Assignment number
Imagine you are starting a small business and it is your goal to create a successful business. What is your business? What products and/or services are you selling?
What industry are you in? Conduct a 5-Force Analysis. Is this a “good” industry to get into? Why or why not?
Who are your direct and indirect competitors?
What is your competitive advantage? How will you create a sustainable competitive advantage?
Create a Situational Analysis (SWOT Analysis) for your business.
How will you compete with your direct competitors? What is your positioning strategy? Explain why this would be an effective strategy.
Question 1
If I were to establish a small business, I would prefer to work in the food services industry. I would create a chain of small cafes serving healthy food. I consider it an idea with big potential as more and more people tend lead a healthy lifestyle, but for busy people it is difficult to get a snack that would not breach their diet when outdoors or at work I am convinced that proposed business will be in high demand. These cafes would serve snacks for the representatives of such movements as vegetarians, vegans and people who simply want to eat healthy. Thus, food assortment must include cuisine of three types: 1) that doesn’t contain meat; 2) that doesn’t contain any animal products; 3) that may contain animal products but match healthy diet.
Question 2
For my business I would chose a pyramidal structure, at the top of which there is the owner, who governs Top Manager, Marketing Manager, Bookkeeper and Human Resources Manager (see fig. 1). All the staff working in the cafes will be under responsibility of Managers, who in their turn will report to the Top Manager. Top Manager’s responsibilities will include supervising the performance of Managers, providing planning, organizing and control of the business’s activities as well as reporting to the owner. Marketing manager will coordinate the work of the Marketing department and provide the owner with strategies to enhance sales and build a brand name. Bookkeeper and HR Manager do not coordinate any staff, but simply fulfill tasks within their proficiency and report directly to the owner. It is a functional type of the pyramidal structure, where the company is divided into departments, which fulfill the tasks within their functions and each department has its manager that supervises its activities. In this case HR and finance don’t have particular departments, but are represented with single employees because I am convinced that it will be sufficient for a small business.
Question 3
According to the 5 forces analysis, the threat of new entrants is moderate as on the one hand, the cost of entering the market is rather low, but on the other hand, healthy food cafes are not as widespread as, for instance, coffee shops, so the market is far from being saturated. Threat of substitute products or services is high as people might opt to get self-cooked take-out meals or find suitable products in the cafes that are not centered at serving healthy food. The threat of established competitors is moderate as although there are some restaurants of similar thematic, there areas in which they are absent, so with the right placement of the restaurants competition can be avoided. The bargaining power of customers is quite high as switching cost is rather low and products offered by the company are not unique, so if the price grows too much, customers can simply switch to other cafes of this kind. Bargaining power of suppliers is low in this industry because the components for the company’s products are available to buy from a wide range of suppliers and switching cost is low, so it won’t pose a difficulty for the company to use the services of another supplier. Conducted research shows that in this industry there is quite high competition and company might face the risk of losing customers because of low switching cost for customers. Although this can be dealt with by establishing a brand name and maintaining differential advantages.
Question 4
My direct competitors are the restaurants that offer healthy and/or vegan food, such as Organix, Lemon Zest Café, Sushi2U, Green Corner Café etc. Among indirect competitors there can be distinguished restaurants that don’t claim to serve healthy meals as well as shops providing healthy food, for example, Whole foods.
Question 5
The competitive advantage this healthy food cafes chain is, first of all, that it would provide healthy meals of high quality. Secondly, its competitive advantage will be its location, as I plan to situate the cafes in central parts of the city, where they will be easily accessible and constitute the major sources of healthy meals. Lastly, the design of the cafes and its staff are supposed to create positive attitude of the customers and make them come back again. As we know, in the restaurant industry such factors as service and interior are usually more important for the customers than actual food, so maintaining these features at high level will help create a sustainable competitive advantage that will attract new clients and facilitate the growth of the regular customers. I also plan to establish ‘happy hours’ during which customers will be able to get significant discounts, this will not only attract customers, but also will help fill the cafes when attendance is usually low.
Question 6
Strength:
cafes will serve the meals of a high quality;
high quality of service;
special promotions, such as ‘happy hours’.
Weaknesses:
relatively high prices high prices;
cafes might be overcrowded at the time of breaks or after work hours.
Opportunities:
adding new items to the menu and employing new techniques;
offering delivery and take-outs;
expanding the net of cafes;
launching a mobile app;
launching a bonus system for loyal customers.
Threats:
new cafes offering similar products that might open nearby;
potential rise in price of the used components.
According to the results of SWAT analysis, there are more strengths than weaknesses in this business, it bears a lot of opportunities as well. The main threat for the business is competition. There is also a threat of potential rise in price of the used components, but it can be dealt with by maintaining inventories and/or establishing long-term relationships with suppliers based on mutual trust.
Question 7
I plan to locate the cafes in the downtown, but in such areas where there are no restaurants that offer healthy and/or vegetarian meals. This will enable to avoid competition as well as attract customers as they are less probable to go to a distant café if they have one nearby By providing attractive design and cozy atmosphere I can make the cafes not simply a place to get food, but a place where one can pleasantly spend time.
I intend to set high standards of quality for food and service due to which I could hold customers even in case new competitors should enter the market. Because of maintaining high quality and central location it would be impossible to implement low-pricing strategy, but this can be turned into an advantage as it may attract customers with belief that pricy products are worth more, in other words, create a perceived value.
Organizational chart
Figure 1. Organizational structure of the company
