Company Background
Arabian Nights Hookah Lounge is based in Amsterdam, Holland. The Hookah Lounges has their origin in India, Middle East. It has since spread to the Egypt, Turkey, Canada, Holland, USA and hence the whole world. It’s the tradition of most of the South Asian countries to use these hookahs and they usually take it to advance their culture. The hookah lounges are also known as shisha bars in Great Britain and Canada. Worldwide, most of the hookahs are owned or rather operated by people of the Asian origin with most still offering the Middle Eastern cuisine menu products. Most of the hookah lounges offer Arabic and Islamic music (Arabian Nights Hookah Lounge, 2013).
In the United States, hookah lounges were first established with Paymon Raouf: the owner of Mediterranean Café and hookah lounge. He later trademarked the hookah lounge and eventually allowed other businessmen to use the name for their own operations.
The hookah lounge also provides hosting services such as group and birthday party hosts, socializing and relaxing venues. They provide a tranquil and serene environment where customers can frequently meet, social and hold meetings. Their facilities and workers are outstanding. The workers are hospitable and always serve their customers with high level of etiquette.
The major product line of Arabian Nights Hookah Lounge is liquor, entertainment, food, hotel, coffee and hookah smoking. The hookah lounge provides several tobacco flavors such as black mamba, purple haze, young love, mermaid, mango, Cuban mojito, power puff, crazy cat lady and fuzzy navel to their customers. In addition, the company also partners with lots of local producers, manufacturers and farmers.
Company’s target market
Arabian Nights Hookah Lounge mission statement and main strategy is to deliver to their customers the serene socializing experience each and every time. The company has been over the years ensuring that this is achieved by providing its customers with quality, wide range, variety, value and everyday low prices. Arabian Nights Hookah Lounge is built on a passion for retail, attention to detail, hard work, ensuring the safety of their customers and their employees, and having fun. Their target groups are the youth and old in Amsterdam. They offer conferencing, meeting, socializing and relaxing and wedding venues.
Arabian Nights Hookah Lounge is a middle sized company with a steady and fast growing background. Over the recent years, the company has grown in terms of its assets, incomes and market share. This has been made possible through its market penetration, quality service and increased operation in Amsterdam town and beyond. In fact, the company has won several awards for its consistency and growth. In addition, the company strongly believes on quality service for the amount payable by our customers for every good and services whenever they transact business with them. The targeted customers are middle size and high income earners. This is due to inflation and the effects of the 2007 world economic trench. The disposable income of the citizens has greatly reduced and hence hookah lounge has to provide favorable products and services.
Porter’s Five Forces Model
This is a model or framework for industry analysis and developing business strategies. Five forces derived from industrial organization economics are used to determine how intense the competition of an industry is, and thus the attractiveness of the market (Porter, 2008). The attractiveness of the market refers to the general profitability of the industry. Five forces are applies in this model.
Threat of new entrants: Profitable markets with high returns will normally attract new firms (Porter, 2008). With many new entrants in the market, the profitability of Arabian Nights Hookah Lounge is likely to decrease. Unless new firms are blocked form entry, the result will be perfect competition with zero abnormal profit rates. The company has no threat due to any new entries since it has an already established brand name and has made a reputation for itself among its customers (David, 2005).
Substitute threat: If other alternative products exist out of the common product realm boundaries, consumers are likely to switch to the alternative products. There exist lost of alternative products to those marketed by Arabian Nights Hookah Lounge, in the other rival companies thus the company loses its market to such products (David, 2005).
Buyer bargaining power: This is the output market, and it refers to the customer’s ability to pressurize the firm (Porter, 2008). It also has an effect on the sensitivity of customers to price changes. Loyalty programs can reduce customer power. Arabian Nights Hookah Lounge offers discounts on some products that are offered by their rival companies. Unfortunately, in offering high discounts to attract a bigger market share, the discounted products appear to be of low quality as perceived in the minds of consumers (David, 2005).
Supplier bargaining power: This is the input market, whereby a company’s suppliers of components, labor, services and raw materials can be a power source over the firm when the substitutes are few and charge high prices for some resources (Porter, 2008). Arabian Nights Hookah Lounge is affected by this force in that even if there are plans for expansion and opening of new branches for convenience to consumers, there is marginal pressure attributed to high prices in the real estate, thus the opening of more branches is restricted (David, 2005).
Competitive rivalry intensity: The competitive rivalry intensity majorly determines the industry’s competitiveness (Porter, 2008). This can be the transparency degree, number of firms and innovation for sustainable competitive advantage. Arabian Nights Hookah Lounge faces competition from other rival companies with the major competitor being Zeeba Lounge. This pushes the company to be more innovative and bring new products and modify the existing ones so as to always attract new customers and retain the already existing ones (David, 2005).
Internal and External Environment Analysis
Arabian Nights Hookah Lounge is a strong, customer oriented and down to earth company with a responsible and hardworking culture and ethical values. The company strives for openness, honesty, fairness and transparency in all of its operations. The customers are put at the heart of decision making and business as a whole. The suppliers are valued and receive fair treatment, and there is respect for the community it serves (Arabian Nights Hookah Lounge, 2013).
The company has a board of directors who act on shareholders’ behalf in company supervision and the maintenance of good corporate governance. They oversee and appraise the strategies, policies and also the performance of the company. Management operations and decisions across of brands of the company are under the responsibility of the management board. (Arabian Nights Hookah Lounge, 2013). The employees work well but their performance could be improved by enforcing strategies for motivation to increase their productivity.
In addition, the company has a well established internal and external communication system. Just as feedback is very important in all aspects of communication, Arabian Nights Hookah Lounge Limited values her customers’ feedback. They get feedbacks either primarily from the customers through the help of their well-trained and reliant customer care, or through the secondary sources. These secondary sources include the online automated email address and through the firms social network: facebook, twitter and MySpace. Furthermore, the company through the help of its legal team adheres to the required laws and regulations. This has managed to keep its public image since it has no cases in the courts of law.
Conclusion
Generally, Arabian Nights Hookah Lounge is a middle-sized company with a big name. It has a good market share and is ranked among the best in the industry. However, the company has been unable to maintain its competitive edge such that it is now not considered the best among the market leaders. It has also done little to expand globally like its competitors (Zeeba Lounge) such that the other companies have more revenue streams on new markets. This has strengthened such rival companies both locally and globally hence the loss of competitive advantage. Moreover, the employees do not have enough motivation to improve their performance. The management could do way better to improve the performance of the company by taking care of the needs of their employees (Hogue, 2003).
Recommendations
The company has lost its competitive advantage to the market leaders. Arabian Nights Hookah Lounge should thus conduct an extensive market research to find out what the consumers want, so that the existing products can be modified or new ones created to satisfy the consumers (Hoque, 2003). This way, the new customers will be attracted and the old ones retained rather than losing them to the rival for the same products.
The marketing department should also adopt more aggressive marketing strategies like using social media, to advertise themselves and enable information to reach customers. Without information reaching customers, they will not know what the company has to offer, and will opt for the other rival companies who have advertised themselves. This could be done by promotions and sponsorships for the enhancement of the brand presence (Porter, 2008).
The company could also tap into new and fresh markets in developing countries and the emerging markets. This will increase their customer base and revenue streams sources such that in the event that one area faces difficulties due to certain circumstances, income is assured from other areas (Hogue, 2003). The constant stream of revenue will provide enough funds for new and better innovations and financing research programs to come up with new products for the market and gain that competitive edge.
The company could also implement reward schemes to recognize the hardworking employees for motivation. There could also be bonuses for attainment of certain goals by employees especially the marketers (Hogue, 2003).
References
Arabian Nights: Hookah Lounge. (n.d.). Arabian Nights: Hookah Lounge. Retrieved December 13, 2013, from http://arabiannightshookah.com/
Arabian Nights: Hookah Lounge. (n.d.). Arabian Nights: Hookah Lounge. Retrieved December 13, 2013, from http://arabiannightshookah.com/
David, F. R. (2005). Strategic management: concepts and cases (10th ed.). Upper Saddle River, N.J.: Pearson Prentice Hall.
Hoque, Z., (2003). Strategic Management Accounting: Concepts, Processes and Issue. 2nd Edition. Pearson Education Australia
Porter, M.E. (2008) The Five Competitive Forces That Shape Strategy. Harvard business Review
Welcome to ARABIAN NIGHTS. (n.d.). Welcome to ARABIAN NIGHTS. Retrieved December 13, 2013, from http://arabiannightsbar.com/
