Food and Industry Essay Example for Free

Food and Industry EssayPolitical This can incur both extreme effects on threat of vernal entrants. If the government brings out amplyer restaurant license cost and join ond taxes and/or implements strict health and safety regulations along with to a greater extent documentation procedures, this will increase the barriers to entry. However, if the government does the opposite by decreasing license cost and taxes or has a piano approach to health and safety procedures, the threat of new entrants will be postgraduate. Economic.Due to the rising income disparity and the adverse stintingal conditions, the number of unemployed is increase due to which the labor cost will decrease, and the up-class restaurants will be more in demand as the rich be getting richer. Thus, the threat of entrants is high because of change magnitude profit margins in such(prenominal)(prenominal) ventures. In case of improvement in the economy, more plenty could afford to go out to restaurants whi ch kick downstairs more opportunities for new restaurants to come up. Social.The current sociable trend is in favor of eating out especially at expensive restaurants, thereby, increasing their demand and withal owning such eat-outs is now very socially appealing thus, increasing the threat of new entrants. Technological The rise in innovative technology has made focus of restaurants very easy and the new sophisticated software now enable restaurants to run with less number of employees, thereby, reducing the labor cost. Thus, this factor increases the threat of new entrants.B Bargaining Power of Buyers Yes No (+) () Are there a large number of buyers relative to the number of firms in the business? pic Do you welcome a large number of customers, each with relatively small purchases? pic Does the customer face any significant cost in switching suppliers? pic Does the buyer wishing a lot of important information? pic Is the buyer aware of the need for addi tional information? pic Is there anything that prevents your customer from taking your function in-house?pic Your customers are non highly sensitive to price. pic Your product is odd to some degree or has accepted branding. pic Your customers businesses are profi remit. pic You provide incentives to the decision pick outrs. pic variation The bargaining origin of buyer is poor in the industry firstly because their product is a commodity item and consumers stir no survival but to continue consumption, as it is too a form of entertainment in our country.This makes the industry more attractive and profitable and the plague forces such as increasing nation is an appealing opportunity, however, the economic situation of the country brings along adverse effects on the industry. Nandos should therefore, bank on the rising income disparity. PEST forces that appropriate Bargaining Power of Buyers Political This governmental factor has no direct affect on t he bargaining power of buyers. Economic The increasing population overturns the power of buyers.Even though the adverse economic situation of Pakistan is reducing the consumer base, it is still non making much impact on the bargaining power of buyers. Social The trend is moving towards eating at restaurants, which is increasing the base of consumers, thus, reducing their bargaining power. Technological The advancement in technology makes it possible for the buyer to gather all the information quickly and make informed decisions. Thus, this is increasing the bargaining power of buyers.C Threat of Substitutes Yes No (+) () Substitutes devote procedure limitations that do not completely offset their lowest price. Or, pic their finishance is not justified by their higher price. The customer will incur costs in switching to a substitute. pic Your customer has no real substitute. pic Your customer is not likely to substitute. pic Interpretation The threat o f substitutes is medium to low, as this industry does not have any real substitutes, because restaurants offer unique encounters along with their base product i.e. sustenance items. In Pakistan, eating out is a form of entertainment and people generally like going to proper(postnominal) restaurants and cafes because of their splendid experience in the past including ambience and feed. Nandos should therefore concentrate their efforts on upgrading their restaurant ambience and the taste offered by them. PEST forces that affect Threat of Substitutes There arent many substitutes of the restaurant industry. However, decrease in the purchasing power of the people could lessen their visits to the restaurants thereby increasing the threat of substitutes.If better substitutes are provided to people such as more variety in the ready-to-cook nutrients could increase the threat of substitutes. D Bargaining Power of Suppliers Yes No (+) () My stimulants (materials, labor, supplies , services, etc. ) are standard earlier than unique or pic differentiated I can switch among suppliers quickly and cheaply. pic My suppliers would find it difficult to enter my business or my customers would find it difficult pic to perform my function in-house. I can substitute inputs readily. pic I have many potentiality suppliers. pic My business is important to my suppliers. pic My cost of purchases has no significant influence on my overall costs. pic Interpretation Bargaining power of suppliers is high because the inputs are not easily substituted, keeping in mind only those companies in the industries that are rather cautious about their inputs as poor quality inputs can cause them a hefty amount of business.Also, the inputs are commonly of a perishable nature, thus, stock-ups are not possible, that is why reliability of suppliers is very important. Therefore, these companies usually have one or two major supplier of main inputs, who ca n provide well-grounded quality inputs in a timely manner. This is an unattractive aspect of this industry, thats why Nandos should integrate backward by probably farming their chicken, in ordinance to eliminate this power of suppliers. PEST forces that affect Bargaining Power of Suppliers Political.If the government grants subsidies to different chicken suppliers so that they are able to produce at the same level and with same quality as KnN, then the supplier power will reduce. If the government establishes quality standards for using hygienic meat products, the supplier power would go very high since there is only one major chicken supplier. Economic The current economic situation of the country will reduce large scale companies such as KnN thus, the supplier power will increase. Also our poultry industry is going down. This will march on increase the power of suppliers. Social.This factor will not affect the input of food industry. Technological Technology has made it possi ble to manage the poultry industry, thus change more suppliers to come in. therefore, the power of suppliers will reduce. E Determinants of Rivalry among existing competition Yes No (+) () The industry is growing rapidly. pic The industry is not cyclical with intermittent overcapacity. pic The fixed costs of the business are a relatively low portion of total costs. pic There are significant product differences and brand identities between the competitors.pic The competitors are diversified rather than specialized. pic It would not be hard to get out of this business because there are no specialized skills and pic facilities or long-run contract commitments, etc. My customers would incur significant costs in switching to a competitor. pic My product is complex and requires a detailed understanding on the get around of my customer. pic My competitors are all of approximately the same size as I am. pic Interpretation.The argument among st the existing firms is moderate to high as each tries to outdo the other by offering cost-effective deals to the consumers especially during Ramadan. With the increasing rate with which these eat-outs are opening, the marketplace share for each of them is deteriorating. Thus, each is rigorously competing against the rest. In such situation, it is usually the restaurants with small operations such as Nandos that suffer. Nandos should therefore, try to combat this issue by increasing their operation via market penetration or market development. PEST forces that affect Rivalry among existing competition.Political If the government grants subsidies to local competitors to match the international chains, the rivalry will increase. Economic The fake economic growth has increased the availability of funds therefore the competitors can match international chains now. Thus, the rivalry will increase. Social This factor will not affect the input of the Restaurant Industry. Technological Te chnology has made it possible for competitors to affectively reduce cost, thereby, enabling to match each other and copy the others competitive advantage. This will increase the rivalry between competitors. Overall Industry Rating Favorable Moderate Un-favorable Implications Threat of new entrants 3 2 7 Threat of new entrants is high adverse Bargaining power of buyers 5 1 4 Bargaining power of buyers is Low Favorable Threat of substitutes 2 1 1 Threat of substitutes is speciality to Low Somewhat Favorable Bargaining power of suppliers 1 0 6 Bargaining power of suppliers is high Unfavorable Intensity of rivalry among competitors 4 0 5 . Intensity or rivalry is Moderately High Unfavorable Total 15 4 23 Reasonably Unattractive Interpretation Overall, it is an unfavorable industry as the major cities of Pakistan are swamped with many restaurants and cafes. Nevertheless, the industry position can be exploited t o ones advantage, if strategically smart decisions are taken. For Nandos, the recommendations include Constantly innovate and bring in more competitive advantage that are unmatchable, in order to reduce the threat of new entrants. Backward integration to reduce the power of suppliers. More effective differentiation to reduce the rivalry between Nandos and competitors. 1 Overall Macro-Environmental Pest Factors Political Factors The political factors that mainly affect Nandos concern how the government relates to health issues concerning food items being served or brings out new regulations regarding the restaurant business. For Instance when Bird Flu occurred in Pakistan, if the government would have asked for ban on chicken items or some strict regulations on the chicken items being served, then it would have highly affected Nandos as well. governing regulations regarding franchises or international chain of restaurants would affect Nandos in relations to itself or in dealing wi th its competitors. Economic Factors Pakistan is a developing country and the majority of the population has low purchasing power. Nandos caters to that niche of the Pakistani society that has a relatively higher purchasing power than the majority of the nation. Any economic instability or economic recession would decrease the power of a lot of consumers, decreasing the niche segment that Nandos caters to.Thus economic power does affect Nandos as people tend to spend less on eating out at relatively expensive places when they have a tighter budget. If the economy develops and more people have the purchasing power, then more people would be able to visit restaurants like Nandos. Social Factors The trend of eating out has been carrying on in Pakistan since a very longtime. Pakistani people have always loved eating out. It is even the main source of entertainment in Pakistan. Earlier on families would go and eat out, but since the past few years, this trend increased even further in te enagers, young adults and with corporate people.Nowadays, if we visit any restaurant such as Nandos, we get to see a diverse crowd that includes teenagers, families, couples and even corporate businessmen. Thus eating out is becoming an increasingly important social trend which cyphers positively for places like Nandos. Technological Factors The restaurant business works well where the management handles the service well. To be quicker and more in effect(p) in processing and then serving the orders, restaurants need to have better technology. To keep records of day-to-business, better technology is essentially important. Cooking also requires better equipments to work faster and better.Nandos has the essential equipment to make all of its flame-grilled items which even works towards providing healthier items by not making deep-fried products. 2 Key Driving Forces touch on the Industry The Internet and new E-Commerce opportunities The Internet can revolutionize the entire restaur ant industry by including the aspects of ordering food online. In this way consumers could be provided with more convenience and be more informed about the menus. Increasing globalization of the industry Global chains of restaurants such as fast food joints like KFC and Mc Donalds have existed since a very long time now.The aspect of a global chain leaves a positive slump on the minds of the people since they tend to believe that the product is of quality and hygiene. More and more restaurants are following this trend and opening up their chains in Pakistan. This does affect the restaurant industry on a all in all. Nandos is also globally widespread but it hasnt penetrated much in Pakistan as yet. Product founding Those restaurants that have had a unique menu or expression have been able create a strong place in the industry. People have always wanted variety in Pakistan.Any new element or uniqueness in a restaurants menu could give it a competitive edge in the market. Nandos has banked on this opportunity by introducing an entirely new concept adopted from South Africa. Technological Change Advances in technology can dramatically transform the restaurant industry. Technological developments can competitively produce significant changes in the distribution channel and logistics and reduce the costs in the value chain. Entry or Exit of major firms Exit of major firms in the restaurant industry can lead to changes in market shares of all the companies that compete with such firms.Entry is relatively easy and keeps on leading to increased competition in this industry. Changes in cost and efficiency drop-off in cost can lead to significant changes in the profit margin of the business. However increasing costs can prove to be pestilential to the businesses in the industry. Regulatory influences and government policy changes Regulatory influences or policy changes such as increased quality and hygiene standards can drive up costs of firms but would lead to better and safer food items. Changing societal concerns, attitudes and lifestylesEmerging social issues and changing attitudes and lifestyles can be powerful driving forces of industry change. The trend of eating out has been increasing consistently in Pakistan giving more opportunities for new companies to come with more and more variety for the public. 3 outside Factor Evaluation (EFE) Key External Factors Weight Rating Weighted Score Opportunities Market Potential growing market for fast casual 0. 17 2 0. 34 Peoples need for variety in the food and entertainmnt sector 0. 10 3 0.3 Rising Demand for Home delivery and takeout food 0. 08 3 0. 24 E-commerce 0. 02 1 0. 02 Peoples preference for red meat 0. 06 1 0. 06 Peoples attraction towards promotional offers 0. 08 2 0. 16 Increasing trends for business/corporate lunches and dinners 0. 05 3 0. 15 Threats Economic Problems in the country 0. 09 2 0. 18 Bird Flu Threat 0. 03 3 0. 09 Political Problems in the country 0. 02 2 0. 04 increase market for cafes in Pakistan 0. 06 2 0. 12 Availability of nandos table sauces in the market 0.03 2 0. 06 Only one chicken supplier (KnNs) 0. 08 2 0. 16 Huge variety of Restaurants, fastfood places 0. 12 2 0. 24 Changing tastes of people 0. 01 2 0. 02 Total 1. 00 2. 18 Analysis Nandos, Pakistans total heavy total is rather disappointing considering their global background. Currently their total weighted defecate of 2. 18 is about 20% less than the industry average of 2. 5. They are not exploiting the opportunities in the food industry to their advantage neither are they combating the threats well.The most major opportunity staring them in the face is the rising market potential which has the highest weighted score of 0. 34, as the trend in Pakistan is moving towards fast-casuals. To handle this opportunity they must open up new outlets to cater to the untapped vicinities. another(prenominal) opportunity that has a high score of 0. 3 is the peoples need for variety. The strategy for such an opportunity would be to add varieties like fancy beverages (e. g. cocktails and mocktails), sea-food and meat in their menu (available at Nandos outlets in other countries of the world).Of the threats, that needs their immediate attention is the rate with which new restaurants that Pop-up. To counter this Nandos must concentrate on increasing its efforts on rightly implementing their Focused Differentiation Strategy. They should further enhance their brand image to capture more loyal customers. Another threat which has a relatively high weighted score is the economic problems of Pakistan the way this can be overcome is by establishing subsidiaries under another name. The third biggest threat with a weighted score of 0.16 is that they have only one reliable supplier they can definitely counter this via backward integration that would include farming their own chicken. keep company and Competitor Analysis 1 Competitive Profile Matrix (CPM) Key Success factors NANDOS BBQ Tonite Roasters GunSmoke Weight Rating Weighted Score Strengths Product their Peri-Peri recipe 0. 20 4 0. 8 Strong brand personality 0. 07 3 0. 21 Ambience at the restaurant 0. 05 3 0. 15 Customer committedness 0. 02 3 0. 06 market efforts towards the consumer base 0.05 3 0. 15 Strong Supplier/Distribution system 0. 10 4 0. 4 Products have essential ingredients for a health life 0. 01 2 0. 02 Strong Background from Africa present till today 0. 01 3 0. 03 Selling Experience 0. 04 4 0. 16 Strong food concept 0. 02 3 0. 06 Strong Globalize Strategy adaptive to culture 0. 06 4 0. 24 Creative and unique Menu 0. 02 4 0. 08 Weaknesses Low Marketing Budget 0. 08 2 0. 16 Stagnant Growth Not penetrated 0. 15 2 0. 3 Communication system within dept- not strong 0. 04 2 0.08 Weak Technological system in the Administration Department 0. 04 1 0. 04 No Beverage Variety 0. 04 2 0. 08 Total 1. 00 3. 02 A nalysis The total weighted score of 3. 02 is 20. 8% more than the average industry weighted score. The reason for such a phenomenal score is their PERI PERI recipe which is their main strength with the highest weight. Basting, marinating and table sauces are usually the most important ingredients and they are definitely quiet effectively banking on this strength. Their delicious basting and marinating sauces still remain a whodunit to the rest of the world.Along with this, they are handling all their strengths genuinely well with the exception of their healthy ingredients, which they are handling in an average way, although, it has a low weight considering the psyche of Pakistanis, they can definitely improve their score by communicating the nutritional values of their ingredients. On the other hand, they are very sick countering their weakness. Their main weakness is their stagnant growth with the highest weight and with only a sore of 2. There is no evidence, that they are will ing to do anything about it as their outlets are still missing in the major cities of Pakistan, like Islamabad.They should definitely improve their growth rate and try to improve their marketing budget. This will definitely enhance their total weighted score. The strategies to improve the growth rate would include market development and product development via establishing more outlets and increasing the variety in their menu, respectively. Strategic Analysis and Recommendations 1 Generic Strategy pic Although, Nandos Pakistan claims to be following a Focused Differentiation Strategy, they havent really implemented it that well.Nandos Pakistan caters to that turning point market which requires a different taste and value and is prepared to pay the price for it. Their focus is entirely on the Upper Middle and Upper-Upper class. The strategies implemented by Nandos have not exactly catered specifically to this focused differentiation strategy. The company needs to make effort in set ing and communicating their real value to its specific set of consumers. Another contradiction in this strategy is that there is no outlet in Islamabad, Pakistan, where mostly the rich and the influential reside.Now is the time to really bank on the rising income disparity in the economy via increasing their prices. This will also attract more customers from upper-middle/high class, as it is quiet socially appealing for them to dine at expensive places. Nevertheless, Nandos offers only chicken items this is in line with their current strategy. They should really check their strategic approach or sort their focus. Nandos should stick to its focused differentiation strategy. The following strategies have recommended for improving their strategic position Increase their prices to capture a larger share of their current target market. Open up outlet in the major cities of Pakistan like Islamabad and Faisalabad. Effectively communicate their niche marketing strategy to their target au dience to further emphasize what their brand actually stands for. Add value by offering an outstanding service which is unforgettable and unmatchable. Nandos is devoted to providing its customers appetite for life, who love to muzzle and live to eat. At Nandos we believe in our flame-grilled Peri-Peri Chicken, we believe its the best in the world.We aim to be the most successful grilled food restaurant in the world at delivering the best customer experience in markets we serve and to do so, Nandos will meet its customer expectations through highest quality food prepared with leading technology and by hiring and retaining personnel with exceptional capabilities. We believe in offering quality and value to our customers and grow in such a way that creates profitability and value for shareholders and structure the society in such a way so as to improve the quality of life of the whole community.Our distinctive competence is our open style of informal restaurants, through the wonderf ul saying Mi Casa so casa My home is your home. Our vision is to be the first choice in grilled food restaurant business around the globe. utmost LOW HIGH LOW HIGH LOW HIGH LOW HIGH LOW Customer Home Delivery Dine-in Take-Away Kitchen Restaurant/Retail Outlet Store Warehouse in Pakistan Fries from McKainz Ketchup from Knorr Chicken from KnNs Peri-Peri Sauces from South Africa.