Category: Restaurant

The market potential

This paper is aimed at estimating the market potential and market share of the restaurant named Lebanese Flower that has recently been opened in Sydney, Nova Scotia. These projections will reflect the financial performance of this business in 2015. On the whole, this calculation requires the management to examine various economic and demographic characteristics of the community. According to the census, carried out in 2011, the population of this community equals 108,724 people (Nova Scotia Community Counts, 2014).

This is the most recent estimation and it should be used in this paper. The target audience of this restaurant will include individuals aged between 18 and 65; the potential customers will be both male and female. These people are the most likely visitors to this restaurant. It should be mentioned that the target audience comprises approximately 59.5 percent of the total population (Nova Scotia Community Counts, 2014). Therefore, the organization may potentially serve 64 690 people.

Additionally, it is important to know the annual amount of money that people can spend on such services. In this case, one can use the data about commercial foodservice sales. The average per capita expenditures equaled $ 1,416 in 2013 (GE Capital, 2014, p. 13). In this case, it is critical to mention that this information was related to Nova Scotia, in general (GE Capital, 2014, p. 13). Nevertheless, this figure can be a very good approximation of the potential revenues that restaurants derive from serving clients.

Admittedly, buyers can differ in terms of their purchasing power and income level, but under such circumstances, one should focus on the average estimations. Additionally, the managers of this restaurant should make an adjustment for the inflation rates in the country. According to the Bank of Canada, the expected inflation rate will be kept at 2 percent (Bank of Canada, 2015).

It is possible to use this particular value of this variable, but one should keep in mind that it can fluctuate during this year. Overall, this information is sufficient for calculating the market potential. In this case, this indicator can be estimated with the help of such formula as

Market Potential = Target Audience × Per Capita Expenditures × Inflation Rate= 64 690 × $ 1416 ×1.02 = $ 93433060.8

This estimation includes the factor 1.02; it has been included to make the adjustment for the inflation rate projected by the Bank of Canada. Admittedly, there can be some inaccuracies in these calculations. In particular, the estimation of the target audience does not include the immigration to and from Sydney because the existing sources do not provide information about the age of people who come to and from this community.

Furthermore, at this point, it is impossible to obtain the estimation of growth trends in the foodservice industry for 2015. These are some of the limitations that should be taken into account by the management. Nevertheless, these calculations should be considered by business administrators in order to estimate the potential profitability of the enterprise.

The market share

The second task involves the calculation of the market share. In order to do it, one should know the service capacity of this particular restaurant and the service capacity of other restaurants located in Sydney. It should be noted that the service capacity of restaurants can be measured as the number of seats.

This indicator can be selected because it shows the number of clients that a restaurant can serve. As a rule, it is more accurate than the square footage or the number of tables which do not really show how many people a certain business can serve. This is one of the aspects that should be taken into account.

The service capacity of Lebanese Flower equals 35 seats. Furthermore, one should keep in mind that there are seven other restaurants located in this city. Among them, one can distinguish Boston Pizza and East Side Maria because they can host from 150 to 200 visitors. In turn, other restaurants have similar service capacity; in particular, they can host from 20 to 40 people. These data are critical for determining the market share.

It should be noted that the service capacity can vary. For instance, on various occasions such as holidays, the management of restaurants can make arrangements in order to provide accommodations for a greater number of visitors. These calculations were based on the maximum service capacity of these restaurants. This is one of the details that should be taken into account. In this case, one should speak about the following formula:

Percentage of market share= Proposed Service Capacity ÷ Total Service Capacity = 35 ÷ 800 = 0.04375 %

In this case, the percentage of the market share should be slightly reduced because this restaurant has been opened only recently. Therefore, in the beginning, this organization will need to establish its reputation in the market. The management may need to spend more time to win the loyalty of clients. In particular, one can reduce this indicator from 0.04375 percent to 0.03 percent.

Admittedly, this reduction is arbitrary; however, very often entrepreneurs make similar adjustments while estimating the market share; otherwise their expectations about their financial performance of their businesses can become unrealistic. Thus, the market share can be estimated in the following way:

Market Share= Market Potential × Percentage of the Market Share = $93433060.8 × 0. 03 % = $ 2 802 991.824.

There are several details that should not be overlooked. In particular, new restaurants can be opened in this community. Moreover, their service capacity is unknown. Therefore, the management should consider the possibility that their market share can be eroded. Additionally, one should keep in mind that the competitive strength of various businesses can change with time passing; thus, they may have more resources for attracting clients. In turn, this change can significantly affect the financial performance of other businesses.

One should also note that Lebanese Flower is the only restaurant that specializes in Arab cuisine. Yet, at this point, it may be difficult to determine how this attribute will influence the competitive strength of this business. These are some of the main issues that can be distinguished.

Discussion

This example indicates the estimation of market potential and market share requires the consideration of various economic and demographic factors. In particular, it is important to consider per capita expenditures, inflation rates, and estimation of the target audience.

Moreover, one should take into account such a factor as competition since it can shape the profitability of an organization. Finally, the management should remember that the number of businesses in the market and their competitive strength can change since these factors influence the validity of estimations made by the management. Despite these limitations, these projections should be included in the business plan.

Reference List

Bank of Canada. (2015). Inflation. Web

GE Capital. (2014). 2013 Canadian Chain Restaurant Industry Review. Web.

Nova Scotia Community Counts. (2014). Sydney: Nova Scotia. Web.

Comparison of Cambridge Suites Hotel and Hampton Inn by Hilton Hotel

A study of the two named hotels indicates a large difference in the prices of their services. Cambridge Suites Hotel records higher prices in all their services as compared to the same services offered by the Hampton Inn hotel though both hotels occupy the same locality in Sydney. The table below represents the results of the statistics recorded.

Table 1: A difference in the prices of services offered in Cambridge Suites and Hampton Inn (Andreyeva, Long, and Brownell, 2010).

Cambridge Suites Hotel has higher prices than that of Hampton Inn in all services provided. This is due the location of Cambridge Suites in an area inhabited by rich people as compared to those living in the area surrounding the Hampton Inn Hotel.

Comparison of Napoli Pizzeria and The Olive Pizzeria Bistro restaurants

Napoli pizzeria is located at 465 Charlotte Street while The Olive Pizzeria Bistro is located along the Sydney port Access Road. The two restaurants mostly operate in fast moving foods such pizza, cheese, pepperoni, and pepp-cheese among others. The table below summarises the results of a study on the prices of different commodities

Table 2: Comparison of the prices of foodstuffs in Napoli Pizzeria and The Olive Pizzeria Bistro (Hayes and Ninemeier, 2004).

Other hotels and restaurants in Canada

Grey Eagle Resort, a modern hotel in 3777 Grey Eagle Drive Southwest, T3E 3X8 Calgary, Canada offers a series of highly recommendable services and is one of the most preferred hotels in the area. Even though it has higher prices as compared to the two studied hotels within Sydney, it attracts a good number of Canadian tycoons and others from the world over. In Grey Eagle Resort, a living room inclusive of breakfast goes for 84 pounds for a single night per person. This is much higher than the hotels in Sydney. Consequently, other services such as meetings, weddings, and events are also more expensive.

Raymonds Restaurant, in the eastern Coast of Canada, also experiences higher prices in their services with the cheapest pizza amounting to $8.50. Generally, the costs are higher than hotels in Sydney. Hayes and Ninemeier (2004) note that a seven-course tasting menu runs from $125 and five-course menu at $100. However, the restaurant attracts a high population of rich individuals with higher profit margin recorded in 2014.

Price comparison of International hotels and restaurants

A study of international Hotel Calgary indicates even a quite higher prices of the services offered. The rates for suites in the hotel start from $119 per person per night. Consequently, dining and events rates are also higher than that of the hotels in Canada, with the starting rate being $112. According to International Hotel Calgary (2015), Catering and weddings are also expensive with the rates calculated per hour.

Thrillist restaurant in the Middle East is one of the restaurants that attract a greater population regardless of its high prices on goods and services. However, it maintains additional services that keep most of its customers regardless of high prices. The lowest rate is $ 14 for a pizza.

Justification of the higher prices by companies

Evidently, companies that charge relatively higher offer modernised and highly improved services that meet their clients taste and preferences. For instance, Cambridge Suites Hotel provides ample rooms for meetings and events organisation with different set of sitting patterns enabling the client to choose the design of their own interest. Consequently, in the event of the meeting, Cambridge Suites provide meeting WI-FI, flip chart and markers, and all day non-alcoholic beverages among others. One of the distinct methods used by Hampton Inn is individual pricing during the meeting if need be and offers for audio-visual systems. My visit to these expensive hotels and restaurants proved provision of extra services and, therefore, a justification of the higher prices (Andreyeva et al., 2010).

Most companies that offer services of higher products offer other free services such as free high-speed internet, free breakfast, pet friendly services, and accessibility to kitchenette where the client can prepare some other foodstuffs apart from those provided by the hotel. Cambridge Suite and Hampton Inn, for example, provide free breakfast and internet to their clients and therefore a need to maintain high prices for their services. I realised that the more a hotel becomes expensive, the more improved are its services. I, therefore, concur with the concept higher prices directly relate to better services.

Other factors affecting price by hotels

The sales of the products in the hotels in Sydney and the world over depend on other factors both within and outside the concept of the company. Outlined below are some of those factors that determine the price of a commodity or service especially in a hotel:

The development cost

Any person offering a service or a product would not be willing to sell the product at a lower cost than the initial production cost. The main aim of operation is to obtain profit. The total cost of production inclusive of tax and other expenditures determines the actual unit cost of a commodity or service. Consequently, an introductory price is always high due to higher in innovative processes and heavy investments into research and development of the new product.

Economic trend

Economic factors such as labour cost, taxation rate, inflation rate, currency exchange rate, and government’s fiscal and monetary policies positively or negatively influence the price of a product or service. For example, a higher taxation of cheese would generally contribute to a rise in the prices of all the restaurants that offer cheese-related products.

Class of the targeted customers

The class of the targeted customers affects the pricing of services and products. There exist three classes of people; the rich, middle class and the poor. A product or service that targets the rich commands a higher than those targeting the middle class. The rich usually render a low-priced service or product valueless; therefore, it does not attract many buyers or attendants. Cambridge Suites Hotel, for example, targets the rich and this contributes to the higher prices of its services to maintain the pool of its customers.

The level of demand

A higher demand than supply of a product or service creates a scramble for the limited available services. Consequently, the products inflate leading to higher pricing of the commodities. Therefore, a product developer must understand the market trend about the demand and supply.

References

Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food. American Journal of Public Health, 100(2), 216-222. Web.

Hayes, D. K., & Ninemeier, J. D. (2004). Hotel operations management. Upper Saddle River, NJ: Pearson/Prentice Hall. Web.

International Hotel Calgary. (2015). Calgary Hotels Downtown. Web.

Dubai Fish Hut is one of the successful small businesses in the food industry in the United Arab Emirates. The restaurant has a good ambience and is located in an advantageous place attracting a lot of customers. The detailed analysis of its location helps to reveal that the owners of the business have chosen a great site contributing to the success of the restaurant.

The Map

The map shows the exact location of Fish Hut restaurant. It is situated at Street 8 behind Lamcy Plaza Parking, Dubai, the United Arab Emirates. The restaurant is located in Oud Metha in a proximity to Dubai Mall. It is also situated close to Burj Khalifa. Only a few kilometres separate it from Jumeirah and Dubai International Airport.

The Competitive Business nearby the Fish Hut Restaurant

This map shows the potential competitors of Fish Hut Restaurant: the nearby restaurants and cafes. The closest food restaurants include Winny’s Restaurant, Noon O Kabab Lamcy Plaza, Moti Mahal Delux Restaurant, Maya’s Restaurant, Des Pardes Restaurant, Pan de Manila Restaurant, etc. Though Fish Hut Restaurant is surrounded by an abundance of potential rivalries in the food business, the restaurant’s dedication to a specialised type of food makes it rather unique, as no fish food restaurants can be found nearby.

The Choice of the Location

The current owner of the business chose this site because of its numerous advantages. The locality of Oud Metha has Dubai metro’s green line station, which makes the location easy to be reached with the help of public transport. Oud Metha is also rich in interesting places attracting thousands of tourists every day. Burj Khalifa, the tallest artificial building in the world, is among the sites mostly visited by the tourists and is situated close to the restaurant. Zabeel Park is also located close to the restaurant. The proximity to the park is always advantageous for a food restaurant, as people come to the park for entertainment and are likely to continue spending their leisure time in a nice place offering delicious food.

The proximity of the airport also makes the chosen site advantageous, as it enables the visitors to try out the exquisite meals served in the restaurant before their flight from Dubai. Dubai Airport serves not only for foreign visitors but also for local population travelling abroad. Therefore, local citizens coming from other cities also have an opportunity to visit the famous restaurant. The restaurant is situated close to Jumeirah Hotel, which increases the chances of being visited by the tourists and businessmen staying at the hotel. The proximity to Lamcy Plaza and Dubai Mall also increases the chances of attracting a lot of visitors coming to the restaurant after long hours of shopping.

Lease Cost versus the Suitability of Location

Though the lease cost in such site is rather high, the suitability of such location offsets the spending, as it enables the restaurant to be in the centre of the entertainment life of Dubai. Fish Hut restaurant is a perfect example of the case in which investing much money in luxurious leasing opportunities is a necessary and well-taken decision. Though the owners of the business had to spend big sums for starting the business in such an advantageous location, the popularity of the restaurant justifies the spending. By choosing the suitable location, the owners of Fish Hut Restaurant have managed to create the business that is famous abroad the United Arab Emirates and attracts thousands of visitors from all over the world.

The Benefits of the Location

The site chosen for Fish Hut appears to be the best choice. The first component of its success is the proximity of Lamcy Plaza Parking. The restaurants situated close to huge parking places have higher chances of attracting the visitors, as their customers do not face problems with searching for a place for parking a car (Lallo 2013). The second advantageous factor is related to the safety of the site. Location in the area of the city that is safe is a must for the owners of food business (Brown 2007). Fish Hut is located in the locality that is not only safe but is also well-known for tourists and the local population. The accessibility of the location is another important factor influencing the success of the restaurant business (Brown 2007).

The site can easily be accessed, as the locality has the metro line and is situated on the way to the airport, which means that an abundance of transport passes by it every day. The attractiveness of the location to the tourists is another factor contributing to the restaurant’s success (Baraban & Durocher 2010). The proximity to famous sites, parks, malls, and hotels makes the location exclusively appealing to the visitors of Dubai. Besides, though the abundance of other food restaurants nearby Fish Hut can seem to be a disadvantage, the restaurant offers such a unique and exquisite type of food, that it is no reason for its owners to be afraid of the competitors in the area.

Success in restaurant business heavily depends on the thoughtful choice of appropriate location (Zapoli 2005). The owners of Fish Hut have managed to choose the site that gives many benefits to the business and contributes to the popularity of the restaurant.

Reference List

Baraban, R & Durocher, J 2010, Successful restaurant design, Hoboken, New Jersey, John Wiley & Sons, Inc, Web.

Brown, D R 2007, The restaurant manager’s handbook, 4th edn, Ocala, Florida, Atlantic Publishing, Web.

Lallo, M 2013, A street wise managers guide to success in the restaurant business, Toronto, Canada, Productive Publications, Web.

Zapoli, J R 2005, How to succeed in restaurant business, Lincoln, Nebraska, Universe, Inc, Web.

Nature of Competition

Firstly, the nature of the competition has to be described to determine the overall construction of the market and industry. The restaurant business is highly competitive due to the strength of the existing firms and a variety of the services’ coverage (Williams 128). The presence of this matter can be determined by the loyalty of the customer’s to the particular brand due to its well-established recognition and assurance of the quality (Williams 128). In this case, it could be said that the entry barriers to entry remain low, but the company’s growth and survival are dependent on its level of flexibility.

Key Success Factors for Competitive Success

As for the determiners of success, one of them is the continuous necessity of evaluation of trends in the hospitality industry. For instance, the current trend is related to the growing popularity of healthy eating (Anderson 131). Consequently, it has to be depicted as a core element of the strategy to assure profitability. Another matter is continuous attention to the establishment of sophisticated marketing campaigns to portray the novelty of the place. This aspect will contribute to the growth of the market share and the ability of the company to attract new customer segments to its locations.

Competitors

The primary rivals of Panera restaurants are MacDonald’s and Darden Restaurants. In this case, the critical strength of both competitors is the high brand recognition, as McDonald’s is a multinational company with its distinctive restaurants in an extended number of countries (Kasperkevic par. 7). In turn, Darden restaurants have a well-develop customer base across the United States of America while increasing brand image by acquiring recognized brands (Darden Restaurants, Inc. par. 1). Nonetheless, the primary weakness of McDonald’s is decreasing consumers’ preference for fast food and the subsequent decline in sales (Kasperkevic par. 4). Nonetheless, the principal drawback of Darden restaurants is a high diversification of the focus (Darden Restaurants, Inc. par. 1).

As for the moves, it is apparent that the companies tend to adopt their strategies to the constantly changing environment. For instance, McDonald’s has introduced new components of the menu, which have a tendency corresponding with the growing consumer’s interests to healthy eating (Lutz par. 1). In turn, Darden Restaurants enhanced its international presence while introducing the franchise scheme globally (“Darden Restaurants: International Franchising” par. 1). It remains apparent that the rapid development is the necessity in this sphere, as, otherwise, the restaurant chains will lose their market share to the competitors with the innovational productions and affordable prices.

As for the competitive actions, it could be said that McDonald’s healthy campaign can be regarded as one of them, as the company modified its strategy to attract the individuals who consider healthy eating habits of high importance (Lutz par. 1). In turn, the presented above introduction of the franchise by Darden Restaurants and continuous expansion of its facilities has a beneficial influence on the company’s performance. In the end, it remains apparent that the flexibility of the competition cannot be underestimated, as it contributes to the development of sufficient entry barriers.

Conclusion

It could be said that it was revealed that the competitiveness analysis is critical for the understanding of the current trends and the company’s position in the market. In this case, Panera restaurant has to understand the strength of its competitors, as they tend to occupy a significant share of the market and have high recognition worldwide. Nonetheless, the organization can utilize the weaknesses of the rivals as a benefit for the development of its competitive advantage. In turn, the company has to be able to adapt to the constantly changing environment while adjusting its services and products to the consumers’ preferences.

Works Cited

Anderson, Erick. Everyone Eats: Understanding Food and Culture, New York: New York University Press, 2014. Print.

“Darden Restaurants, Inc.: Darden Restaurants Completes Acquisition of Yard House USA, Inc. ” Mergers & Acquisitions Week. 2012. Web.

Darden Restaurants: International Franchising. 2016. Web.

Kasperkevic, Jana. “Still Not Lovin’ It: McDonald’s Sales in US Drop for Seventh Quarter.” The Guardian. 2015. Web.

Lutz, Ashley. “McDonald’s has stopped trying to convince people its food is healthy.” Business Insider. 2015. Web.

Williams, Chuck. MGMT: Principles of Management, Boston: Cengage Learning, 2016. Print.

Sonny’s Real Pit Bar-B-Q was established in Gainesville, Florida by Sonny Tillman and his wife (Lucille) in 1968. In 1991 Bob and Jeff Yarmuth bought it and moved its headquarters to Maitland, Florida. Bob and Jeff had a franchise located in Orlando.

The aim of setting up the restaurant was to provide a casual and relaxing place for the people of the southern state. Sonny’s Real Pit Bar-B-Q does not only serve nutritious food, it provides customers with forthcoming and quick services every time they stop by. Excellence can be demonstrated in their passion for giving people the first priority in everything they do.

According to Sonny’s website, the restaurant owners believe that everything is possible, one should only put little effort. They aim at delivering an unmatched feasting experience where all people are always welcome. Their Mission is divided into three main parts. Firstly, they need to be on top of all casual restaurants. Secondly, they need to ensure that they make profits to their stakeholders. Finally, they need to uphold a steadfast obligation to their community.

Sonny’s Real Pit Bar-B-Q is one of the most popular of the 128 restaurants located in the South-Eastern states today. It has served areas like Alabama, Georgia, Florida, Kentucky, Mississippi, Louisiana, North Carolina, Tennessee, and South Carolina. The Real Pit Bar-B-Q has provided employment for 6,700 people system wise. The sales in 2010 were estimated to be around $238.

The restaurant has been enjoying an outstanding reputation for forty years and it is due to various things: the services from real professionals, the devoted franchisees and the concrete system that ensures the generation of quality products and profits. Despite the fact that the management of the restaurant has changed overtime, it still remains friendly and comfortable as ever.

The food served at Sonny’s Real Pit Bar-B-Q has a good nutritional value. It is confirmed by the analysis of the nutritional value. The restaurant takes nutritional analysis that is conducted by Analytical Food Laboratories that was custom built by Sonny’s. They also rely on the nutritional information provided by vendors. This ensures that customers are provided with quality foods and drinks.

The restaurant also offers catering services, deliveries, and pick-ups. The food in the restaurant is affordable at reasonable prices. It is famous for the delicious meat that is served plain to give customers a chance to choose their barbeque sauce. The meat is prepared by barbecuing the meat with hardwood which leaves it soft, tender and juicy.

They include ribs, chicken, and pork. The restaurant offers appetizers and soups like chicken wings, corn nuggets, and fried okra among others. It also specializes in salads, sandwiches, and desserts. This tends to attract many people because of the wide range of foods they can choose from.

As the name suggests, the restaurant specializes mostly in meats and meat-related foods. However, there are dishes that are served for vegetarians that include salad bars, the Big Salad, and chicken Caesar salad. Sonny’s Real Pit Bar-B-Q also serves sidekick dishes like vegetables, crinkle cut French fries, mashed potatoes, baked potato, backyard garden salad, fresh coleslaw, and cinnamon apples.

In conclusion, Sonny’s Real Pit Bar-B-Q has worked incredibly hard in the past years to build their corporate image. They have ensured both customers and employees satisfaction. It has proved with the right people, the right attitude and the right services that a business is set to achieve its goals indefinitely. Sonny’s Real Pit Bar-B-Q is a success story in the restaurant industry, and its latest performance shows even further progress.

Works Cited

Sonny’s Bar-B-Q Restaurant, 2012.

Abstract

Panera’s Restaurant is a well-developed company in the United States of America. However, it experiences challenges due to the rising level of competition and the necessity to comply with the client’s preferences. The overall industry alters due to the growing popularity of limited-service and casual restaurants. Meanwhile, the competitors tend to adapt to the fluctuations by introducing healthy and fresh dishes and communicating with the customers via different means of technology.

Financial, SWOT, industry, and competitive analysis contribute to the understanding of the key factors, which the company has to pay attention to while redesigning a strategy. In this case, Panera’s restaurants have to focus on the differentiation strategy while utilizing technology to deliver the messages to the customers and engaging them in the interactions and product development.

Introduction and Overview of the Case

Panera Restaurants is a network of the bakery-cafes, which utilizes franchises, as an operational scheme (Panera Bread Company: Annual Report, 2015). Its area of operations is vast, and the restaurants tend to be present in 46 states in the United States of America while having its locations in Canada simultaneously (Panera Bread Company: Annual Report, 2015). Nowadays, the corporation operates under several sub-brands including the Panera Bread, Paradise Bakery and Café, and Saint Louis Bread and Co. (Panera Bread Company: Annual Report, 2015). Nonetheless, despite to company’s extended geographical coverage, the organization has some issues related to brand recognition and might lose a substantial share of the market to its competitors.

In this case, the primary goal of the paper is to propose sufficient recommendations for Panera Restaurants to increase its competitiveness and recognition in the current market. In this case, the industry analysis will be conducted to reveal the other attractiveness of this area of operation. Meanwhile, the competitors’ analysis will have a substantial influence on the understanding of the critical aspects while defining key success factors of the competitors. Simultaneously, the company’s position depicts the features, which require modifications and adaptations. Based on a combination of factors displayed above, critical matters will contribute to the formation of the relevant strategic recommendations while finding the solutions to eliminate the influence of the existing issues. In the end, the conclusions are drawn to summarize the primary findings while emphasizing the most appropriate course of the action.

Analysis

Industry Analysis

Distinguishing Features of the Industry

The overall restaurant industry is represented by various facilities, which tend to provide services to its clients while having an established menu (Market Realist, 2014). Meanwhile, the range of the restaurant’s subtypes tends to grow due to the positive fluctuations in the employment rates since this phenomenon leads to the rise of the budget for entertainment (Market Realist, 2014). The restaurant market in the United States is fast growing while having 630,964 restaurants in the country (Statista, 2016).

Meanwhile, the overall restaurant market in the United States is divided into categories such as limited and full-service restaurants and bars while having $431 billion of sales in the United States only (Market Realist, 2014; see Figure 1). In this case, the full-service restaurants imply focusing on experience and occupy 44% of the market (Market Realist, 2014). The primary competitors of these segments are Darden ($7.5 billion in capital value), Brinker ($3.3 billion), and Buffalo ($3.1 billion) while representing the casual dining, and Cracker and DineEquity focus on the families (see Figure 2). Nonetheless, the market is prioritized by casual restaurants due to their ability to satisfy an extended range of needs while concentrating on dissimilar segments of the population to increase the revenues.

In turn, the limited services utilize less time for the preparation and have 55% of the market (Market Realist, 2014). Meanwhile, the type of restaurants use the scheme of paying up-front before the meal is delivered, and a menu is represented by afternoon, lunch, and breakfast meals while prioritizing buy-and-leave strategy (Market Realist, 2014). These entities focus on the satisfaction of the customer’s needs in the short-term while eliminating the time for the stay in the restaurant. This matter ensures the rapid circulation of the customers to increase the company’s revenue and profitability.

The critical competitors are McDonald’s ($98 billion), Yum ($35 billion), and Burger King ($15 billion) while representing the fast-food segment characterized by the low prices (see Figure 3). Starbucks is the leader among the cafes ($60 billion), and the fast-casual and pizza spheres are represented by Chipotle ($20 billion) and Domino’s ($5 billion) (see Figure 3). Consequently, it remains evident that the rest of the market is occupied by the bars and taverns in the United States of America.

Lastly, the economic and demographic trends have a crucial correlation with the decreasing unemployment rate, as this matter determines the ability of the individuals to have additional financial for various services and products. The continuously rising employment rate has a positive influence on the restaurant business, as the organizational entities will continue their operations while innovating menus and introducing new services to satisfy growing customers’ needs.

Consequently, the overall industry will continue to grow until the year 2017 (Restaurants in the United States, 2014). In turn, despite the innovative nature of the technology, food safety is one of the most vital issues of this industry, as the harmful intention of the ingredients might have an adverse influence on health (see Figure 4). Meanwhile, the products have to be fresh and comply with the existing regulations while prioritizing biotechnology as a priority in manufacturing (Restaurants in the United States, 2014).

How the Industry Is Changing?

Nowadays, any industry experiences alterations due to the various factors including changes in the consumer’s behavior and development of technology, as generation X aims at discovering novel tastes while modifying their food preferences constantly (Pwc, 2016).

This innovation could be regarded as a primary cause of the formation of the fast-casual restaurants, which implies the integration of the fast-food chain and full-service restaurants while delivering dishes within the limited timeframe (Market Realist, 2014). This segment is the most attractive one and continues its growth due to the favorable conditions and having eye-catching prices of $7.50, which are lower than in full-service establishments (Davis, 2016). Nonetheless, all restaurants tend to modify their services to comply with the altering preferences of the consumers continuously, as, otherwise, it could be regarded as a reason for the loss of the market share.

Speed efficiency can be viewed as another essential matter in the modern restaurant industry, as the minimization of the waiting time is vital to encourage the customers to return (Barklon, 2015). Alternatively, the frequency of the visits of the restaurants tends to increase, and the adaptation of the menus and facilities’ layouts is a necessity to comply with the busy lifestyle of the individuals (Barklon, 2015). In turn, the restaurants tend to pay attention to the essentiality of décor and interior design, as these features contribute to building an association with the brand while contributing to the generation of the desire to return (Barklon, 2015). A combination of these aspects assists in delivering exceptional services to the customers while creating trusting relationships and prioritizing consumer-centered interactions.

Furthermore, technological development is another essential trend, which is vital for the enhancement of the flow of the services and increasing customer engagement via touch screens, availability of the alternative methods of payment, and ordering from home (FreshKDS, 2015). In turn, digital receipts and cloud storage can be viewed as the additional enhancers of the overall quality of the services to ensure successful data retrieval (Tetreault, 2015).

Meanwhile, it remains apparent that these trends will continue to evolve due to the rapid improvements in the technological segment and necessity to adapt them to maintain at the same level of the innovative advancement as the competitors.

Rise of the green policies has a vehement reflection on the functioning of the organizations, as they aim at using technologies to reduce the waste and water and electricity consumption (FreshKDS, 2015). The presence of this trend will continue to rise due to the increasing popularity of this matter between the dissimilar segments of the population. In the end, it could be said that all of the factors aim at the enhancement of the consumer’s experience while minimizing the waiting time and creating attractive interior design and have to be applied simultaneously to ensure the effectiveness.

Key Success Factors of Industry

The innovative menu, modification of the traditions, and new product lines are critical matters, which help competitors stay on the market while defining their possibility for success (Market Realist, 2014). Meanwhile, the companies have to develop their strategies to focus on the right set activities including the establishment of the system to repeat success, creation of a special experience for customers while treating them as the members of the family, and targeting at profitability as a core outcome (Munsell, 2009).

This factor has a vehement interdependence with the overall organizational strategy, as it tends to portray the company’s values in its actions while aiming at meeting the organizational goals. In turn, it contributes to compliance with the constant modifications of the restaurant’s industry and maintaining the competencies at the same level as the competitors’ ones.

Meanwhile, the brand image can be regarded as a separate success factor, as it has a vehement effect on the revenues (Ashe-Edmunds, 2016). It determines the recognition of the company in the world while building the customer’s loyalty and creating particular perceptions and associations with the brand. A well-established image is one of the most important assets in the industry, as it defines the company’s ranking in the market, but it has to be applied to the efficient marketing strategy simultaneously.

In this instance, the essentiality of the employee training cannot be underestimated, as the employees play the role of the intermediary between the management and clients (Healy, 2014). The workers tend to generate a particular perception about the company with the assistance of the interactions with the customers, as communication is the core element of the augmented offering in the service industry.

Despite the vitality of the strategy and the brand image, the role of the budgeting of the financial resources cannot be underestimated, as the cash flow ensures the liquidity of the organization while maintenance of costs is critical for the profitability (Ashe-Edmunds, 2016). This important aspect enables the development of organizational productivity, and sufficient budgeting leads to the occurrence of the resources for the research & development, and marketing departments.

Generally, critical success matters are highly related to the ability to adapt to the changes mentioned above. Meanwhile, the company has to emphasize its exceptional nature to ensure the inability of the competitors to substitute the products. In this instance, the overall strategy has to focus on the idea principles including innovation (novelty and additional value proposition), differentiation (unique strategic features and principles), evolution (enhancement of the experience), and adaptation since these matters assist in creating an appropriate strategy (Tristano, 2013). Consequently, it could be said that the flexibility and innovative nature can be regarded as the core ideologies for the restaurants to stay competitive in the market, otherwise, the absence of connection will lead to the loss of the market share due to the constantly increasing competition.

Conclusions: The Industry’s Attractiveness

Based on the factors provided above, the attractiveness of the industry has to be evaluated, as it will contribute to the ability of Panera restaurants and other companies to increase their efficiency and productivity. It could be said that the assessment of the attractiveness will be based on an analysis of the key success factors analysis conducted above, as it revealed the presence of the changing environment of the industry.

The possibility for the expansion can be regarded as a critical definer of the industrial attractiveness, as it determines the potential and the ability of the companies to increase their productivity (Brown, 2016). In this case, the restaurant industry can be considered as being attractive and prosperous, as it has positive projections associated with the increasing demand for services and entertainment leading to the rise of the popularity of the food services in the world.

Meanwhile, entry barriers and an amount of start-up capital also determine the attractiveness (Brown, 2016; Bhasin, 2015). In the context of the restaurant industry, the start-up capital is dependent on the preferences of the founder of the business to utilize particular equipment and design in their facilities. This factor increases the flexibility of the choices due to the presence of a variety of options and has a high correlation with the attractiveness of the industry. In turn, the bargaining power of buyers and suppliers and the availability of substitute products can be regarded as the critical definers of the company’s capabilities and possibilities in the market (Bhasin, 2015).

In this case, the suppliers can be easily switched to the ones with lower prices due to the vast variety of services and food providers. This aspect is vehemently beneficial for the new entrants, as they can consider the alternatives, which will contribute to the increasing possibility of the achievement of the break-even point.

In the end, the restaurant industry is one of the spheres with a high level of competition, but it tends to experience growth due to the rising demands of the customers. Meanwhile, the alterations in the industry contribute to selecting the most relevant type of restaurant to pursue success. Furthermore, an extended plethora of the suppliers and possibilities for future development assure the ability of a new entrant to progress in a positive direction while increasing its market share.

Consequently, the industry highly attractive for the newcomers while the presence of this factor contributes to the substantial rise in the competition. Nonetheless, any company has to remember a vitality of key success factors since; otherwise, it will not be able to increase its market share due to the well-established company’s images of the competitors and continuous innovations to alter distinct competitive advantages.

Competitive Analysis

Nature of Competition

The nature of the competition has to be described to determine the overall construction of the market and industry. The restaurant business is highly competitive due to the strength of the existing firms and a variety of services coverage (Williams, 2016). Nonetheless, as it was mentioned earlier that the market is highly diversified, as the competitors tend to pursue different marketing strategies to increase their market share.

Despite the ability of the full-service restaurants to offer exceptional services, the fast-food industry dominates the market, as it tends to provide customers with efficient services and affordable prices (Market Realist, 2014). Meanwhile, fast-casual restaurants is another establishment, which combines the features of fast food and traditional restaurants and attracts an extended number of customers (Market Realist, 2014).

In this case, Table 1 presents the leaders from different segments of the industry by ranking them by their capital values. In this case, McDonald’s is a clear front-runner in the market with $98 billion while the rest of the positions is also occupied by limited-service restaurants including Starbucks, Yum, and Chipotle (Market Realist, 2014). Meanwhile, the leader in the full-service industry subjugates the last position in this rating while having only $7.5 billion in the capital.

Table 1. Nature of Competition (Market Realist, 2014).

In turn, Figure 5 presents the positions of the companies in the market while depicting the location of Panera’s restaurants in the competition based on the revenue and popularity in the United States of America. Panera does not have leading positions while McDonald’s is the market front-runner. It could be said that the presented ranking correlates with the modifications of the consumer’s behavioral patterns and the desire to receive the orders rapidly. In this instance, the newcomers of the fast-food industry have a high possibility of success. Despite a high level of competition, a desire to try something new is often regarded as a priority.

Key Success Factors of Competitors

The primary goal of this section is to determine the factors, which define the success of the selected organizations in the market, as it interferes with the key success principles of the industry. In this case, the role of the brand cannot be underestimated, as McDonald’s tends to have its leading position due to its global brand recognition (Kasperkevic, 2015). Meanwhile, other competitors pay attention to the maintenance of the brand image to increase the customers’ returns. The presence of this matter defines the ranking displayed in Table 1, and it can be determined by the loyalty of the customer’s to the particular brand due to its well-established recognition and assurance of the quality (Williams, 2016).

As for the determiners of success, one of them is the continuous necessity of evaluation of trends in the hospitality industry. For instance, the current trend is related to the growing popularity of healthy eating (Anderson, 2014). These aspects also have a reflection on the actions of the competitors, as they tend to introduce new product lines, which do not comply with their initial traditional strategies. This matter creates controversies but attracts customers by using contrasting features of fast food and healthy eating. Consequently, it has to be depicted as a core element of the strategy to assure the profitability of the organization.

Customer support and the minimization of waiting time are also critical in any restaurant, especially, in the fast-food industry, as the delivery defines the consumer’s satisfaction and determines the customer’s return (Barklon, 2015). In restaurants such as McDonald’s the orders are proceed and delivered rapidly, and this matter explains the substantial differences between the values of the revenue of McDonald’s and the subsequent position. In turn, this aspect complies with the busy lifestyle of the majority of the visitors and creates a perception of the fast service provider.

Another matter is continuous attention to the establishment of sophisticated marketing campaigns to portray the novelty of the place and promote changes in the menu (Healy, 2014). The competitors use dissimilar marketing instruments to ensure the delivery of the message to the final users while increasing the target groups’ coverage. This aspect will contribute to the growth of the market share and ability of the company to attract new customer segments to its locations while increasing the percentage of the customers’ return.

Nonetheless, the features mentioned above could not be considered as being effective while being applied separately. A distinct application of each will contribute to the increase in the company’s profitability in the short-term. Meanwhile, the utilization of all the factors a significant part of the strategy will differentiate the company from the competitors and define its possibility to become one of the market leaders.

Competitors or Rival Firms

The fast-casual restaurants can be viewed as critical competitors due to the belonging of Panera to this segment, but the overall leaders have to be considered, as the threat is rising (Market Realist, 2014). The primary rivals of Panera’s restaurants are MacDonald’s, Darden Restaurants, Yum, and Starbucks as they tend to occupy a significant share of the market in the United States of America while being vehemently recognized in the world. It remains evident that the primary competitor is McDonald’s, as it operates at the global level while having 36,000 stores in 100 countries (McDonald’s: Company profile, 2016).

It aims at success while emphasizing the importance of being a progressive and innovative leader in the burger industry while trying to deliver modern experience (McDonald’s: Company profile, 2016). The company’s product ranges are highly diverse, but different variations of burgers still could be regarded as a priority. It could be said that a combination of a well-developed strategy, brand recognition, and focus on the particular product line while being innovative define McDonald’s position as a front runner of the industry in the United States.

In turn, Yum is a food services provider, which is represented by KFC, Taco Bell, and Pizza Hut while having operations globally (Yum! Brands Inc., 2016). In this case, the concepts mentioned above tend to focus on different cuisines. For instance, KFC utilizes chicken as a primary product while Pizza Hut tends to provide ready-made pizzas (Yum! Brands Inc., 2016). Lastly, Taco Bell can be regarded as a Mexican-style food provider (Yum! Brands Inc., 2016). In this case, it could be said that a vast coverage of different types of cuisines allows the company to be one of the most successful restaurants in the fast-food industry while having coverage of an extended range of the target markets.

Darden is a group of full-service restaurants, which includes an extended variety of brands such as Red Lobster, Oliver Garden, Bahama Breeze, Seasons 52, Wildfish Seafood Grill operating in the United States of America and Canada (Darden Restaurants, Inc., 2016). In this case, the organization tends to satisfy dissimilar customers’ preferences by having representatives of Italian cuisine, stakes, chicken, Caribbean flavors, vegetarian dishes, and grills (Darden Restaurants, Inc., 2016). It tends to utilize fresh ingredients and provide an exceptional experience to the users.

Additionally, Starbucks can be regarded as another competitor, as it tends to have high recognition in the world while providing excellent services and high-quality products. The company is well-known for its signature coffee while offering a unique experience to its users and brand merchandise for sales (Starbucks Corp., 2016). It has extended geographical coverage while being present in the Middle East, Europe, the United States of America, Africa, and Latin America (Starbucks Corp., 2016). In the end, despite the diversified areas of operations, the companies tend to occupy a significant share of the market while establishing a strong brand image and extending geographical coverage.

Relative Strengths and Weaknesses of Each Rival

Nonetheless, it is vital to evaluate to determine the strengths and weaknesses of each competitor, as this analysis will contribute to the understanding of the principles of building their competitive advantages and designing the strategy for Panera Restaurants. Despite high brand recognition in the market, McDonald’s tends to have weaknesses, which might have an adverse influence on the functioning of the corporation in the future.

Firstly, McDonald’s is a multinational company with its distinctive restaurants in an extended number of countries (Kasperkevic, 2015). In turn, it tends to have strong marketing campaigns while prioritizing technological development and cost-effectiveness (Ma’arif, 2007). Nonetheless, the primary weakness of McDonald’s is decreasing consumers’ preference for fast food and the subsequent decline in sales (Kasperkevic, 2015). In turn, this matter is related to the inability of the company to project the potential development of the actions of the competitors while not taking the advantage of innovation.

Table 2. McDonald’s strengths and weaknesses (Ma’arif, 2007; Kasperkevic, 2015).

Meanwhile, Darden also has a similar issue, as, in this case, the critical strength of this competitor is the high brand recognition, as Darden restaurants have a well-develop customer base across the United States of America while increasing brand image by acquiring recognized brands (“Darden Restaurants, Inc.: Darden Restaurants”, 2012). It contributes to the development of the loyal customer base while complying with the consumer’s preferences due to an extended variety of menu offerings. Nonetheless, the primary weaknesses are related to the limited areas of operations and the lack of the development of the organizational strategies related to the expansion (Darden Restaurants, Inc., 2016).

Table 3. Darden’s strengths and weaknesses (Darden Restaurants, Inc., 2016).

In turn, Starbucks has similar issues, and its internal operations have to be evaluated to emphasize the primary drawbacks in its operations. In this case, the core strengths are related to global brand recognition and financial excellence due to the ability to integrate cafes with the stores and communicate with the customers on the regular basis (Ferrell & Hartline, 2016). Nonetheless, the company has weaknesses, which might affect negatively financial performance. In this case, the company is losing its ability to meet the rising customers’ demands and does not adapt its offerings to marketing fluctuations (Ferrell & Hartline, 2016).

Table 4. Starbucks’ strengths and weaknesses (Ferrell & Hartline, 2016).

Lastly, the analysis of Yum has to be conducted, and its core strength is the company’s brand recognition, as it utilizes several sub-brands to ensure the coverage of the significant segments of the target market. In turn, an interesting and dissimilar menu of each facility is can be regarded as an additional enhancer of the company’s success (Griffin, 2012). Consequently, it contributes to the development of the brand image, financial performance, and effectiveness of the marketing campaigns (Griffin, 2012). Nonetheless, its primary weaknesses are the lack of a focus on R&D leading to the ability to meet the expectations and innovate (Griffin, 2012).

Table 5. Yum’s strengths and weaknesses (Griffin, 2012).

In the end, the core strength of the primary competitors in the industry is their brand recognition, as it assists in extending the customer’s base while attracting additional segments to try their meal. Nonetheless, all of the chains mentioned above tend to have weaknesses. In this case, the drawbacks are associated with the ability of the company to comply with alterations of the industry. Consequently, the lack of flexibility might be regarded as one of the most dangerous aspects while operating in a competitive market.

How Competitors are Changing

Nonetheless, the competitors tend to adapt to the changing consumer preferences, as, otherwise, it will damage their profitability and financial liquidity. In this case, it could be said that McDonald’s healthy campaign can be regarded as one of the examples, as the company modified its strategy to attract the individuals who consider healthy eating habits of high importance (Lutz, 2015).

This matter does not comply with the company’s critical principles of the fast-food chain, but it is regarded as a necessity due to the rising popularity of this trend. Additionally, McDonald’s has launched white-chocolate mocha to expand its drink offerings (Market Realist, 2014). It is apparent the company tends to comply with the existing trends while introducing new product lines and providing exceptional products to satisfy customers’ rising demands.

In turn, the presented above introduction of the franchise by Darden Restaurants and continuous expansion of its facilities has a beneficial influence on the company’s performance. This adaptation contributes to the growth of Darden while reducing additional costs and increasing the overall financial efficiency, as these matters are necessary due to the limited presence of this restaurant chain in the world (Darden Restaurants, Inc., 2016). The utilization of these operations is critical for the company’s functioning and the rise of the market share, as the competitors already utilize this strategy for their financial prosperity and worldwide recognition.

As for Starbucks, it tends to increase its attention to the retail segment, as more and more merchandise is present in cafes. Nonetheless, it prioritizes the production of the coffee by extending the range of drink specialties (Starbucks Corp., 2016). Speaking of other competitors such as Yum, the organizations tend to adapt their strategies to ensure the fast delivery of the products while modifying their menus. It could be said that the changes in the menus tend to occur in all of the companies, as the preferences of the consumers tend to be modified depending on the season.

In the end, the description of the adaptation of each rival revealed that the companies tend to change their concepts while using the alterations in the customer’s demand as a basis for their actions. In turn, this analysis depicts that the primary rivals tend to prioritize the essentiality of the customers while making them a center of the interactions. In the context of the presented research, it is clear that the restaurants mentioned above tend to change their actions ultimately, and this matter explains the existing ranking depicted in Table 1. It could be said that that flexibility is a crucial problem for the company’s endurance, and the lack of compliance with the changing trends will affect the organizational market share adversely.

Rivals’ Anticipated Competitive Moves

As for the moves, it is apparent that the companies tend to adopt their strategies to the constantly changing environment, as it is vital to the company’s survival in the market. For instance, McDonald’s has introduced new components of the menu, which have a tendency corresponding with the growing consumer’s interest to healthy eating (Lutz, 2015). In this case, the company tried to change its initial strategy while complying with the changing preferences of the consumers. Meanwhile, it emphasizes the vitality of the burgers due to the prioritization of this dish as a core ingredient.

Nonetheless, this trend is gaining popularity among other restaurants, for instance, Darden tends to focus on the availability of the dietary options in the menu (Darden Restaurants, Inc., 2016). Consequently, this approach contributes to the constantly increasing popularity of Darden’s locations. In turn, Darden Restaurants enhanced its international presence while introducing the franchise scheme globally (Darden Restaurants: International Franchising, 2016). It remains apparent that rapid development is the necessity in this sphere, as, otherwise, the restaurant chains will lose their market share to the competitors with innovative productions and affordable prices.

Speaking of Starbucks, the company tends to pay substantial attention to the development of the menu while offering various seasonal specialties for its customers Ferrell & Hartline, 2016). Nonetheless, the company tends to rely on its brand image due to the underestimation of the actions of the competitors. This matter might hurt the company’s operations while influencing financial performance dramatically. In turn, Yum also tends to modify their menus while offering the dishes, which are vehemently associated with the different cuisines (Griffin, 2012). Nevertheless, the organization tries to support the initial image of the brand while paying attention to the meals associated with KFC and Taco Bell.

Conclusion

It remains apparent that the competitors’ analysis contributes to the understanding of the efficiency of the functioning of the organization and its position in the market. Meanwhile, it is critical for the understanding of the overall competitive nature of the market since these aspects influence the company’s success and a possible market share in the future. Consequently, the competitive assessment determines the key success factors of the competitors and their strengths and weaknesses to ensure the design of an appropriate strategy for the organization.

It could be said that it was revealed that the competitiveness analysis is critical for the understanding of the current trends while depicting changes in the behavior of competitors and consumers. In the context of the presented case, Panera restaurant has to understand the strengths of its primary competitors, as they tend to occupy a substantial share of the market and have high recognition worldwide while causing a significant threat to Panera’s development. Alternatively, the analysis revealed that the companies adopt the strategies of the competitors, like Darden Restaurants starting using a franchise’s operating scheme as a core instrument for the expansion.

In turn, McDonald’s decided to diversify its menu with fresh and healthy snacks to support a rising trend of a healthy lifestyle. Meanwhile, the companies tend to have weaknesses, as not all of them can adapt to the constantly changing economic and demographic environments. For instance, McDonald’s is losing its market shares, as the customers alter their desires while decreasing the demand for junk food. It could be said that the presence of the weaknesses contributes to the presence of equality while facing the competition, as the restaurants can generate efficient marketing campaigns while evaluating the effectiveness of the tools while using the examples of the rivalries.

Based on the information provided above, the company has to highlight the vitality of the flexibility while combining it with the appropriate marketing strategies and introducing reliable modifications of the menu to comply with the customers’ preferences.

Nonetheless, the organization can utilize the weaknesses of the rivals as a benefit for the development of its competitive advantage. This matter is highly correlated to the ability of the company to conduct a sophisticated analysis while adapting to the constantly changing environment and adjusting its services and products to the consumers’ preferences. In the end, the matters associated with flexibility and competitor’s changes can be regarded as essential elements of the basis of the strategic development, as the understanding of these features will contribute to the ability of the company to alter its critical thinking and problem-solving principles in a positive direction.

Company Analysis

Financial Analysis

Finances play a critical role in the company’s sustainability, and the evaluation of its principles will have a substantial effect on the understanding of the company’s current position in the market. Meanwhile, the analysis will contribute to the determination of the firm’s strengths and weaknesses related to this sphere. In this case, the company’s financial ratios have to be analyzed to understand the company’s liquidity and sustainability.

Table 6 presents the fluctuations in the values of the organization’s ratios (see Table 6). In this case, it is apparent that the company’s liquidity experiences positive changes, and it is critical for the maintenance of the cash flow. Nonetheless, its profitability tends to decrease, and these aspects affect the company’s profitability and position in the market. In this case, the company has to prioritize the necessity to maintain the profit margins on sufficient levels while cultivating the growth of liquidity ratios.

Table 6. Panera’s Ratios Comparison (Nasdaq: PNRA: Ratio, 2016).

Additionally, it is critical to compare the financial figures of Panera restaurants with the competitors, as it will portray and reflect the position of the company in the market with the assistance of various financial instruments and cash flow. In this case, Table 7 depicts the comparison of the companies by using their revenues, gross profit, and net income. In this instance, it is apparent that the company’s financial position is questionable, as the competitors tend to have higher revenues and net incomes. For example, the gap between McDonald’s and Panera is critical while causing damage to the company’s reputation.

Table 7. Comparison of the Company with the Competitors.

In the end, the overall position of Panera’s restaurants could be considered as developing in a positive direction, as its liquidity ratios tend to rise in their values. Nonetheless, it is apparent that the company’s overall financial performance is below average in the industry and decreasing profitability might lead to the inability of the company to grow and develop sufficiently to occupy a substantial share of the market. In this case, the company has to pay vehement attention to its cash flow and level of income while evaluating the relevance of mergers, acquisitions, and other investments.

Current Strategy

A strategy is a critical component, which is vital to the company’s success as it has a reflection of the company’s values, vision, and mission. It tends to determine the flow of the actions associated with the delivery of the primary message to the customers and reflect the key principles of the corporate culture. In this instance, the initial goal of this section is to highlight the core features of Panera’s current strategy.

Nowadays, Panera utilizes a sophisticated approach to depicting the organizational competitive advantage and value creation from all angles due to the essentiality to emphasize all segments to stay competitive in the market. Firstly, the value proposition of the concept of the service delivery implies using only natural materials while baking only fresh bread every day for the customers while highlighting the importance of transparency (Panera Bread Company: Annual Report, 2015). Meanwhile, it emphasizes the essentiality of the policy of transparency to ensure the compliance with the principles of the utilization of the fresh materials for its meals (Panera Bread Company: Annual Report, 2015).

In turn, the company pays vehement attention to the quality of the services to provide its customers with an exceptional experience while increasing their return to the restaurants (Panera Bread Company: Annual Report, 2015). The client’s satisfaction is a critical component in the service industry, as the achievement of the relevant level of satisfaction implies the possible increase in the company’s market share. The prioritization of this component has a positive influence on the customer’s behavior while establishing a potential return to the location.

Nonetheless, the factors mentioned above highlight that the strategy tends to cover all the principles, which are vital in the service industry, but its unique nature is questioned as competitors with a more remarkable image tend to prioritize the same features. Meanwhile, it also lacks the compliance with the changing trends while not being in a trusting relationship with the customers. Despite the criticism and an extended variety of issues related to Panera current strategy, the company has to cherish its initial values, as they tend to reflect the firm’s mission and vision statements. In this case, it could be said development and modifications of the existent approach are a necessity, as a continuation of the prioritized features of the current strategy might be discovered as a cause of the decline in the customer’s returns.

Strengths and Weaknesses

Meanwhile, the company utilizes its strengths as the core components of its strategy, as they tend to form the company’s competitive advantages while increasing its share of the market. In this case, the critical strengths are related to Panera’s desire for excellence while aiming substantial attention to the quality of its services (Panera Bread Company: Annual Report, 2015). Customer-oriented relationships are vital for the restaurant services to build positive associations with the brand.

Additionally, it could be said the company actively utilizes its technological novelties to enhance the customer’s experience while offering mobile applications with an easy interface to cultivate better connections with the customers (Panera Bread Company: Annual Report, 2015). This matter contributes to generating of the trusting relationships with the customer’s while encouraging them to participate in the interactions.

Speaking of the weaknesses, they have a tendency to be dependent on the company’s internal structure and the organization of the performance. In the context of depicted case, Panera’s income is highly dependent on the elements of the franchise while any changes in its dynamics will contribute to the loss of the revenue (Panera Bread Company: Annual Report, 2015). This matter has to be considered of high importance, as the maintenance of the flow of the information within the organization is critical.

Consequently, the insufficiency of the computerized system for the organizational maintenance might be considered as another potential weakness since its dysfunction affects the organizational performance (Panera Bread Company: Annual Report, 2015). This drawback might cause negative alternations with the customers and employees while causing the incompliance of the expectations and reality.

In turn, lack of brand recognition, limited geographical coverage, and the lack of a well-developed marketing campaign can be regarded as the principal drawbacks since the company such as McDonald’s tend to maintain excellence in these areas while having a well-established brand image (Kasperkevic, 2015). This aspect has a significant influence on the operations of Panera’s restaurants while increasing the necessity to regard one of these matters for the formation of the strategy.

In this case, strengths and weaknesses tend to depict the internal functioning of the organization while forming a basis for the development of the sophisticated strategy. In the context of this situation, the company’s strengths are related to its extended years of operations and its ability to portray the firm’s values in the current strategy. Nonetheless, the organization has to understand the essentiality of the weaknesses, as they present the critical drawbacks, which can affect the company’s profitability of the restaurant chain and its operations. In this instance, the company has to pay vehement attention to the system’s maintenance and conduct the continuous evaluation of the risks related to the supplies and the usage of franchise scheme. Meanwhile, increased recognition of the brand has to be prioritized due to its essentiality for the enhancement of the financial performance.

Opportunities and Threats

The assessment of the externalities is vital for the understanding of the company’s image in the market, and it contributes to the establishment of the relevant strategy for enhancement of the operations. Meanwhile, it reveals what matters have to be taken into account to minimize the risks and assure the ability to take all the proposed opportunities. In turn, this analysis contributes to the evaluation of the market and to the develop a relevant strategy for the organizational functioning while taking advantages of the external possibilities.

In this instance, one of the opportunities is the necessity of the organization to take an advantage of the technological development, as it has a well-developed technical basis. In turn, it can increase the number of its facilities across the United States of America while enhancing its recognition by participating in various events and fairs. Meanwhile, the organization can take an advantage of the side events as this matter does not require high investment and is vehemently gaining popularity in the country (Best, 2012).

Speaking of threats, the jeopardies are highly correlated to the functioning of the supply chain, rising competition, alterations in customer’s behavioral patterns, and changes in costs of raw materials and maintenance services. In this case, any changes in economics and demographics will modify a position of the company while having a negative effect on its profitability and sustainability. Meanwhile, the alterations in proprietary and healthcare laws and regulations and the lack of risk assessment of mergers and acquisitions are being assessed and portrayed at national and international levels (Panera Bread Company: Annual Report, 2015).

In this case, the modifications in the jurisdiction might limit the areas of operations while making the activities in some countries impossible. Meanwhile, the actions of the companies are also dependent on this matter in the United States of America and Canada. In turn, the insufficient planning of company’s expansion strategies might cause an investment in unfavorable entities while leading to the loss of the part of the revenue and negative return on the investment.

The opportunities and threats highlight the primary risks and future approaches for development, as the understanding of these matters contributes to the evaluation of the unrevealed possibilities and jeopardies in the market. Based on the analysis provided above, the company has to pay attention to the threats, as, otherwise, its productivity, efficiency, and organizational performance will be adversely affected by the constant social, demographic, and economic fluctuations at national and international levels. Meanwhile, it has to take advantage of the opportunities to increase the awareness of the company in the world and benefit from its technological advancement.

Conclusion

It could be said that the analysis of the company contributes to the understanding of the organization’s competitiveness while being able to propose a suitable strategy based on its strengths, opportunities, weaknesses, and threats. It is apparent that the company takes the advantages of its strengths, as it prioritizes them in the current strategy while aiming at the excellence of services via means of technology. Nonetheless, the company’s weaknesses such as the lack of the brand image and issues in the maintenance of the systems have a negative reflection on the financial performance while being one of the reasons for the existence of the gap between Panera and the frontrunners of the market.

In turn, the presented opportunities can contribute to the ability of the company to exploit its technological excellence while utilizing the novel means of the innovative features of the technology. As for the events, they contribute to the development of the marketing campaign to ensure the delivery of the message of the company’s excellence to its customers. Speaking of threats, they are highly associated with the changes in regulations and rising competition. The company has to monitor these fluctuations to ensure its position in the market while shifting the flow of the rivalry.

Despite the ability of the company to provision the demographic and economic changes, the company’s strategy lacks the portrayal of the distinct competitive advantage and does not prioritize marketing instruments for the brand construction. Based on the information provided above, the company has to pay vehement attention to the compliance of its strengths with the primary threats and opportunities, as, otherwise, it will not be able to face an intensified competition of the restaurant industry. In the end, all the matters are critical and have to be taking into account while designing the strategy and presenting the issues of the current one.

Strategy

Key Strategic Issues

Despite the existence of strengths, the problems associated with the strategy have a tendency to be present and have to be revealed in details to propose the further steps of actions. These factors will contribute in acquiring the overall image of the market while determining the basis for the matters, which require substantial attention. Meanwhile, it is vital to understand and assess the consequences of the issue, as dissimilar solutions might be applicable and appropriate in different cases.

The first subject is the fact that the restaurants’ marketing is rising and popularity while increasing a level of competition in the industry. In this case, the primary consequences are the inability of the company to monitor the actions of the competitors leading to the loss of the market share. Meanwhile, the introduction of new products and services can be regarded as an issue since these matters increase the competition’s intensity. Nonetheless, the company has to monitor the actions of the competitors on the regular basis to assure the relevance of their actions while selecting potential novelties to be implemented in the dishes.

The second issue is associated with the differences in the customer’s preferences, as the alterations tend to modify the overall demand in the industry while causing an increase in competition and innovation in the industry. The current restaurant market is associated with the rapidly altering trends and possibilities. Paying vehement attention to the trends is critical, as this aspect has a substantial correlation with the actions of the competitors. Meanwhile, in this case, the primary problems are related to the capability of the companies to predict the changes in the consumer behavior and alter their strategic initiatives in time.

The third issue is related to the economic downturn, as any economic fluctuations have a tendency to have a negative influence on the financial excellence and efficiency of the organization. The financial downturn has a significant number of consequences, as it alters financial performance, company’s operational strategy, the overall quality of the services and products, and the expansion options. In this case, its affects the ability of the company to invest in the particular options for enlargements. Furthermore, it has a vehement impact on the possibilities related to the product development, as the presence of the downturn requires the assessment of the resources for the sufficient diversification.

In this instance, it is apparent that the issues are vital for the company’s functioning, as they tend to cover various segments of the company’s operations. It is critical to consider these aspects of the continuous organizational development, as, otherwise, the rising level of competition, presence of the economic downturn, and the inability to comply the preferences of the customers might have an adverse impact on the company’s functioning leading to failure. Despite the essentiality of all problems, a company has to evaluate its current condition critically and determine the potential aspects of the development, as, otherwise, it will lead to the imbalance of the expenditure and revenues.

Courses of Action

Strategic Initiative Options

Based on the information provided above, the company can have multiple strategic initiative options to pursue to take advantage of the opportunities and strengths while minimizing the weaknesses and threats. In response to the first issue, the company has to alter its overall vision, as the company’s strategy does not present a unique competitive advantage. The analysis shows that the organizations with the stronger image utilize a similar strategic approach. The second option is the fact that Panera’s restaurants should prioritize the essentiality of the marketing instruments for the brand creation, and this matter leads to the lack of the recognition in the world. The third option is the focus on technological improvement while using applications and social networks for the creation of the brand.

In response to the second problem, the company has to consider various changes in consumer’s preferences. The first possibility is to observe the necessity for the introduction of the new services or advancing old ones to attract more customers to the market, as innovation is not regarded as core principle currently. Nonetheless, it has to conduct a sufficient analysis of the market before the implementation of the particular strategies since otherwise, the establishment of any alterations might lead to negative or no return on investment.

The second option is the necessity to design applications to encourage the clients to participate in the design of the products. In this case, this novelty will contribute to the increase in the popularity of the brand due to having constant interactions with the customers. Furthermore, the company will be able to benefit from its technological excellence.

Lastly, several responses to the last problem tend to exist to the last issue, as the company has to emphasize the essentiality of the geographical coverage and operational scheme, as the inability to conduct a sufficient analysis of the relevant risks affects the decision-making and profitability of the organization. The first option is the possibility to expand the market with the assistance with the mergers and acquisitions.

The second choice is the necessity to conduct the analysis of the jeopardies and opportunities. The third possibility is modifications of the operational schemes while combining stores and cafes in one location. The last option is the essentiality to reduce production costs, as the role of finances cannot be underestimated since they determine the company’s profitability while referring to the financial liquidity.

Preferred Courses of Actions and Rivals’ Reactions

Based on the aspects stated above, the company should create its unique competitive advantage by introducing a completely unique service or experience, which was not existent previously. At the same time, the proposed actions will lead to the reaction of the primary rivals as they have a tendency to monitor changes in the strategies of the competitors to maintain their market shares. Meanwhile, the strategic initiatives described above are aimed at increasing company’s differentiation and brand development within the next ten years while taking the advantage at national and international levels.

In this case, the recommendation one implies that Panera’s restaurants should consider the introduction of the novel services and products associated with the customers’ trends such a healthy lifestyle as a critical matter of the company’s sustainability in future since, otherwise, the company will start losing its market shares due to the intensified competition. Meanwhile, the utilization of this strategy will ensure the compliance with the constantly changes environment and allow development of the organization in the right direction while having a positive influence on its profitability. In this case, one of the options is the utilization of the special technology for the bread production while offering an extended variety of products.

As for the second alternative, the company has to adapt Starbucks’ scheme and combine a shop with a café. The potential products might include various companies’ products such a signature bread and merchandise with the company’s logo while creating a perception of being a Starbucks competitor. This approach will have a beneficial influence on the company’s brand image while determining an association with the signature bread and creating a perception of the best bakery company.

In turn, the fourth option is the possibility of the company to expand its functioning with the assistance of the mergers and acquisitions in different countries. Nonetheless, a sufficient analysis will be regarded as a necessity, as it is vital to determine the profitability of its actions. Meanwhile, the company has to evaluate the alternatives on the regular basis to ensure the absence of bias associated with decision-making.

Furthermore, the last option is prioritization of the marketing campaign as a key definer of the company’s development and success. In this case, the company has to expand its promotional instruments by participating in various events and culinary festivals. In turn, Panera can generate the popularity by using social media, and designing an application ‘Design your own bread’ to allow the users to customize their products and establish trusting relationships with the customers. Nevertheless, the company has to combine this strategy with the efficient risk assessment since, otherwise, it will lead to the negative return on investment and low revenues. It is clear that these matters have to be applied simultaneously to ensure the efficiency of the strategy.

Nonetheless, it is apparent that the competitors such as McDonald’s, Darden’s, Yum, and Starbucks will spot a rising popularity of Panera’s restaurants. In this case, their potential actions will be included in the sufficient research of the chain while depicting its strengths, weaknesses, opportunities, and threats. In turn, the companies will introduce Panera’s specialties while adapting them to their strategies and culinary principles. In this case, Panera should build an association with the best bakery in the United States to avoid the adverse changes in reactions. These matters will tend to intensify competition for Panera while creating the necessity to comply with the competitor’s actions.

Counter Moves

Additionally, the counter moves also have to be described, as they contribute to the formation of the algorithm for the strategic improvement while describing potential alterations in the strategies of competitors. Firstly, McDonald’s might react to the actions of Panera as new approach proposes to focus on the development of the healthier menu while diversifying bread options. In this case, the largest burger provider will have to establish new offerings, which comply with the constantly growing popularity of sports and healthy lifestyle.

Diversifying the menu will help McDonalds remain the leader in the market, but it has to remember to maintain the popularity of the burgers, as it was original company’s specialty. Consequently, Panera has to pay vehement attention to the development of the customers’ trends and adapt the menu to the changes while designing new marketing campaigns.

In turn, Starbucks will also have to adjust to the strategy, as, its weaknesses related to the ability to provide personal services tend to rise. In this case, Panera’s adaptation to Starbuck’s strategy will contribute to the necessity to alter the existent structure of the stores aiming at customer-centered relationships. In turn, Starbucks has to develop its menu, as it has to add a new flavor to its signature coffees. Meanwhile, Panera should regard these actions as a threat and be prepared to introduce exceptional offerings for the lower prices.

Darden will also have to modify its strategy after the increase in advertising campaigns, technological advancement, and well-developed menu related to compliance with the healthy lifestyle in Panera’s restaurants. In this case, the most reasonable actions of Darden will be connected to the increased marketing campaigns while diversifying meals with fresh and juicy dishes. Nonetheless, it will not change its operations schemes, as it belongs to the full-service restaurants and has popularity in this segment.

Despite an extended number of Yum’s restaurants with various dishes, the actions of Panera’s restaurants might increase Yum’s activities in R&D and lead to the development of the marketing campaigns. Nonetheless, the company might not react fast, as it has difficulties related to the functioning of the organization and its responsiveness to the marketing changes, and Panera has time to introduce well-developed menus via marketing campaigns. Consequently, Yum might start losing its market shares due to the inability to adapt to the actions of the competitors.

As for the other firms, the companies will try to modify their strategies to ensure their growth while focusing on social media and application development. The alterations in the actions of Panera’s restaurants will lead to the rise of the newcomers to the industry as the company tends to develop popularity of a new niche while combining high-quality bread with the delicious, healthy offerings. In the end, Panera’s restaurants have to be prepared for the counter moves of the competitors and ensure the strengths of its new positions and values.

Conclusion

The overall paper has a sophisticated portrayal of the attractiveness of the industry, competition, and overall organizational performance of the organization while using the findings as the basis for designing the relevant strategies to cultivate the enhancement of the corporate performance. Currently, Panera’s strategy tend to combine the core values and principles of the firm, but the company lacks the brand recognition and has to diversify its products to ensure the rising popularity in the market. Currently, the company is not a leader in the market while losing its position to McDonald’s, Starbucks, Yum, and Darden. In this case, the company has to apply the differentiation strategy while developing new product lines and creating a recognizable brand image.

Panera’s restaurants have to focus on its unique product’s features while building a substantial association with the bakery brand in America and Canadian markets. In this instance, this matter will have a considerable effect on the creation of the company’s brand image. In the context of the presented case, Panera has all required characteristics to have a market share while the lack of the organization’s recognition leads to the inability of the company to contribute to the increase of its popularity. Using social media and designing an application with an easy interface will have a substantial influence on the company’s recognition. The application will help build trusting relationships with the customers while generating innovative ideas for the future product lines.

A combination of a store and a café is also critical for the company’s recognition and success, as it tends to create an exceptional opportunity of to explore the offerings in details and purchase an item with the beloved brand. It could be said that this innovation will assist in the generation of the additional revenue. In turn, it will have a substantial influence on building the correlation with Starbucks while associating Panera’s restaurants with the high-quality bakery with exceptional features.

In the end, the company has to consider the proposed recommendations for the formation of a novel strategy, as they tend to correspond to the primary trends of the industry such as flexibility, innovation, and development. Nonetheless, the company has to create a perception of the brand image among the customers while building the association with the best product and service. Despite the essentiality of the brand image, the company has to conduct a sufficient analysis and evaluation of the alternative solutions related to the marketing campaigns and instruments for the expansion.

References

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Andrew Cherng’s Biography

Jin Chan Cherng, the founder of one of the largest Chinese quick-service chains in the United States, Panda Express, was born in Shanghai, China, in 1948. Most of his childhood, he spent in Yokohama, Japan, where he graduated from an international high school. Then he moved to Baldwin, Kansas, and in 1970 obtained his bachelor’s degree in mathematics at Baker University. At the University of Missouri, where he continued his education and acquired a master’s degree in mathematics, he met his future wife, Peggy Tsiang. Peggy Tsiang immigrated to the United States from Burma and was obtaining her master’s degree in computer science at the University of Missouri. Cherng’s quick-serve food empire started in 1972 as a small Chinese restaurant Panda Inn in Pasadena, California. In 1983, he opened the quick-serve outlet in a large suburban mall. His wife designed the software programs for the company and carried out the administrative duties. In the consecutive years, the Cherngs opened more than 100 Panda Express outlets in all states (Hirahara 36). Currently, there are more than 1800 Panda Express branches in the United States, Japan, Mexico, Canada, and Puerto Rico (Leibowitz, “The Tao of Panda Express”).

The Chengs’ Business Model

The Panda Restaurant Group is a family-owned enterprise with headquarters in the San Gabriel Valley. Their philosophy is that a successful businessperson should serve in order to lead (Brott 20). They help their employees to improve their livelihood and learn to live a full life. Their aim is to make their employees financially, emotionally, spiritually, mentally, and physically better because they believe that it helps to do the job well and treat the clientele better. Even the Panda Restaurant Group’s headquarters seem to be designed to boost the personal development of their employees: numerous motivational posters on the walls and books on tables inspire people to want more success for themselves and Panda (Leibowitz, “The Tao of Panda Express”).

The company’s policy also focused on the active encouragement of its employees to attend personal improvement seminars. The company holds meetings every weekend when a large number of Panda’s employees that include both servers and members of the Panda Group’s PR gather for team-building activities (Leibowitz, “The Tao of Panda Express”). When Cherng was asked what the source of his inspiration was, he replied: “Our associates” (Brott 21). Thus, the company’s business model is to focus its attention on employees: inspire them and help to become better since only happy and motivated workers may provide high-quality service for customers.

Possible Improvements of the Business Model

The company may try to develop new menus and interiors for their restaurants as well as upgrade the mobile application for Panda service. It seems that Cherng’s approach to business is unilateral and needs to be revised in order to shift the focus from employees to customers a little. Then, there will be a balance in the company’s employee-customer orientation.

Conclusion

Andrew and Peggy Cherng are good examples of the successful family business. Their business approach is based on the segregation of duties: Andrew is responsible for the work with employees and their motivation, and Peggy is the so-called science technician of their team. It was interesting to learn how much the company may invest in its human resources. Such a business model is not new; many companies and corporations implement it in their workflow, developing the employees’ professional potential in order to receive more profits. On the contrary, the Cherngs seem to see their primary goal in the personal development of their workers, considering it as a determining factor in one’s good professional operation.

Works Cited

Brott, Rich. Maximizing Your Business Success: 11 Critical Principles That Lead to Prosperity! Rich Brott, 2009.

Hirahara, Naomi. Distinguished Asian American Business Leaders. Greenwood Publishing Group, 2003.

Leibowitz, Ed. “The Tao of Panda Express.” Los Angeles Magazine, 2015. Web.

Andrew Chreng Bio

The entrepreneur was born in China in the year 1948. His father was working as a chef during his early life. Andrew Chreng is the founder, co-chairman, and Chief Executive Officer (CEO) of Panda Restaurant Group, Inc that is based in Rosemead, California. In his early life, he immigrated to the United States. He took his studies at an American university, and in the year 1970, he obtained a B.S degree in Mathematics. His business career started in 1972 after he moved to Los Angeles. Like any other entrepreneur, Andrew had developed a strong desire for achievement. He helped his cousin manage a restaurant. Entrepreneurs are creative people that develop great desires of inventing new ideas (Jang, Liu and Namkung 663).

Andrew founded a restaurant in Pasadena to be selling Asian meals. It was his first move of venturing into the business field. In mid-1973, he worked together with his father to take over a restaurant that they named Panda Inn. They made a decision of offering Chinese food. They used the funds from loans that were available for small business administration and family savings. In the year, 1983 he opened the first Panda Express with the aim of offering fast food in Glendale, California. To increase its profitability, Andrew opened outlets and in the year 1993 the company had expanded to hundred restaurants. The chain has become the largest fast-food restaurant in the United States that offers Chinese food (Pearson 21).

Business Model and Their Website

Panda is one of the largest private owned restaurants chains in the United States. The company focuses on people and food. It values the satisfaction of its customers more than the profits. The restaurant offers fresh food possible. It discards dishes that have stayed at the steaming table for more than twenty minutes to ensure that it provides fresh and green vegetables to its customers. The business targets the majority young people and mainly Asian customers. The company has been closely held by the family. As a result, it has been easier to make decisions and to maintain the vision and mission of the enterprise. The company website has been used as a marketing tool for its products and the quality services offered. It clearly outlines the company philanthropic arm, the Panda Cares, its mission, leaderships and values (Pearson 22).

Recommended Areas to Improve from a business standpoint

Continuous improvement plays a significant role in the growth of the firm. It enables the company to improve the quality of products offered, speed to market, flexibility, costs reduction, customer value and satisfaction (Westhead 252). Panda Restaurant Group, Inc should improve on it fast food meals. There has been an increased customers’ awareness on the health issues as a result of consuming high-fat contents diets. As a result, it should ensure that it is offering low-fat contents meal and organic food. The business should enhance the skills of its employees through involving them during problem-solving and decision-making processes.

Reason for Choosing Andrew Chreng Lessons Learnt

I chose him to learn from his ability to grow as an entrepreneur since he is an immigrant in United State. Choosing him has helped in learning how he developed a passion for running a restaurant. The entrepreneur has also helped in understanding that minimal funds can be used to start a business. I have learned that perseverance, drive, and passion are critical to ensuring that the businesses overcomes competition and satisfies the needs of the targeted customers. I have also learned that clients and employees play a significant role for the company to succeed.

Works Cited

Jang, SooCheong, Yinghua Liu, and Young Namkung. “Effects of Authentic Atmospherics in Ethnic Restaurants: Investigating Chinese Restaurants.” International Journal of Contemporary Hospitality Management 23.5 (2011): 662-680.

Pearson David. “How I Made It: Panda Express’ Billionaire CEO Dishes Up a Stir-Fry Empire.” Los Angeles Times 11 January 2015: 21-22.

Westhead, Paul. “Entrepreneurship: Concepts, Theory and Perspectives.” International Small Business Journal 26.2 (2008): 251-255.

Nowadays globalized businesses offer a broad range of similar products and services throughout the world adapting or standardizing them to local markets. This paper is aimed at the review of concepts associated with the international marketing, in particular, standardization, adaptation, multi-domestic, global, and transnational strategies resulting in the case analysis of Roy Choi’s restaurant empire and Xiaomi company and recommendations for their international expansion.

In the international marketing, marketing principles and functions persist, but they possess some characteristic features connected with different national, cultural and other peculiarities of foreign markets. According to Herbig, there are two types of the global expansion: the international marketing standardization (globalization) and adaptation (glocalization) (31). If the company focuses on the similarity of the characteristics of certain foreign markets while choosing a target market, in this case, the complex of a standardized marketing is developed. Standardization covers goods, advertising, and distribution channels that provide significant cost savings.

As a rule, such international marketing is based on the principle of ethnocentrism, in other words, the possibility of using in the foreign markets the same methods as in the home country. In fact, such companies are expanding the national market to international offering a standardized product.

For instance, the standardization of advertising is suitable for products associated with widespread habits (Marlboro cigarettes or Beefeater gin that are perceived and remembered literally without words), or with the universal consumer evaluations of their main functional characteristics (shoes or clothing). In addition, analyzing the possibility and necessity of standardization in developing the international marketing, factors that affect the degree of adaptation should be taken into account as adaptation marketing strategies depend on competitive geographic, national, racial, religious, and cultural contexts.

The concept of glocalization is based on the characteristics of each national market. Therefore, the adaptation of the marketing to conditions of each market is necessary. This concept is inherent in multinational corporations. Their geocentric orientation pays attention to both similar and distinctive features of foreign markets, whereby the marketing could be adapted, but if appropriate – partially standardized. For example, the promotion of a standardized product might be accompanied by a completely adopted advertising.

It is also significant to consider concepts of multi-domestic, global, and transnational strategies. The multi-domestic strategy means the adaptation of a strategic approach to conditions of each country where the company operates (Jeyarathmm 136). The strategy considers significant national differences in cultural, economic, and political environments in different countries along with needs of customers and their habits.

This type of strategy is suitable when consumers in the country need only specific products, when product demand is relatively small, when national governments impose requirements on the necessary conformity of the goods sold on the spot market, and when trade barriers of the national government are so diversified and complex that hinder the development of a single coordinated approach. In this case, one might observe the development of strategies appropriate to the conditions of the particular country. Moreover, the strategy is characterized by a focus on local suppliers and full adaptation to the specifics of the national demand, culture, and customs of the country. As a rule, it is implemented in markets where competition is limited to the national market and does not depend on what occurs outside it.

The global strategy occurs when prices and competitive conditions of national markets are closely linked (Steers and Nardon 117). In this regard, the competitive position of the company in the same national market significantly affects its position on another. In markets with global competition, the marketing tends to the standardization and harmonization, and the main struggle is the unfolding for the price efficiency.

The global strategy allows the company to focus on providing a competitive advantage for both the international and domestic competitors. If differences between countries are small and could be taken into account when developing a global strategy, it is preferable as it gives the opportunity to combine efforts of the company to provide a competitive advantage in the global market due to the low cost or differentiation.

The transnational strategy imposes contradictory requirements. On the one hand, companies should be effective in relation to costs and prices, on the other hand, to ensure the adaptability of the production and marketing system to national circumstances. The company could transform to this type of strategy in two ways. First, to change consumers’ preferences in global market by means of price pressure from standardized mass production to differentiated one. The second way is to strengthen the price competition in the multi-domestic industries.

It should also be mentioned that companies are reviewing their strategies and changing them in accordance with the changing market environment to the extent of the geographical and sectoral diversification

Speaking of the Roy Choi’s food truck or restaurant business international expansion, I would recommend following the product localization and the overall transnational strategy. The food industry should take into account differences in consumers’ taste preferences that are largely related to national characteristics. The product standardization does not correspond to this concept that requires a high degree of product adaptation to the particular market.

Consequently, the company should adapt as much as possible including foods, recommended recipes, and other aspects. However, it is necessary to preserve the image of the company and its initial mission. “I’ve always had a magnetic ability to connect with people on the fringe. That’s why my food relates to so many different people,” states Choi (Walker par. 8).

He also claims that “wherever it goes from there will be up to the concept that fits the community” (Frausto par. 8). Therefore, I believe that the company’s strategy should be based on transnational strategy. Thus, the optimal solution of the issue is, perhaps, the partial localization along with the preservation of the spirit of the single campaign in all markets where the product is offered, but, at the same time, making it possible for the necessary degree of standardization in order to strengthen the impact on the consumer.

As for the Chinese Xiaomi company, I would recommend the product standardization and the overall global strategy. According to Hugo Barra who joined Xiaomi recently, “the equation of quality and affordability” are the principal components of the company’s expansion strategy (Larson par. 6).

The product of the company does not require the consideration of special features as a smartphone is comprehensible for everyone, and, as a result, might be standardized. In order to implement this type of strategy, it seems appropriate to improve the organizational structure, form of control where a special role is given to the corporate culture, increase the role of innovation, and the effect of global learning. The latter consists in the fact that the company is organized in such a way that any new knowledge about improvements comprising product, functional system, and market service methods should be available in all divisions of the company wherever they are, and, most importantly, they should be freely accepted and implemented.

Works Cited

Frausto, Manny. “Are Roy Choi’s Eyes Bigger than His Stomach?” The Orange County Register. 2014. Web.

Herbig, Paul A. Handbook of Cross-cultural Marketing, Binghamton, NY: International Business, 1998. Print.

Jeyarathmm, M. Strategic Management. 2nd ed. New Delhi: Himalaya, 2008. Print.

Larson, Christina. “Xiaomi’s Resolution: Double Its Smartphone Sales Volume in 2014.” Bloomberg Business. 2014. Web.

Steers, Richard M., and Luciara Nardon. Managing in the Global Economy, Armonk, NY: Sharpe Inc., 2005. Print.

Walker, Tim. “Keep on (gourmet) Trucking: The Cuisine-bending Secrets of LA’s Famous ‘Kogi Korean Taco‘” The Independent. 2013. Web.

The practice of tipping has emerged as a major method of compensating the wait personnel as it improves their performance with zero costs. In terms of an organizational structure, tipping refers to the method of rewarding individuals (Mandy, 2016). Since one of the fundamental problems that every organization faces is that decision-makers do not have appropriate incentives, the practice of tipping provides the wait staff with such an incentive.

From an economic point of view, tipping is beneficial for all the three parties, namely, the managerial staff of a restaurant, the wait staff, and customers. To earn more tips, workers will do their best to provide high-quality service to their clients. Moreover, the wait staff is motivated to sell more since the tip depends on the total sum of the bill. As the sum of the tip is not fixed and depends on the customer, it is expected that waiters will be encouraged to improve their performance to get a larger tip.

Customers, in turn, will be more satisfied with the quality of service, provided that the wait staff has an incentive in that. Restaurants also benefit from the practice of tipping since it allows for enhancing the performance of the wait staff at the cost of customers (Tung & Reyes, 2018).

If customers are satisfied with the service, the odds are they will come to the restaurant once again and recommend it to their friends. It should also be stated that such a method of rewarding may significantly eliminate the number of conflicts between waiters arising from the system of rewarding since it is not managers but clients who decide on tips. Therefore, the organizational architecture of restaurants promotes the excellent performance of the wait staff.

It is customers who typically decide on the amount of the tip because they are the recipients of the service. It is considered that only the customer can adequately evaluate the quality of the service and whether a waiter did a good or bad job. Since there is no standard metrics of the quality of a waiter’s performance and the customer experience is mostly a subjective matter, the choice of how much tips to pay is given to customers.

Restaurants want every waiter to be rewarded with tips. This complies with an organizational architecture and allows the managerial staff to save money on employee rewards. When an individual visits a restaurant, he or she eagerly gives tips to a waiter. However, when a group of individuals comes to a restaurant, they may be reluctant to give tips. If every person pays his or her share of the bill, the amount collected may appear to be less than the sum of the bill and tips. As a result, a waiter has less incentive to provide customers with high-quality service. Restaurants require tips from large parties for waiters to be compensated for their service.

References

Mandy, D. M. (2016). Producers, consumers, and partial equilibrium. Amsterdam, Netherlands: Academic Press.

Tung, I., & Reyes, T. (2018). Wait staff and bartenders depend on tips for more than half of their earnings. Web.