restaurant Menu, London: Cambridge University Press.
Piana, V., 2003, Product Differentiation, New York: Prentice Hall.
Porter, M. E., 1998, Competitive advantage, NY: The Free Press.
Sharp, B., & Dawes, J., 2001. What is Differentiation and How Does it Work? Journal of Marketing Management, 17, 739-59.
Tabby, M., 1999, Restaurants, New York: Prentice Hall.
Treacy, M. & Wiersema, F., 1997, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market, NY: Perseus Books Group.
Wilsons, P., 2007, Strategic Management, New York: Oxford University Press.
Penang Mutiara Restaurant functions on the pillar of total quality management system. The hotel is proactive in safeguarding assets and resources, sustaining efficiency in operations, and ensuring completeness in the management strategies. These strategies support communicational culture, efficiency, and optimal resource use in it service delivery to customers. The business has incorporated a corporate disclosure and system of litigation variables which are connected at central point by strategic planning. Every operational decision revolves around quality assurance and creatively. Besides, the risk proportions are thoroughly verifies before informed decisions are made. This procedure is necessary in monitoring decision science, distribution of risk elements, and forecasting into future swings in the restaurant industry market (Slack, 2008). The decision makers in the establishment have rationalise the service delivery processes as a prerequisite for managing operational costs, rather than simply introducing cheap menus or food.
Skills required in supporting business strategy plan are found in the hotel’s operation management model, which functions as an implementer and driver of business decisions. These variables are critical in ensuring organisational survival in the volatile market. The variables are connected at central point by strategic planning which encompasses costing, speed, quality, flexibility, and dependability to create a smooth continuous operation tracking model that operates like computer from one segment to another. As a result, most of the clients are frequent visitors who are attracted by these unique services (Slacks, 2008).
Through setting of performance targets for the staff members, the professional hotel attendees always strive and work harder to satisfy the needs of ever growing demands from their customers. Besides, the topological structure of the hotel consists of communication and operations management system which help in determining efficient performance and optimal resource use. The continuum of increasing the value of quality in operation of the hotel’s human resources lies in constant training and motivation (Williams, 2007).
Possible changes
In order to avoid an imminent failure, it is vital for the operations management system at the Penang Mutiara Hotel to focus on a defined edge in balancing the labour and operation costs. Despite having this efficient operations management system, the hotel has not fully established a mechanism for monitoring progress at micro level and depends on macro auditing in decision making. Therefore, it is necessary to review certain element of the operations strategy. The hotel should introduce a micro auditing unit for internal decision making rather than depending on macro market environment (MacKay & McKiernan, 2009).
Impact of quality, speed, flexibility, and cost
Through implementation of the strategic operations management elements such as speed, cost, flexibility, and quality, the Penang Mutiara Hotel is set to immediately and substantially gain from the reliability aspect as compared to its competitors. Since clients will be able to receive quality, affordable, and flexible services within a shorter time, the Penang Mutiara Hotel stands to gain from customer satisfaction and referrals (Slacks, 2008).
Internal benefits
The element of flexibility will make the internal business environment for the hotel sustainable since establishment will be flexible to the changes in the supply and demand of the production factors. The aspect of quality in service delivery among the employees will ensure profit maximisation and business growth (Samson & Singh, 2008). On the other hand, the element of speed is directly related to the output of each employee in the hotel. The element of cost in the Penang Mutiara Hotel’s operations strategy will ensure efficiency in the use of resources to serve the needs of customers.
References
MacKay, B., & McKiernan, P. (2009). The role of hindsight in foresight: Refining strategic reasoning, Futures, 36(2), 161-179. Web.
Samson, D., & Singh, P. (2008). Operations Management: An Integrated approach. London, UK: Cambridge University Press. Web.
Positive service marketing experience encountered was at Jordan’s restaurant in Murrumbeena. Jordan’s Restaurant displayed the best customer service ever to be experienced. The restaurant is located on a quiet shopping strip with a railway station nearby. As we walked in together with my friend, we had minimal expectations. However, we were greeted very kindly and offered to sit anywhere we liked.
Usually, this kind of service is not an option with many restaurants. The waiter greeted us warmly and offered us menus and asked whether we’d like to start with some drinks. The food was delicious and served in detail as reflected within their menu. As we were eating, the restaurant had some jazz music playing in the background which was very soothing and made the experience all the more enjoyable.
During the meals, the waiter came around to inquire whether we needed some assistance of any kind. The payment process was not stressful since there were two cashiers within the restaurant (Baron and Harris). The level of cleanliness within the restaurant, warm greetings the choice and preference of where to seat made the whole experience lively.
This treatment in comparison to other restaurants was second to none. The issues of offering menus and something to drink is a standard procedure amongst most restaurants. The true test of their service was where the menus arrived with a wide selection of meals followed by a detailed description of available dishes. Finally, it was topped off with the delicious taste and excellent service. This revealed positive disconfirmation leading to enhanced satisfaction.
The provision of better customer services
However, the restaurant should expand their packing space to avoid the congestion of vehicles as we experienced. Poor level of communication and the expectation in the other two experiences did not match the level of service provided and should be improved. In these two cases what was portrayed as the gap between the quality of services offered and the responses towards customer treatment. The expectations were different from the performance at a glance (Baron and Harris).
Characteristics of people who provide excellent customer service
Recognition of customer’s needs is one important aspect which contributes towards employees awareness of the level of service required. This reduces role conflict and ambiguity in the process of delivering appropriate services since each need is attended to at different points. It also ensures employee job fit and respect accorded to customers.
A positive attitude leads towards teamwork, and this helps in avoiding role conflict and allow the prevalence of harmony within the workplace, it ensures a high level of understanding hence good communication network amongst employees and also between them and customers (Baron and Harris).
Diplomacy is an important component within the work environment; this is because it presents the best way of evaluating performance based on individual interaction with customers. Diplomacy provides employees with the opportunity of learning from one another and improves on their points of weaknesses.
High level of performance is usually realized whenever diplomacy is applied since employees learn various ways of interaction guaranteeing a productive workforce. Diplomacy presents a social and free environment for customers as well as employees.
Enhancement of employee’s identity is one of the characteristics contributing to a high level of customer service. This characteristic lead to the development of effective communication channels between employees and customers since it enhances self-esteem and change of behavior within the working environment.
Works Cited
Baron, Steven & Kim, Harris. Services marketing: Texts and cases. Basingstoke UK: Palgrave, 2003.
Desert Restaurant LLC is a catering business with a focus on Arabic traditional food. The company has been established in 2006 and for 5 years of its operation it has managed to strengthen its positions at the national market. The reasons for overseas expansion are numerous. First, the company has managed to get 60 franchise companies all over the UAE for the period of its work and the desire to enter the international market is explained by the desire to expand. Second, the demand on Arabic national food is high in the USA (O’Sullivan n.p.).
Rationale
The desire to expand its business is also supported by the fact that such services are in demand in the USA. Using international expansion, Desert Restaurant LLC provides the opportunity to exploit the benefits of internalization, such as economies of scale, scope, and learning, exploitable relationships between business segments and geographical areas, shared distinctive capabilities or core competencies among business units, and differences in factor markets (Lao 5). The specifics of the products and the desire to offer the food which seems strange for international society attracts customers with its uniqueness.
Therefore, the demand on the Arabic food is higher in the USA and the market share is more beneficial as well. The “inequality in the position of the buyer and seller regarding knowledge on the value, nature and quality of the product” (Ietto-Gillies 102) is one of the main reasons for entering international market. Thus, the restaurant location in the USA encourages forward integration. The desire to enter international market at the current stage of company development is explained by the necessity to increase a total income as the company area control may be internationally centralized (Ietto-Gillies 101). The USA market analysis should be conducted to understand the reasons for entering international market.
Market Analysis
Table 1. Size of Firm Industry Estimates. (“BARNES Reports” 97).Table 2. Sub-Industries – 2010 Industry Estimates. (“BARNES Reports” 97).
Therefore, looking at these activities, it can be easily noticed that the industry market is expanding. The sales of the restaurant industry are planning to increase by more than $10 million in 2012. Firms’ sizes and employment is also planning to increase that says about high competition in the industry and high demand on the industry products. The information about size of firm industry estimates and sub-industries helps to assess the situation at the American food market and make specific conclusions about the further development of the Desert Restaurant LLC’s activities at the international arena and particularly in the USA (“BARNES Reports” 97).
Considering the situation on the international arena, it should be stated that the US market segmentation is rather high, it comprises 39.1% of the global restaurants sector value. Additionally, it is important to state that being one of the largest segments in the restaurant sector, restaurants and cafes steel cannot compete with fast food sphere which increases from time to time (“Restaurants Industry Profile” 2). There are also other substituting sectors, such as various eating places, ice-cream and soda fountain stands, carry-out only restaurants, chili stands, coffee shops, food bars, grills, hot dog and hamburger stands, snack bars, etc. All these sub industries add to the competition (“BARNES Reports” 97). The industry consists of such specific sectors as fast food retail, restaurants and cafes, drinking places and catering.
Desert Restaurant LLC belongs to the restaurants and cafes as it is a full-service restaurant. Buyers in the industry are rather sensitive. Additionally, people have an opportunity to cook at home, therefore the services are not of the primary importance. Company image is very important. The negative experience may reduce the number of clients to minimum that can not only reduce the income, but also create great expenses and company bankruptcy. Price fluctuations in commodities are one more factor which impacts the industry development. Cheap alternatives (eating at home) are also the factors that make different companies to be creative and reduce prices. “Improving efficiency by adopting innovative solutions, new product development, or marketing and pricing strategies” (“Restaurants Industry Profile” 21) are just several strategies used by the companies at the international market and Desert Restaurant LLC should pay much attention to those to make sure that their strategies are winning.
Market Entry Strategy
Having entered a new international market, Desert Restaurant LLC should develop specific strategies which may help it stand to the leading positions at the international market. Much general aspects may be recommended, however, stress on advertising and promotion campaign should be made. Desert Restaurant LLC should pay attention to its image and make all possible to create a positive one. To kick off promotional activities, Desert LLC can start with an e-business model that can target selected Web users across target cities. The campaign can be designed in the form of web banners, flash gadgets, e-zines, newsletters, press releases and mass mailers.
Websites such as Profilecanada.com give a detailed list of end consumers who can be systematically targeted by Desert LLC. Local celebrities such as stand-up comedians can be roped in to give wings to initial promotional activities. Local radio stations can be hired to run news-reels about the new restaurant chain. There must be simultaneous promotional activities across print media, newspapers and magazines. The initial promo campaigns may prove expensive for Desert LLC, but they will do good to establish a presence in the mindset of end consumers. Thus, the company should create an impressive image, it should rush at the American restaurants market, astonish everyone with its strength and power. It is important do not give an opportunity for the competitors to realize that a powerful player has entered the market. Therefore, specific theme advertising campaign with traditional Arabic significance should be implemented.
Conclusion
Therefore, it may be concluded that operating in a highly competitive environment and desiring to enter an international market, Desert Restaurant LLC has many chances to succeed in the affair. Being a specific type of cuisine for Americans, the company may attract many clients by impressive advertising.
Works Cited
“BARNES Reports: Worldwide Fast Food Restaurants Industry (NAICS 72221).” Worldwide Fast Food Restaurants Industry Report (2011): 1-104. Web.
Ietto-Gillies, Grazia. Transnational corporations and international production: concepts, theories, and effects. London: Edward Elgar Publishing, 2005. Print.
Lao, Yadong. Entry and cooperative strategies in international business expansion. London, UK: Greenwood Publishing Group, 1999. Print.
O’Sullivan, Feargus. “Middle Eastern food is taking the world by storm.” Global Travel Industry News, eTurboNews, 2009. Web.
“Restaurants Industry Profile: Global.” Restaurants Industry Profile: Global (2011): 1-44. Web.
The Bleeding Heart Restaurant and Bistro serves more than a thousand guests on a daily basis, even though Robert and Robyn Wilson faced a lot of criticism that it would not succeed when they established it in 1983. In addition, it offers French foods and its name is linked to the eleventh century, Lady Elizabeth, who met her death there. The annual Winter Ball was a highlight of the London social season and this made this place famous. This essay examines the strengths, weaknesses, opportunities and threats facing this restaurant.
Strengths
The greatest strength of this restaurant is that it has a rich history and every journalist dreams of spending a night here. It has been used to honor ancient writers like Charles Dickens, who wrote praises about it. Its initial architectural and cultural values enable it to serve a multi-segment market and compete with other popular joints. It’s farmyard illustrations offer the impression of a game drive and this keeps visitors coming back for more adventure in this restaurant as they enjoy a variety of excellent-value wine.
In addition, media comments from the Chicago Mercantile Exchange, Transworld Publishers, Wall Street Journal, Business News and Harden’s London Restaurant Guide enabled this hotel to market itself in the international level especially in America. Moreover, it was feted as one of London’s Top Ten Bars six months after it was established and this achievement has been maintained to the advantage of this investment.
Its performance and services were rated as London’s most romantic by The Times and this has continued to promote its image in the local and international scenes. Moreover, it has massive capital that enables it to hire the services of professional advertisers like the Wilsons and other prominent local dailies
Weaknesses
The Bleeding Heart Restaurant and Bistro relies on its rich history to market its products and services. However, there is no guarantee that this trick will help this business in the future. Clients are running away from traditional themes and thus this company should modify its presentation and appearance to retain its clients.
In addition, it focuses on French dishes yet it has an international appeal to clients. This limits its client base and lowers its profits. Moreover, some people do not like visiting places that are associated with death. Therefore, Lady Elizabeth’s memories will not be an advantage to this restaurant because it will discourage potential customers from visiting it.
Opportunities
This investment has higher chances of expanding its client base by blending traditional and modern architectural and cultural aspects. It has a large farmyard that can be converted into a mini-game park for social wild animals like birds. In addition, it can construct a modern restaurant in this farmyard to ensure it attracts clients from both (traditional and modern) worlds.
Lastly, it should utilize its rich history and huge capital to advertise its service and products and if possible subsidize its prices to ensure clients do not forget the wonderful experiences available in its premises.
Threats
Fast food restaurants are threats to all traditional hotels because they offer quick and ready services and products. The products and services of The Bleeding Heart Restaurant and Bistro are not flexible and this means that other upcoming modern hotels stand high chances of competing with this investment. In addition, its peaceful and natural farmyard is facing the risk of extinction because of pollution and encroachment from the hotel and neighborhood populations.
Lastly, this restaurant relies on its rich history to attract customers. However, the present generation does not have a keen eye on issues that had significant meaning in the past. Therefore, it may be deserted if it does not introduce modern aspects in its dishes and themes.
The process of the selection of a supplier has to deal with multiple responsibilities regardless of the sphere or industry. The selection of the supplier is connected with various risks and benefits among which there can be the reputation of a business among the consumers and partners, the satisfaction of the stakeholders, the efficiency of the processes and operations, and the profitability of the company. That is why the suppliers are to be selected thoroughly and thoughtfully. The industry selected for this paper is hospitality and food industry. A choice of salmon suppliers for a restaurant will be evaluated in this paper.
First of all, discussing the possible choice of a supplier for a restaurant or a chain of cafes it is important to remember the mission and vision of this particular business. The current global trends in food and diet choices have been heading towards sustainability for the last several years. This tendency is explained by the fact that the main target consumers of the contemporary restaurants are the Millenials who grew up under the influence of the promotion of the environmental responsibility. That way, to stay in demand, the contemporary restaurants and cafes are to provide the customers with sustainable meals. In other words, the sustainability and the quality of the salmon sold by the suppliers would be one of the main criteria.
As mentioned by Kerzner (2009), the supplier’s confidence concerning their ability to meet the deadline and provide the products in time is another vital criterion responsible for the efficiency of the operations and the presence of the required items in the restaurant’s menu for the satisfaction of the customers. In addition, the size and type of the business has to be taken into consideration by the decision makers since a restaurant caring about serving the sustainable products would be more inclined to cooperate with the responsible seafood artisans instead of buying from large farms that cause enormous pollutions annually. Moreover, as pointed out by Zsidisin and Ritchie (2008), the survey conducted by the Michigan State University shows that price is one of the most frequently emphasized characteristics of the suppliers within the food industry. Finally, one more important criterion to take into account is the location of the supplier. This characteristic would include the geographical information about the place where the supplier operates, its distance from the receiver of the goods, and its status (local or foreign).
Having established the five criteria (time, price, business type and size, sustainability and quality, location), one needs to assign the value to each of the characteristics. On the scale from one to ten the meanings are the following: time – 10 points, price – 9 points, business type and size – 5 points, sustainability and quality – 10 points, and location – 7 points.
After the calculations, the results of the three potential suppliers are the following: Supplier # 1 – 326 points, Supplier # 2 – 347 points, Supplier # 3 – 329 points. These scores determine the leader (Supplier # 2) with the highest score. Interestingly, taking a look at the scores of this supplier one will notice that they are not the candidate with the best time and price scores, so this supplier is going to be slow or unreliable and pricey, but their quality and sustainability score is higher than that of the other competitors.
The method applied to the supplier selection is beneficial since it provides an easy way to calculate the optimal candidate. It looks like a simple solution, but this is just an illusion as this approach has a couple of disadvantages. First of all, it might be rather challenging to assign a numerical value to each of the criteria on the list using the same scale. Converting a price (in dollars) and time (in days and hours) into the numbers from one to ten might turn out very confusing. Besides, how is one supposed to decide which aspects are more and which ones are less valuable? This solution might turn out rather arbitrary and cause multiple arguments among the decision makers. Finally, the final results may be slightly frustrating because the candidates’ lower scores on the important criteria can be easily compensated by the higher scores on the markers with a lower value.
In conclusion, the method of supplier selection tested in this paper can be rather helpful, yet it might make sense to employ it as an additional source of information for the decision makers who would rely on other methods as well. Applying mathematical calculations as the core method for the selection of suppliers seems insufficient as it is mainly based on fuzzy logic and approximations (Golinska & Kawa, 2015).
Reference List
Golińska, P., & Kawa, A. (2015). Technology management for sustainable production and logistics. New York, NY: Springer.
Kerzner, H. (2009) Project management: A systems approach to planning, scheduling, and controlling (10th ed.). New York, NY: Wiley.
Zsidisin, G., & Ritchie, B. (2008). Supply chain risk. New York, NY: Springer.
Kingsway restaurant is a fast food restaurant with five outlets across America. Most of the restaurant’s outlets are majorly operated through franchises or affiliates and collectively, they accommodate approximately 200 employees or more. The restaurant primarily sells hamburgers, cheeseburgers, chicken produce, and a number of other common fast food American delicacies. Of late, the company has been experiencing a number of challenges with regards to its ability to sustain high profit levels, as it did in the past decade or so. This has been occasioned by a change in management.
Most of the functional areas identified as missing links to the organization’s capability of sustaining high performance can be evidenced from its organizational design (Mind Tools Ltd., 2011). The missing links entail important functional areas, such as a clear definition of the organization’s strategic goals; a lack of internal alignment to organizational goals; ineffective links to customers and a lack of external fit. These are some of the weak areas noted in the overall organizational design of the company. In demystifying these problematic areas, this study will comprehensively outline how the organization fails in ensuring the functional areas are well defined to improve organizational efficiency.
Lack of Goal Clarity
A change of management at Kingsway restaurants has significantly brought a lot of ambiguities in the strategic growth path of the organization. In other words, the organization has been very inconsistent in the manner it addresses its core strategies. Currently, management is insisting on customer satisfaction as its core strategic goal, but five months back, the same management had been insisting on strategic positioning (with regards to competitive forces) as the primary strategic goal of the organization.
The second strategy was meant to engage a number of strategies to position the company above its competitors and become the best fast-food restaurant in its regions of operation. This lack of clear definition of strategic goals have confused a number of employees on the primary strategic goal of the organization, because many do not know whether the strategic goal of the company is to be the best fast food restaurant among its peers, or to provide the best customer service in the region.
Lack of Internal Alignment
Kingsway restaurant has in the recent past grappled with the problem of internal alignment because the design of the organization has been inconsistent with the organizational structure. This has especially been noted with regards to the knowledge management process of the organization (in other words, the knowledge management approach for the company is in total disharmony with the organizational culture). This can be evidenced from the fact that the organization has a predefined strategic orientation of customer emphasis and information focus, but the organizational culture is basically centered on management orientation. In this regard, employees virtually have no say in the organizational decision-making process, except to follow managerial instructions. This problem shifts focus from customers to management, and according to Simons (2005, p. 2), it is bound to cause organizational inefficiency and increase the organization’s likelihood of not realizing its strategic goals. .
Ineffective Links to Customers
Kingsway customers have in recent years been very choosy of the service offered to them. Their demands have been equally high over the period of time, and because of this reason, the management of Kingsway has been trying to establish a good link between the organization and the customers so that they can better cater to this increased demand. Considering the success of such a strategy depends on the ability of the organization to have the required capacity to meet such customer demands, the organizational design of the company has been unable to facilitate the realization of this goal because there is no customer service department or a communication framework where customers can communicate their concerns to management. In other words, if there is a legitimate concern from a customer, there is no possible framework such a customer can communicate freely with the management, (say through a suggestion box or similar means). Simons (2005, p. 6) explains that such kind of situation can significantly reduce organizational performance.
Lack of External Fit
Kingsway restaurant has not done a good job in keeping up with the changes pertaining to the demands of the external fast-food environment. This is in reference to a continued customer demand for healthier foods in the fast food industry. Since the inception of the company, there has been continuous production of traditional and less healthy foods such as Hamburgers, french-fries, sodas and the likes, but little has been done to change the menu to meet the demand for healthier foods. This arises out of the fact that the organization has a rigid staff, which has consistently opposed the idea of preparing “unfamiliar types of foods”. Lampropoulos (2010, p. 19) notes that such a problem of staff rigidity, which causes a lack of external fit, calls for a change in the human resource strategy of the company.
Conclusion
Kingsway’s problems, to a significant degree, revolve around poor organizational designs that lead to a lot of organizational inefficiencies (regarding the manner the company operates). This study identifies that the weak functional areas of the organization’s design relate to a lack of clear definition of organizational goals, lack of internal alignment, ineffective link to customers, and a lack of external fit. These problems can be remedied through an overhaul of managerial principles.
References
Lampropoulos, N. (2010). Enabling the Exploitation of Tacit Knowledge: Open Issues and Opportunities. Web.
Mind Tools Ltd. (2011). Organization Design: Aligning Organizational Structure with Business Goals. Web.
Simons, R. (2005). Levers of organization design: how managers use accountability systems for greater performance and commitment. Harvard: Harvard Business Press.
The sphere of entrepreneurship consists of a number of peculiarities and activities that have to be defined in time in order to avoid failures and mistakes. In this report, the basics of entrepreneurship will be evaluated from one particular sphere – the restaurant business, and, to be more exact, the activities of one Russian restaurateur, Arkady Novikov, will be taken into consideration.
With the help of this report, it is possible to make certain clarifications as for the different aspects of entrepreneurship and prove that such points like motivation, team management, decision-making process, and proper strategy formulations play a significant role in the development of business and its successful implementation into the world of business. In spite of numerous difficulties and challenges in the restaurant industry, it is still possible to define its main objectives and strive for their accomplishment within a short period of time.
Introduction
Nowadays, many people would like to be involved into the process of entrepreneurship in order to have a chance to earn money, to be recognized in society, and to make use of their skills and knowledge to develop the chosen sphere of business. Carsrud and Brannback (2007) admit that “entrepreneurship is important to economic wealth creation at the national and individual levels” (p. 6), this is why when people get involved into entrepreneurship, they have to be able to recognize the purposes of their activities and the benefits of the chosen steps. The impact of entrepreneurship into the economic sphere is considered as huge, for example, by means of “acting as a conduit through which knowledge created by incumbent firms’ spills over to agents who endogenously create new firms” (Acs et al. 2009, p. 17).
Among the variety of entrepreneurship types, it is possible to define the restaurant business due to its abilities to unite different spheres of human activities. After the evaluation of the current state of affairs, it is necessary to underline that the restaurant business is one of those where the idea of competitiveness and the desire to introduce the best services turn out to be the leading ones. In this report, the idea of entrepreneurship within the frames the restaurant business will be evaluated in order to clear up what the main steps to success in the chosen business are and what challenges may appear on business developers’ ways to this success.
With the help of the achievements of one of the most popular Russian restaurant business’ owners, Arkady Novikov, the concept of the restaurant business becomes clearer and more comprehensible: “Moscow’s massive inequality is a blessing for its high-end hostelries: there are plenty of rich Russians to patronise them and more than enough poor ones to make labour cheap” (The Economist 2006, p. 62). The process of restaurant entrepreneurship’s development is regarded as a complex activity with a variety of issues to be considered: individual learning, motivation, control, team management, etc are the areas that promote the development of the restaurant business and their owners’ activities.
Peculiarities and Objectives of the Project
One of the main objectives of this report is to prove that such aspects like properly chosen entrepreneurial behaviour, individual learning, decision-making process, employees’ motivation and control, self-employment, team management, and strategy formulations are integral for entrepreneurship. Based on the example of the restaurant industry and the activities of Arkady Novikov, the peculiarities of entrepreneurship may be defined properly taking into consideration every single detail. However, the above-mentioned objectives are not the only ones that have to be accomplished in this paper.
Such additional points like identification of personal traits, challenges owners and employers may face, and opportunity recognition also becomes influential for the development of the project. Under the current conditions of living, people have to deal with numerous difficulties; and the idea of entrepreneurship encourages to take serious actions and to evaluate the outcomes of the chosen activities beforehand.
To gain a better understanding of the peculiarities of the restaurant industry, online sources where the ways of restaurant business development are mentioned should be used. It helps to comprehend what precautions and ideas are the most effective for modern times. A number of theoretical literature like books and articles has been also used to define how theory has to be implied to practice and what expectations of such theoretical backgrounds are. For example, Davidson (2002) believes that entrepreneurship research is obligatory for those people who want to know the basics of entrepreneurship. This is why the evaluation of the educative literature is the significant point in this project as well as the interview with Arkady Novikov, a famous Russian restaurateur.
The development of the restaurant industry in such huge countries like Russia have been predetermined by numerous events such as USSR collapse, investments’ growth, and the necessity of Westernization. People were deprived of the opportunities to find enough money to start their own business and earn money, this is why they tried to make use of cheap labour-power; and one of the most successful examples was Arkady Novikov whose achievements and attempts made him popular and recognizable around the whole world. This is why such backgrounds for the restaurant business have to be admitted as the most influential ones.
The methodology of the Project
To present this report and achieve the purposes set, a number of steps have been taking in accordance with the necessary order. First, the evaluation of entrepreneurship and its basics have been made to clear up its essence and its main points. Second, the restaurant industry is chosen as one of the most successful examples of world entrepreneurship and analyzed from a variety of perspectives.
This step makes it possible to define the major aspects of entrepreneurship and the qualities that have to be inherent to people in order to become successful owners of the business. The example of the Russian restaurateur Arkady Novikov is regarded as the most appropriate one because he started his business at the beginning of the 1990s and during a long period of time, he proved that the chosen industry is able to succeed and bring benefits.
To make use of the data collected, it is very important to create time limitations and find out the necessary sources accordingly. For example, the necessity to interview the entrepreneur is burning because his ideas and suggestions make the entrepreneurship research easier and more effective: the main points of the restaurant industry are already defined. With the help of the interview, the basics of entrepreneurship business are defined: though Mr Novikov admits that he never relies on business plans and other strategic formulas, his activities and propositions always gain recognition and support.
The analysis of books helps to define the main theoretical frames of entrepreneurship business and the restaurant business in particular. Up-to-date sources introduce the backgrounds of the chosen industry and properly explain the ideas of how it is better to carry on the process.
In general, the process of data collection turns out to be successful and effective because basic information on entrepreneurship and its features are found as well as several sources about Arkady Novikov’s activities and the development of the restaurant industry in Russia are chosen.
Literature review
The main points to be taken in the report should constitute the holistic character of motivation, challenges, leadership skills, and, perhaps, a little bit of luck. Jack (2005) investigates the changes that took place in Russia during President Putin. In this respect, the core of Russian economic and political relationships, meaning Moscow, flourished with lots of fashionable and cutting edge apartments, restaurants, hotels and other facilities. All these gave stimuli to turning Moscow around. The case in question is that concerning Arkady Novikov, as was mentioned before, is glorious for his intensive capability of opening restaurants throughout Moscow. The researcher writes in the book that the main factors that influenced Novikov to create and further develop his restaurants were the primordial ambitions and creativeness in cooking. That was the focal idea that showed Arcady the way to follow in newly born Russia.
In The exploding restaurant scene – in Moscow (2006) the observers have made a fair remark that after the Soviet reality Moscow experienced a real Renaissance in restaurants. Moreover, this study has reported that Arkady Novikov is presumably the main figure in the pack of restaurants serving Italian, French, Asian, and many more dishes in more in over 60 upper-class and middle-class restaurants (The exploding restaurant scene – in Moscow, 2006).
The leadership and administerial ability of this person characterize the gist of entrepreneurship at large. Moreover, to be a successful restaurateur, as Novikov, means to adjust diversity of approaches to make a definite place attractive. It is seen, as Borden (2009) views it, in the capability of aesthetical as well as cultural tints incorporated in “Bolshoi Restaurant” (or just “Big”) near the famous Bolshoi Theatre.
Motivation and control which is seen on the example of Arkady Novikov were, probably, borrowed by him from some western entrepreneurs who had come to Russia and Moscow, in particular, after the fall of the USSR. In this respect, Hunter (2000) provides a successful story of George Cohon who opened the first McDonald’s in Moscow in 1990. Moreover, Novikov worked there for some time.
Achieving the potential of entrepreneurship, one should be able to face challenges with an initially worked plan of actions. Thereupon, Bolton & Thompson (2002, p. 1) admit that a “true entrepreneur is someone who does things that make a significant difference.” Observing their standpoints according to it, one should realize the same feature as concerned with Arkady Novikov. This person could navigate the growth of restaurant business by way of sequential implementation of a different vision. There is no single restaurant that could repeat some other one. According to the interview with Arkady Novikov, it is seen that his potential is largely based on opportunity recognition.
Harringon & Herzog (2007) provide a scope of arguments to prove that a real restaurateur is one sharing features of personal vision, leadership and sustainability. This is why the range of concerns going round for a real chef should be explicitly based on team management and development in communicating with staff and clients. A specific approach is considered to be referred to the Gastronomic Identity Model (Harringon & Herzog, 2007). Moreover, to add suchlike communication in a more extravagant, Novikov includes the aesthetical components reflection the atmosphere loosely related to the name of the restaurant. This feature demonstrates the way an entrepreneur should evaluate the current stage of progress along with further implications.
In this case, Harper (2006) infers that to make entrepreneurship different means to do it in an extra-ordinary way. The example of Arcady Novikov is reported to be similar a bit to that of Steve Schussler: “He recognized that a number of people wanted more than just a meal when they went to a restaurant – they wanted an experience” (Harper, 2006, p. 96). That is the attribute in market relations and management which shifted the restaurant business in Moscow in 1990s owing to Arkady Novikov. His strategy is largely grounded on going ahead in introducing a visitor to a spectacular and magnificent world of dreams and different association while having meals.
One should admit also the passion with which Novikov opened 2-3 restaurants each year. That is what characterizes him as an intuitive restaurateur. His position also proved to be successful as Novikov never took a glimpse at how thing were going on in different (dark) times for Russian economy. Von Gehr (2007, p. 3) interprets this claim based on position of New York restaurateur, Charlie Palmer: “Analysis cannot replace entrepreneurial intuition and passion.”
With more approaches to entrepreneurial behaviour possessed by Arcady Novikov, one sees the difference in what he succeeded and how it was possible for this entrepreneur. The question is that “the fundamental nature of entrepreneurship is acting on the basis of information and knowledge that not everyone else possesses” (Block, 2002, p. 726). Lahm (2007, p. 2) points that bootstrapping is, perhaps the optimal way in self-employment, self-sufficiency, and individualism to support successful and cutting edge “way of entrepreneurial life.” Thus, reviewing the professional way of Arcady Novikov, one agrees with the fact that he chose initially correct way for growing rich and successful.
Findings
The example of entrepreneurial manner demonstrated by Arkady Novikov in restaurant business provides a set of ideas on how to become a successful entrepreneur. Several studies reported about different algorithms for stepping forward toward new frontiers in entrepreneurship. However, less attention is grabbed to it by the majority of people. The pioneer in marketing cultural and aesthetical features prescribed in the interior and exterior parts of a restaurant, Novikov motivated the rest of entrepreneurs to shape this feature in Russia (Henry, 2007). Moreover, entrepreneurship in creative industries should not be adjusted to some clichés in maintaining business on the whole. It is a sort of creativeness united with personal inclinations to change the environment for better.
Stokes, Wilson and Mador (2009) admit that entrepreneurship in terms of developing markets is quite attractive in Russia and in Moscow, particularly. The fame laid on Novikov is that he could predict what people wanted at the time after the fall of the USSR. Here starts his genuinely distinct entrepreneurial activity. Calagione (2005) states that marketing environmental benefits, helps in expanding personal horizons and business. Thus, entrepreneurship is a dynamic sphere of relationships that need more efforts and creativity and dexterous feature of character.
Further still, the role of entrepreneurship grows when it turns out to be a sort of chain management. Networking business means expanding personal territory of influence. Hence, networks have their own practices in cultural and specifically delineated perspectives (Casson, 2006).
With this idea in mind, Novikov could not just stop increasing his administrative abilities outlined in opening new restaurants on a higher scale of influence. Entrepreneurship in food industries is thought of to be a basic need for the society (Lynn, 2009).
Thus, starting a restaurant, a person should be highly motivated to reach out the pivotal purposes despite facing different challenges on such a “triumphal march.” The thing is that most of the beginners in this field fail after the first year, for the lack of coordination and sufficient planning. Thereupon, Lynn (2009, p. 2) admits: “In fact, the more streamlined you can make it, the better your chances for success.” That is the way it looks today. However, it is still not so late to start a personal restaurant business guided by what the eminent restaurateurs admonish.
Discussion
Looking at the information reported in the literature review, one is about to feel responsible for realizing the features of being a restaurateur. The example of Arkady Novikov is in case, and this clarifies the holistic perspectives enlisted in the paper. The field of opportunities and challenges he faced invigorated him to pioneer new prospects on restaurants in Moscow. The whole evaluation of Novikov, as an entrepreneur, falls into the scope of approvals on the part of eminent researchers in the West.
The arguments are mainly based on concrete facts and assumptions prescribed. However, the continuation of the main idea in the literature review has faced a counter feedback in part grounded on the general entrepreneurial practice. On the other hand, some parallels were drawn up to constitute the practical consequences of rational approach in creative industries.
To say more, the similarities stated in both parts of the report are found at the juxtaposition as referred to the one-sidedness in main points. In other words, the findings outlined in part what has been discussed in the literature review part. The area of the main points discussed includes: decision making, opportunity recognition, team management, and strategy formulation. All in all, there is a distinct transition between the parts related to the personal features of an entrepreneur and entrepreneurship as such. The two parts correspond to each other in terms of the observation, on the one hand, and current inferences, on the other hand.
A complex vision of these parameters indicates the validity of the reported topic. As the culinary industry is in a constant vortex of change, thus, restaurant entrepreneurship should also be flexible to maintain such changes (Hamilton,Cornelio, & Papagni, 2009). Hence, the main points to be discussed have been taken into consideration.
What is more, the difference that is seen between two parts is in the way of challenging the main prospects. Thus, the reviewed literature fits specific topics and ideas that are off in the findings section. Moreover, the scored information in the findings shows more some notes (techniques) to be implemented. The overall discussion does not shake the initial gist of the project in order to complement the genius of being a successful entrepreneur at the very outset of business start-up. At this point there is a unification of what was discussed in both sections of the report. An observer should relate personal suggestions as for the ideas represented above solely in terms of practical improvements. It is so, as the restaurant business is considered to be growing currently. Thus, the further implications in reviewing current and previous studies should propose a global model for reaching success in entrepreneurship.
Conclusion
In the report, the analysis of the entrepreneurship business and its peculiarities has been presented. To narrow down the limits of the research, one particular sphere is chosen: the restaurant industry. The example demonstrated by Arkady Novikov that the restaurant industry might be improved in many different ways like chain management organization, motivation factors, and means of control.
Though sufficient planning is regarded as the crucial step, Arkady Novikov demonstrates that sometimes attempts to break the rules and take actions independently without thorough planning may become winning and rather effective. In order to start a restaurant business, a person has to respond to a number of characteristics and be enough motivated because numerous challenges may decrease the quality of actions and thoughts.
Restaurant business has a number of peculiarities that have to be considered in time. If the owner fails to meet one of the demands and requirements of the chosen project, there is still a possibility to improve the situation by means of changing another aspect of entrepreneurship. Organizational change and its proper management play a crucial role in any business, and the restaurant industry and the actions by Arkady Novikov in particular serve as a good example of how entrepreneurs may improve their work and achieve the purposes set.
Appendices
Interview with Arkadiy Novikov
Introduction from magazine
“ I’m never using business plan for my projects…” Famous restaurant entrepreneur A Novikov used to rely on his intuition.
Co: You are always considered as an extraordinary restaurant entrepreneur and ‘Moscow city’s pride”. What do you personally think about your accomplishments?
N: I don’t like to be praised. There was a moment when many people were saying “ You are the best, you are the number one”. This is very pleasant to hear, but you can’t be the first al the time. In this business, like in sport, there is a constant competition. Many of my competitors are slightly behind me and some of them are even went ahead… That’s why I don’t over react on such comments. We’ve done a lot during past 10 years, but when I think about how many people have done even more, I understood that everything is relative and you always have to think about future perspectives.
Co: About perspectives, what is going to be next? It must be very challenging to control your own “empire”?
N: I think the word empire is not appropriate, empires have a tendency to collapse. I prefer the word “company”, it is more sophisticated. As for my business, control over companies, in particular, they are all under my surveillance and I act as consultant-coordinator. I have business partners who help me in managing, but the main pressure is on managers in some cases on cookers. However sometimes the whole business depends on cleaners and cloakroom attendants.
If they don’t act friendly-nobody will come to our place, if it’s dirty –nobody will ever come back. Everything is important: how the carpet lay, entry illuminated, how waiter smiles to clientele, how the bill is served.
Co: You are often criticized that the interior dominates over “kitchen”. What can you comment on this, what is more important to feed the customer or to create a unique atmosphere?
N: There are a lot of people who go to restaurants? They can be divided on several groups. People who want to enjoy the quality of food, people who want to enjoy the interior and people who want both. Also there are people who just want to hide from everybody. I’m trying to satisfy all of their needs. That’s why it’s difficult to say what is vital for me. I just want to Maximize target audience and to meet their expectations.
Co: Hoe do you begin the work on a new project? You make a business plan, think through the interior…
N: I never create a business plan, though I graduated from economic university in Moscow. I’m trying to keep all in my head, it’s difficult to forecast the success of a new project. The success can even depends on how friendly is your staff. Neither economist nor analytic can predict it.
Open a new restaurant is creativity first of all. It always begins with an idea. Any word can be a stimulus. Every new project is like a child. Parents never know what he will become. Everyone wants hip to be happy, healthy and clever. Even healthy and clever parents don’t always have healthy and clever children. It’s like we do, opening a new restaurant you never know what is going to be like in the end. There is an element of adventurism. There are people who know the business from inside and there are people who just have money but can’t create anything proper.
There is a calling – you can just take the money and begin work, and if it is not, then, even with a million, you risk of burning out. By the way, I wasn’t not born a restaurateur, I studied in the process. But I like to open new restaurants, I get pleasure from it.
Co: In Russia the culture of visiting restaurants differs a lot from European style, where people go to the restaurant at fixed time and often in order only to eat. Does Russian specificity affect the business?
N: In Russia the restaurant business and culture is completely different from that in Europe. It depend on what to compare. Speaking about posh restaurants, posh Moscow restaurants can provide decent competition, as for classic ones we don’t have such. Once I’ve been to Ducas restaurant Plaza Athenee in Paris, with a special “aquarium” room, where you can observe the cookers work. I don’t know how many years should pass in order for our cookers to learn to work like that. They didn’t say a word. I had a feeling that I was attending a surgery operation. They kept eye-to-eye contact between each other. Top class performance.
Of course we also have good cookers but it’s not the same, the main Russian problem is that we don’t have a culture of a supper. For instance it’s impossible to make an Italian business man o stay in his office during supper time. That’s why all places are crowded during this time. From 13 to 15 they have supper time and dinner after 19. I appreciate it a lot. In our country everything is completely different. If the restaurant is 20-30% full we consider it very good.
Co: Is it true that $150 000 is enough to open a small restaurant and you will probably need $500 000 to open a proper one?
N: Not long ago I was invited as a consultant for people who spent $2 million on the restaurant. And u say $150 000? Of course you may try with this amount of money if you want. I can give you an example. Everything depends on what you want to create. Let’s imagine we want to open a new restaurant with you. Let’s say for 50 seats. We will need a place of 300 sq m, in order to make a good kitchen, cloakroom and toilets.
This space we should rent or buy. Good location will cost you from $600 to $1500 for 1sq m per year. It will be about $300000 per year and $ 25 000 per month. Note that you will have to pay from the moment of sighning a contract, but you will probably spend 4months for renovating the place. It’s $100 000 now and $100 000 will go on kitchen equipment, interior, furniture, hire staff and to buy appropriate vines, drinks and food… Very money consuming venture. An you never know when this investment is going to return to you and will it be successful or not.
Co: What is more profitable to open? Posh or cheap place?
N: The both can be profitable. Everything depends on how you manage. For instance, which problems you face opening a posh restaurant? People start to talk about is it tasty or nor, do they like interior or not, I it a good location or not, is there a parking space or not? When you open a cheap restaurant there are no such problems. First of all there should be a high attendance and the proper pricing. The location is a very important point as well, it’s better around the underground or pedestrian zone. In cheap restaurant cases you don’t need a creativity anymore, you should be a ruthless counting. So it’s never clear what is more profitable. The only thing I can say is that a chain of restaurants is always better.
Co: in general, is this business rentable?
N: Of course yes. We don’t have a bank or a rich sponsor.
Co: Do you feel the competition?
N: Of course yes, maybe it’s not good for us but our customers have the opportunity to choose from different prices and quality of restaurant.
Co: do you always buy or rent the space for your new projects?
N: It depends on the circumstances. Sometimes we buy, sometimes rent. Nobody gave me a property for free yet.
Co: Does anything change in restaurant business?
N: Classic restaurant style is becoming less demanded. France is still keeping the brand, nevertheless there are more and more fans of mixed cuisine. Everything is changing-cuisine change, interiors change, there are more and more fashionable restaurants in the world. As you know fashion is constantly shifting.
Co: Restaurant business in Russia is unstable. What if the crisis of 1998 will happened again?
N: Of course it frightens me, I think about it, but it doesn’t scare me that much. As for actual restaurants everything will depend on location, rent terms and loans. Of course every single crisis in this country affects the business.
Reference List
Acs, ZJ, Braunerhjelm, P, Audretsch, BD, & Carlsson, B 2009, ‘The Knowledge Spillover Theory of Entrepreneurship’, Small Business Economics, vol. 32, no. 1, pp. 15-30.
Block, W 2002, “Ona’ah,” International Journal of Social Economics, Vol. 29 No. 9, 722-729.
Bolton, B & Thompson J 2002, The Entrepreneur in Focus: Achieve Your Potential, Cengage Learning EMEA, Stanford, CT.
Calagione, S 2005, Brewing up a business: adventures in entrepreneurship from the founder of Dogfish Head Craft Brewery, John Wiley and Sons, Hoboken, NJ.
Carsrud, AL & Braanback, ME 2007 Entrepreneurship. Greenwood Press, Westport.
Casson, M 2006, The Oxford handbook of entrepreneurship, Oxford University Press, Oxford.
Davidson, P 2002 ‘What Entrepreneurship Research Can Do for Business and Policy Practice’, International Journal of Entrepreneurship Education, vol. 1, no. 1, pp.5-24.
‘Face Value: Arkady Novikov, the Restaurant Tsar’, The Economist, vol. 378, no. 8467-8470, p. 62.
Hamilton, DC, Cornelio, L & Papagni, C 2009, Love What You Do: Building a Career in the Culinary Industry, iUniverse, New York, NY.
Harper, SC 2006, Extraordinary Entrepreneurship: The Professional’s Guide to Starting an Exceptional Enterprise, John Wiley and Sons, Hoboken, NJ.
Harringon, R & Herzog C 2007, “Chef John Folse: A Case Study of Vision, Leadership & Sustainability,” Journal of Hospitality &Tourism Education Vol. 19, No. 3, 5-10.
Henry, C 2007, Entrepreneurship in the creative industries: an international perspective, Edward Elgar Publishing, New York, NY.
Hunter, S 2000, Entrepreneurs, Weigl Educational Publishers, Toronto.
Jack, A 2005, Inside Putin’s Russia: Can There Be Reform Without Democracy? Oxford University Press US, Oxford.
Lahm, RJ 2007, BOOTSTRAP MARKETING: AN ANALYSIS OF CONSTRUCTS AND IMPLICATIONS, Conference, Austin TX.
Lynn, J 2009, Start Your Own Restaurant Business and More: Pizzeria, Coffeehouse, Deli, Bakery, Catering Business, Entrepreneur Press, New York, NY.
Stokes, D, Wilson, N & Mador, M 2009, Entrepreneurship, Cengage Learning EMEA, Stanford, CT.
“The Exploding Restaurant Scene – in Moscow,” Financial Times. Web.
Von Gehr, J 2007, The Effective Entrepreneur, The Effective Entrepreneur, New York.
The hospitality industry includes a range of different fields connected with the service industry and tourism. Its units (such as restaurants and hotels) can be found all over the world, as they can be adjusted to various demands. According to the National Restaurant Association (2016), the restaurant industry in the United States enhances its performance with time, which can be seen in Diagram 1:
Diagram 1. Restaurant Industry Sales.
Such results prove that starting a restaurant is likely to be beneficial when its operations are maintained professionally.
Taking this information into consideration, it seems to be advantageous to start an Asian fusion restaurant in a neighborhood of Seattle. Downtown, Capitol Hill is a great location within this area due to its public and popularity among the tourists. It is claimed to be one of the entertainment districts that are always full of people ready to try something new. More than 32,000 individuals are living in Capitol Hill that is known for being “an eclectic mix of families, young professionals, and students” (Capitol Hill, 2015).
In this way, the target market of the restaurant can be defined. Realizing that such a diverse population has different demands, the restaurant is planned to offer lunch, afternoon tea, dinner menu, and bar service. As a result, customers will have an opportunity not only to satisfy hunger and thirst but also to warm up when it is cold outside and to have a nice time with friends and family.
Many clients must be likely to be the representatives of the younger generations and counterculture communities. Such people tend to be in opposition to the general public that is why they like to try something new. Thus, they will not be impressed and attracted by an ordinary restaurant. Fusion cuisine is a new wave and a trend in the industry that is why it should be greeted with fervor. Except for that, Asian food is not typical for America. Due to technological development, people became interested in Asian countries, which increases the chances for the restaurant to become successful.
The Asian fusion restaurant will be opened from 11 a.m. to 11 p.m. on weekdays and Sundays. However, on Fridays and Saturdays, it will work to 1.30 a.m. (still, only beer, liquor, and light snacks will be served after 11 p.m.). Such a schedule perfectly meets the schedule of the customers, as they are working and studying in the morning, which means that they will have no time to come. Still, the restaurant will be opened before the lunchtime so that it can satisfy many workers and will not lose the potential income. Moreover, taking into consideration the fact that at night people prefer to have a rest without substantial meals, a shortened menu allows them to streamline the working process and reduce expenditures.
The benefit of the Asian fusion restaurant is also its ability to innovate. The national cuisine of different countries can be selected and adapted if customers are willing to see some changes.
Competitor Analysis
Capitol Hill is full of attractions all day and night. The majority of its population has a high income (median income is even higher than in Seattle) and attends restaurants rather often (Neighborhood guide, 2016). Being a center of parties and fashion, this district turned out to become a fueler for numerous restaurants that can be seen as competitors of the Asian fusion restaurant under investigation.
According to the information that is available on Zomato (2016), there are 376 restaurants near Capitol Hill. Of course, they differ in cuisine and are targeted at a different market, but it does not mean that there is no competition. The clients have an opportunity to try Asian fusion food in 7 restaurants located only in Capitol Hill (Yelp, 2016).
The competitors are mainly focused on several types of cuisine and offer not only Asian fusion but also particular dishes from such countries as Vietnam or Korea. Rather often they provide the vegetarian option and focus on sandwiches. Still, the customers tend to pay more attention to salads and meat, which proves that the restaurant can focus on them when designing its menu.
Monsoon Restaurant is considered to be the best one in Capitol Hill. Its uniqueness is connected with the menu peculiarities (Vietnamese and Dim Sum, except for Asian fusion). The restaurant usually works from 11:30 a.m. to 12:00 a.m., but it opens at 10:00 a.m. on weekends. The price varies from $11 to $30. Like the majority of other restaurants nearby, it has a waiter service, allows taking reservations and has a take-out option. This place is targeted at adults who come with their friends. It is even adapted to the needs of people with disabilities who cannot move without a wheelchair.
Still, our restaurant can win clients’ appreciation, as Monsoon Restaurant fails to deliver the orders to homes and workplaces, has no Wi-Fi that is valued by today’s youth and is not ready to serve individuals with children (Yelp, 2016).
References
Capitol Hill. (2015). Web.
National Restaurant Association. (2016). Facts at a glance. Web.
Neighborhood guide. (2016). Web.
Yelp. (2016). The best 10 Asian fusion restaurants in Capitol Hill, Seattle, WA. Web.
Zomato. (2016). Capitol Hill restaurants, Seattle. Web.
This report was commissioned by the manager and owner of Marco’s Restaurant. It seeks to address the increasing losses that the restaurant continuously incurs. The profits have been declining since 1998 and beginning 2006, the restaurant has been on the downward trend incurring serious losses. The objective of the report is to determine the root cause of the increasing losses of the restaurant by analysing the management problems which include staff recruitment, training and motivation, communication, customer service, innovativeness and production efficiency; and to suggest strategies to revamp the restaurant.
Procedure
The report will analyse the background information provided by the manager as well as the findings of a recent customer and staff survey carried out to determine customer satisfaction and staff perception and attitude towards the management of the restaurant. The background information and the survey results will be used to explore the recurring problems and their relationships with the current downward trends of the restaurant.
Findings
Employee perception survey was given to a section of the staff across all the departments within the restaurant with an aim of determining their feelings towards the management of the restaurant. The survey conducted by an independent agency posed a series of questions around some key areas:
Organisation
Innovativeness
Staff recruitment, training and motivation
Equal treatment of staff
Communication
Production efficiency
A customer satisfaction survey was also given to customers who had been previously served at the restaurant. They were asked to comment on which areas they were satisfied with in terms of the services, food and menu; and which areas they were dissatisfied with. The results of this survey also raised some questions about customer service, menu and communication.
The background information provided by the management plus the surveys of both the staff and customers yielded recurring themes which suggest that poor management practices taken by the restaurant’s owner/manager are the potential sources of the poor services at the restaurant leading to the serious downward trends that is currently experienced.
Results of the staff survey: Key themes
Organisation
A recurrent theme was that the management has been ineffective in organizing and planning for activities of the restaurant. The restaurant is managed by Marco and his wife, Maria. Marco manages the kitchen while the wife manages the services; however, planning daily activities becomes a challenge to Marco as the wife often comes late. Maria is also not able to effectively manage her department since she wastes a lot of time with the relative employees including the sister. This causes poor coordination of the workforce and the business process of the restaurant.
The major problem being the large number of staff during the day when the customer turn out is low while the number of staff who serve the large number of customers in the evenings up to midnight is low. The staff also complain that roles of each employee are also not clearly defined. Another source of problem identified was the budget management in the kitchen department. The management purchased more than double the amount of ingredients required per week therefore over half of the stock was wasted. It was also suggested that the management paid little attention to its opening hours. Preparation of breakfast and lunch had become cost-ineffective since it served very few customers during these sessions.
Staff recruitment, training and motivation
Most of the members of the staff are either family members or friends of Marco’s family some of them with little training or no training at all in the hotel industry. This means that the level of expertise in the operations of the restaurant is low. Besides, there has been a major concern on equal treatment of the staff. The management is more lenient on the relatives and friends leading to increase in workload on the non-relatives and friends. The relatives and friends cause a lot of time wastage and delays in the provision of services.
The management tolerates their unhealthy behaviors such as coming to work late while drunk. In addition, there has been little on job training provided to the workers. It was also noted that motivation of the workforce was not given priority especially to the professional staff. They complained of workload and in addition, their views were not incorporated into the business process of the restaurant. It was suggested that the manager was too controlling to let the head chef and the bar manager carry out their jobs in best ways they thought.
Innovativeness
The restaurant management particularly the manager does do not allow for new ideas to be integrated in the production process or menu. The manager still believes in applying the traditional ways of food preparation and the original menu that was introduced during the establishment of the restaurant. The management has not invested into more modern and efficient equipment of managing its ingredient and food wastage. On the other hand, the restaurant offers broad menu while focusing less on strategies that could help effectively compete with other restaurants in the market. Guiseppe’s, a restaurant which came into the market 17 years after its inception has greatly overtaken Marco’s in the market share.
Communication
In particular, communication remains a major problem in the restaurant. The survey suggests that the staff are sometimes not given instructions on what to do. The front house manager mostly concentrates on talking non-business issues with relatives often forgetting to instruct staff under her department.
Results of Customer survey: Key themes
Poor customer service
The customers’ complaints were majorly on; order delays, mix up, menu and low staff morale while serving. Marco’s lost a lot of revenue as a result of order delays and mix-ups as some customers went away to get served at its neighbouring restaurants while others decided to stay away from the restaurant after experiencing such delays. The customers also complained that the staffs’ lack of morale while providing services created a very formal and stuffy environment not suitable for serving guests. The customers suggested that it would be much more relaxed if the restaurant provided for a more relaxed environment. The menu was also written in Italian making it hard for non-Italian customers to make their choices.
Implications of the key themes
The poor management practices adopted by the management of the restaurant have led to overall poor customer service and in turn declining market share for the restaurant. Employee motivation is low causing low morale in the workforce and job dissatisfaction. This has also contributed to low commitment to their duties as they feel less valued by the management especially the professional staff (Ninemeier & Hayes 2005: 237). The management problems have inhibited staff creativity and innovativeness as well as involvement in the management of the restaurant. Poor planning and budgeting has increased the cost of operations of the restaurant leading to increased losses.
Conclusions
The major problem that Marco’s is experiencing is management in all its business processes which include budgeting, planning, purchases, food preparation, customer service and human resource management. Family management with the help of friends and relatives has been very ineffective and has reduced efficiency in its business processes. The management also focuses less on motivation and empowerment of its employees.
Recommendations
It is therefore recommended that the manager has to first accept that customer trends are changing and therefore the restaurant need to diversify its operations and adopt better management practices.
Consider only non-family members as staff to achieve high level of expertise in its workforce. This means that the management has to lay off most of the relatives and friends staff and only remain with professional and efficient staff since maintaining relatives and friends has proved inefficient and cost-ineffective. The manager has to recruit expert staff as well as a human resource manager to help revamp the restaurant. The management has to invest in developing the skills and knowledge of its workforce through on job training and providing latest practices in restaurant operations. Each member of staff must have his or her roles in the restaurant clearly defined (Ninemeier & Hayes 2005, 237-239).
Allow staff to make decisions in situations under their jurisdiction. Their views should also be taken into consideration by the management. Customer service has to be trained to excellently handle customers and there should be an agreement on how to reduce the evening workload on them through proper planning of work schedules so that they do not work under much pressure and stress. It is important to eliminate service delays. The management also needs to consider implementing a reward scheme for its staff to motivate the workforce.
Adopt modern ways of marketing its services and menu by creating an interactive website where customers can order for foods online or make reservations. It has to expand its services to include offering food services to offices. It has to adopt more contemporary Italian cuisine and avoid being rigid on traditional style of food preparation to meet the changing customer trends and demographics. D
Discuss the possibility of introducing a different menu depending on the time of the day, day of the week and occasion.
Discontinue the foods in the menu that provide less returns or cause losses (Los Angeles Magazine 2006 74). It is not how broad the menu is but how each item in the menu can earn the business.
Invest in modern food preparation equipment which monitors the use of ingredients and also tracks product quality. This will help the restaurant streamline its costs and prices as well as reduce wastage (Boyle 2007). It will also help achieve speed and flexible cooking.
Reference List
Boyle, M., (12 October 2007), Burger King reinvents flame broiling. Web.
Los Angeles Magazine, (2006). The restaurant. Los Angeles Magazine, 51(1): 60- 188. Web.
Ninemeier, J., D., & Hayes, D., K., (2005), Restaurant operations management: Principles and practices. Upper Saddle River, New Jersey: Prentice Hall. pp. 237-239.
