Background
The Chinese market is characterized by a population, which is vibrant and large enough to facilitate and ensure the growth of businesses in China. The coffee consumption market is one, which has been on an increasing trajectory in terms of increase in the number of consumers for the product. The culture of the consumption of the product was increased by the presence of Starbucks a western franchise that delivers coffee in various parts of the world, and which has been the highest force of competition for Maan Coffee franchise. However, the greatest problem affecting the business entity associated with Maan Coffee Franchise is the reduced rate at which the Chinese consume the product, as the average rate of consumption of coffee by the Chinese is about four cups per year.
Such statistics demonstrate the need for a paradigm shift as well as strategic thinking into providing solutions facing the company. It is from this perspective that the firm ought to embark on solving the problem through a modification of its current framework regarding construction of more franchises and their structures. Such measures include ensuring that the cafes are vast and spacious enough to accommodate a large number of clients. Other strategies integrated include the use of antique furniture as seats for the customers as well as desk lamps, setting up lights on top of trees, integrating the utilization of candelabras while integrating both traditional concepts to the modern way of life.
The use of these strategies will ensure that there is a reduction in the competition from other companies competing to become dominant in the Chinese market. These strategies are also coherent with the mission, vision, and value of the hotel. The sentiments echoed by the chief executive officer of the million-dollar franchise; Ja Sang Shin implores that the core purpose of the firm is to provide coffee while promoting the culture and values of the Chinese personalities. The objective of the report is thus to give an insight into the current problems facing Maan coffee franchise as well as provide strategies that will lead to the reduction of the problems present.
A majority of the consumers of coffee in the Republic of China recognize the relevance of Maan Café franchise. The republic of China is known for its large population as well as the maintenance of its culture associated with activities such as drinking tea. However, the consumption of coffee in China has been on a continuous trajectory especially as a majority of the personages in the region are only accustomed to taking of tea. Coffee, on the other hand, tends to be more expensive than tea and can only be afforded by people with high levels of income in most cases. The Maan Café Franchise was formulated due to the observation of the existence of an opportunity for growth of coffee drinking market, especially in China. Firms such as Starbucks and Costa are accredited for their promotion of the culture of consuming coffee in China (Aken, Berends and Bij, 2012, p. 72). However even with these firms establishing themselves as the ideal franchises for the sale of coffee based products; they do not give a reflection of the ideal Chinese culture but rather have only integrated some Chinese cultures into the Western business entities.
Maan Coffee Franchise, on the other hand, focuses on integrating the Chinese culture into its modes of operation to tap into the existing Chinese market as well as provide a holistic environment that captures the pertinent needs of the Chinese in the consumption of their products. It is from this perspective that Maan Coffee franchise has embarked on a makeover regarding organizational of its facilities and incorporation of features that provide a relaxed atmosphere as opposed to the business environment present in Starbucks business entity.
However, even with the amalgamation of an atmosphere that reflects the culture of the Chinese people, the firm faces grave challenges associated with its expansion strategies. Such include the reluctance of Chinese personages from consuming coffee hence leading to the degeneration for revenue amassed by the firm. The paper, therefore, embarks on providing strategies subject to utilization in dealing with this challenge as well as other factors that may result in the declined performance of the firm.
Evaluation of Business Strategy
According to Christensen and SEEC Media Group (2012), Maan Café franchise is one that faces various opportunities of maximizing its performance associated with the sales made by the business conglomerate. The average annual returns made by the business entity from the year 2011 to date are about 1.5 million dollars. However, such an amount is infinitesimal as compared to the numbers of personages with high-income levels. The reason for such an observation is based on the fact the Chinese personalities have not yet developed a culture of consuming coffee and they always embark on consuming the products they are accustomed to such as tea. The firm also embarks on integrating the culture of the Chinese people, which propagates an environment that is holistic to ensure the creation of tranquil environment. Such a strategy is different from the business-like structure promoted by Starbucks or Costa Coffee which have also demonstrated their dominance in the region (Wang, 2015). The integration of the Dutch model associated to the solving of problems is crucial as it allows for the analysis of issues facing the firm as well as providing a forum in which all of these problems can be addressed.
The Dutch Model and Maan Café Franchise
The Dutch model was subject to incorporation to provide a forum in which business entities could address pertinent issues facing a business entity. The first step involves identification of the problem facing the business entity. The determination of the actual problem facing the company provides an environment in which the problem can be addressed, regarding finding out the symptoms facing the business entity. Waldmier (2014) argues that the primary challenge facing coffee based cafes in China involves the relevance of conflict with the existence Chinese culture that includes the drinking of tea. Similarly, poor performance in these firms, especially by Maan Café franchise arises in some of the regions. Such is because of the poor levels of consumption of coffee by the Chinese. Such is subject to analysis through the integration of the PEST analysis stratagem that evaluates the external competitive environment.
PEST Analysis
Arline (2014) implores that the use of the PEST analysis strategy has been very instrumental in providing an analysis of issues facing a company especially those that are externally based in their influence over business entities. The acronyms PEST represent political, economic, social, and technological issues that influence the performance of business entities. According to Wang (2015), the Chinese government has been supportive of its agricultural sector in through its support for farmers producing the product. Issues dealing with regulations based on trade do not reflect the decreased consumption of coffee by the Chinese. However, the relevance of political stability in the region has resulted in an increased performance of the business entities. However, the performance of the firm is subject to analysis following external factors that are economical in their orientation (Arline, 2014). These include the degree of unemployment in China as well as the living standards of the people.
The drinking of coffee in China is associated with the wealthy segment of the society. The poor performance of the coffee based restaurants and franchises may be attributed to the poor economic levels of some of the Chinese citizens, especially those based in the rural regions. The other factor is attributed to the existence of multimillion dollar business entities such as Starbucks and Costa Coffee which both base their origins from the Western Nations and Britain respectively (Christensen and SEEC Media Group, 2012). These companies have numerous resources as compared to Maan Café Franchise. They also possess a vast level of experience in the coffee franchise business and therefore are better equipped to deal with the turmoil present in the industry.
The relevance of social factors is among the core reasons why the firm faces challenges associated with increasing its performance. According to Wang (2015) and Waldmier (2014), the core social factor influencing the success of the firm is based on the culture of the Chinese folk who are accustomed to drinking tea instead of coffee. The technological entity that affects the success of the Maan Café Franchise is the presence of mechanization and technological advancement in China. The Chinese government embarks on ensuring that there is the development of infrastructure in the region as well as access to all input concerning the raw material and the machinery involved in the production process. The opportunity that presents itself is the ability of the firm to maximize on the changes in the tastes and preferences of the Chinese based clientele and their adoption of new cultures (Waldmeir, 2014). The threats therein include competition from rival mega-conglomerates and the threat of many new franchises all seeking to access the Chinese market.
SWOT Analysis
An evaluation of the strengths and weaknesses with respect to the internal environment is crucial in determining the measures subject to incorporation to prevent losses by the Maan Group of companies. Grant (2016, p. 53) argues that the conduction of a SWOT analysis leads to the successful integration of solutions that are coherent in addressing the challenges facing a business entity. Wang (2015) argues that one of the strengths of the firm arises from the presence of a strong management team, headed by Ja Sang Shin. The Chief executive officer of the company who is also the vision carrier is responsible for developing the franchise and through his leadership; the company has been able to increase its trajectory. The other strength demonstrated by the firm is the presence of competent members of staff who adhere to the established principles and guideline coherent with the objectives of the firm (Christensen and SEEC Media Group, 2012). In numerous occasions, human resource management has been a challenge and has led to the downfall of businesses, but Maan Café has been able to manage this issue and turned into a strength.
David (2016) argues that it is also crucial to focus on finding out the weaknesses of a business entity, as it will aid in the provision of solutions to these shortcomings. One of the weaknesses resides from the fact that there is only one person who is subject to consultation and carrying out of all the decisions. As the founder of Maan Café franchise, the leader ought to ensure that decision making rests on more than one person (Wang, 2015). An example is a directive to carry out an expansion of the franchise in the local regions in China where there is a small market as well as personages who firmly adhere to their traditional tea drinking culture.
However, the members of staff in the firm are both intrinsically and extrinsically prepared for the growth, owing to the decision to make Maan Café Franchise, a center of quality. As such, the company has developed competent staff who can ensure the delivery of quality services as well as well as promoting the culture of the people. Such are strengths and support the growth of the conglomerate (Need, W.C.D.H.P., 2006). The organization also need capitalize on its focus on Chinese culture which is an aspect that the majority of Chinese people value and the organization can tap into this as a strength as well as an opportunity for the growth of the organization. The existence of international competitors such as Costa and Starbucks reflect a threat to the company’s ability to grow and expand in an already shrink Chinese coffee market. As such, the organization need to develop competent strategies, that will facilitate the achievement of a competitive advantage, which is an essential aspect in facilitate the survival and success of the business.
Locke’s Goal Setting Theory
Edwin Locke formulated the goal setting theory as a basis for motivation in an organization. The theory posits that goal setting is primarily based on the performance of a task. As such, an organization needs to develop specific and challenging objectives, which have been found to improve the efficiency of task performance. As such, Locke identified five principles of goal setting, which include clarity of the goals, challenging goals, commitment of the involved parties, availability of a feedback and task complexity (Latham, 2012, p. 31). The principles as presented by Locke can play an imperative role in Maan Café Franchise adopted the principles in its action plan towards achieving a competitive advantage in the market.
The organization need to adopt Locke’s model in its value system and clear goals with timelines. Further, such goals need to be challenging and seek the commitment of all the employees offering frequent feedbacks on task performance, achievement of various targets and what need to be corrected. Based on the fact that the company is operating in a challenging market where coffee culture has not taken root in China amidst tough competition from Starbucks and Costa the tasks are challenging. The organization has embarked on various strategies, which will facilitate its expansion in the Chinese market such as integration of Chinese culture. As such, the organization need to set challenging targets concerning its expansion strategies and the number of new franchises that need to be opened over a long period, which should be broken down in the short term (Latham, 2012, p. 72). The organization should ensure that the employee commit to the goals and allow for frequent feedback on different issues such as progress and new strategies that need to be adopted. Further, the feedback can be from the employees concerning the approaches and strategies that they think that the organization can adapt to inch ahead in the market.
Critical Evaluation
The selected strategies are coherent with the goals and mission of the firm. According to Locke and Latham (2006), the establishment of goals is essential as it provides a framework and a guideline to be followed to allow for the increase in returns by the Maan Café Franchise. For instance, one of the strategies involved increasing the numbers of individuals directly involved in decision making. Diversifying the management and their role allows better decision-making stratagems (Hill, Jones and Schilling, 2014, p. 42). Further, an analysis of the organization’s internal and external environment has been identified as a competent strategy towards an organization’s realization of its position in the market. Further, it has been identified as an important fit in enhancing the ability of an organization to choose a growth path that facilitates the achievement of a competitive advantage in the market.
The strategies therein also contribute a viable business model associated with improving on the approach with respect to the provision of coffee as a product. One of the methodologies involves improving the physical outlook of the company by providing a serene environment, which integrates the Chinese culture. Such efforts result in an increased number of clients who feel that their culture is appreciated (Locke, and Latham, 2006, p. 267). The application of the Dutch model coherent to problem-solving model as well as the goal setting theory is consistent to strategic management principles. Maan Café Franchise is no exception with regard to integrating proper solutions based on the analysis of problems (Hill Jones and Schilling, 2014, p. 45). The remedies such as improvement on the cost of the product, the environment and expansion of the firm are coherent to strategic management which is essential for monitoring performance of a firm.
As an internal agent, I was instrumental in promoting change in the organization. Such is through providing guidelines on the best fit stratagems that prove useful in propagating the growth of Maan Café Franchise. Similarly, the enforcement of suggested directives by the management of the firm will result in the increased performance of the business entity. It was identified that the ability of an organization to compete effectively is on the identification of the opportunities and strengths that an organization can capitalize on to achieve a competitive advantage (David and David, 2016, p. 32). However, an organization has to reduce the weaknesses and manage threats that can affect its growth potential.
Conclusion
The success of any business venture with an emphasis on the Maan Café Franchise in China is dependent on the analysis of its strengths, weaknesses, opportunities and strengths. Similarly, it was imperative to conduct an evaluation of the external factors that are likely to influence the performance of the firm. These factors include the presence of rival companies and the best mechanisms to amalgamate to deal with their effect on the performance of the business entity. It was also prudent to integrate the use of the PEST analysis strategy, as it would provide details pertaining the external entities that determine the success of the coffee franchise. Information regarding the structure of the management, as well as the role of the founder as the decision maker, has been analyzed and recommendation on the need to incorporate a more holistic approach to decision making has been given. The integration of all of these stratagems will result in an increased performance of the coffee based franchise as well as spur its growth into gaining dominance in the China.
Reference List
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