A tactical management process like strategy evaluation, strategy formulation, and strategy implementation are essential for a business. (Anthony H, 2008)
Macro-environment can act as an evaluation which provide early caution system for organizations to foresee dangers, opportunities, and develop appropriate replies (Ginter and Duncan, 1990) in the discerning tendencies generally environment which might impact upon its industry and market segments. Strategy evaluation can make firm to give attention to factors and conditions which influence a firm's profitability in a industry and concentrate on predicting the dynamics of competitor's activities, responses and intentions. (Anthony H, 2008) This tool of examination will discuss about Infestation construction, Porter's Five pushes construction and SWOT evaluation for BreadTalk in BreadTalk Group Ltd.
2. 1. 1 Infestation Analysis
PEST analysis is a good tool to help Breadtalk Group Ltd to help find and keep an eye on all weak signals to identify the discontinuities or fractures to shape the environment. Infestations refers to politics, economic, public and scientific.
i) Political Factors
The politics factor includes all legal elements like legislation, taxation, deregulation philosophies, labour training and etc. (Anthony H, 2008) All business within the food processing industry are pressured to innovate and cut costs to stay competitive to prevent new entrants as new entrants will enter the market with less expensive and even more clearing understanding of consumer needs by offering more progressive products and services.
Increasing globalization and trade barriers has created a chance and challenge to BreadTalk as BreadTalk can enter into the market by rising companies in political steady country to explore the new market especially in market segments where bread could be luxury but at the same time BreadTalk will have to challenge with all kind of sources to source for low cost high quality from world over.
ii) Economic factors
The strengthening associated with an current economic climate will generally benefit market sectors but its effect will vary relating to which factors are most infected. The monetary factors include interest, throw-away income, inflation, gross home product, unemployment rates, budget deficit and surplus, personal savings rate, business savings rates and exchange rates. (Anthony H, 2008)
The climb and semester of item and raw materials and surge in fuel prices around the globe cause the climb of purchasing charges for BreadTalk and the excess cost has to pass to consumers by increasing the prices of products. The market meltdown can impact BreadTalk as it can decrease the electric power of buying of consumer and BreadTalk may face competition from local small bakery stores who offer at more affordable prices though less scrumptious to cost conscious consumers.
iii) Community factors
Social factors include all ethnic changes like interpersonal cultural within the surroundings or country and it would impact consumer spending habits. Social ethnic include traditions, standards of living, values, attitudes, beliefs, tastes, and labor force variety. (Anthony H, 2008)
BreadTalk forays into the market segments of China and India and cultural factors come into understanding. Chinese language and Indian customers have different culture in lifestyle, plus they have different opinions and needs on the current products offered.
iv) Technological factors
No doubts that major changes taking place in the general environment that are impacting the competitive environment are technical. Scientific factors include product creativity, applications of knowledge, new communication solutions and etc. The immediate rate of changes of technology has allowed new entrants to enter the market at a lower cost bottom. (Anthony H, 2008) Modern procedures and machinery with many marketing communications devices now can now be used by BreadTalk to ensure the price of labor and creation are reduced and orders to process faster scheduled to globalization and changes in scientific factors.
2. 1. 2 Porter's five pushes framework
The five makes of Porter are, risk of new entrants, bargaining electric power of purchasers, Bargaining power of suppliers, risk of alternative product and level of rivalry
Threat of new entrants
The threat of new entrants is when new competitors decide to get into a business and reduce income being acquired by incumbent businesses and to reduce degree of customer's commitment within the meals control industry. (Anthony H, 2008) With BreadTalk's product differentiation and high brand acceptance and customer commitment, it will prevent new entrants to type in the market, and so the threat of new entrants will be low.
Bargaining power of buyers
Buyers have the influence electricity for an industry to force down prices and provide higher quality as consumer's purchase symbolizes a sizable percentage of organization's overall sales. (Anthony H, 2008) BreadTalk produced products that are probably lower price for customers as they design its products and also have their own factories. BreadTalk improve customer commitment by boosting existing customer and getting new customers by providing positive shopping experience through good customer services, therefore the buyer ability is high.
Bargaining electricity of suppliers
Suppliers have the energy of keep or apply within an industry by raising price or minimizing the quality of products. (Anthony H, 2008) The increase of company electricity is the mirror image of increase buyer vitality. BreadTalk runs on the strategy of building greater devotion and long-term human relationships marketing with suppliers and stores and then to bring about improve performance in work and offer good service to customers.
Threat of alternative products or services
By possessing a products or services that meet similar needs can make customers change to substitutes in response to a price increase on product. (Anthony H, 2008) In Singapore, there are many substitutes for bakery like hawker centers and restaurants like Delifrance and McDonalds' are close substitutes in conditions of charges and perform the same function to market food.
Intensity of rivalry among businesses in an industry
When an organization exhibit a high degree of rivalry, it will cause the industry's profits to reduce because of aggressive competition on price as when rivalry cut down on price, the other organizations will decrease price to support in their market positions. (Anthony H, 2008)
BreadTalk main opponents are Four Leaves, Prima Deli, Q-Bread, Lovely Secrets, Bengawan Single, and so forth. BreadTalk is facing an intense rivalry competition from both small-scale development like small family-fun in the neighbourhood and large stores like Sunshine and Gardenia which produce affordable products. For this reason extreme competition, BreadTalk attempted to get into China's market for diversity purposes.
SWOT analysis identifies strength, weaknesses, opportunities, and risks. Power and weaknesses make reference to the BreadTalks's interior environment within the firm's control while opportunities and threats refer to BreadTalk's external environment that your company has less control.
The BreadTalk's strategy is exclusive from the traditional bakeries in the market as BreadTalk has a broad menu of confectionery products like breads, buns, pastries and cakes which allows the menu change on daily basis to meet customers mixed needs. BreadTalk will create new products every four weeks to serve customer's changing flavor. (competitive strengths, 2009) Other than this, tactical locations is one of the competitive durability. BreadTalk's shops are mostly near to the public transportation systems like bus terminals, the Mass Quick Transit Channels, and the Light Rail Move stations. (competitive strengths, 2009)
There is very much indeed reliant on Singapore with a small local market of five million and it is also underserved in the growing economies of Asia, in effect this might drag BreadTalk's company performance in permanent reasonably saturated with little expansion in local market. Although BreadTalk offers a variety variety of products, it generally does not have halal license, so it is very difficult and critical to permeate into the Muslim market, Malaysia market and Indonesia markets.
BreadTalk oppose its main weakness by growing and emerge its market in China, Vietnam and other Parts of asia with its affordable, low-priced high amount breads. Apart from this, the increase of reputation of online shopping has provided an possibility to BreadTalk to lower expenses by expanding its business in to the realm of digital marketplace.
Existing bread related companies like Gardenia, Ya Kun and Sweettalk are also rivalling BreadTalk directly to offer loaf of bread with fillings plus more variety of bakery, this move will significantly influence on BreadTalk's revenue of the sales of loaf of bread. If the health conscious alternative like Subway decides to sell low priced bread, BreadTalk will face challenging.
2. 2 Value String Analysis
There are two analytical tools like Value String examination and Benchmarking to asses whether BreadTalk's costs are competitive with those of rivals as is a crucial part of company situation research.
Value Chain examination is more suitable for BreadTalk Group Ltd. A company's companies are includes all activities performed in producing, designing, marketing, providing, and aiding its product and service which perform internally incorporate to create a value chain. Value chain research was devised by Porter (1985) which helps us to examine an organization's resources to ascertain its talents and possible weaknesses. Value Chain is made up of two types of activities which are primary activities where most value for customers is created while support activities help in performance of the primary activities. For bakery goods machine like BreadTalk, its most important activities would be producing loaf of bread from raw materials to semi done products by the activities emulsifiers, enzymes, sourdoughs and yeasts, resource chain management, formula development and screening, mixing and cooking, packaging, sales and marketing and then circulation. For its support activities, it might be quality control, individual resource management and then administration.
Value Chain examination has a few quality:
To combine charges for all activities in a company's value chain to define the company's internal cost structure
To compare a firm's costs activity by the activity against costs of key competitors from raw materials purchase to and price paid by ultimate customer
To pin point the source of cost benefit or disadvantage on its inner activities
Strategy formulation can be argued that it can constitute differential solid performance and allows BreadTalk to accomplish sustainable competitive gain and to attain their objectives and mission. A business must keep an eye on its capability before it can implement strategy through the strategy formulation stage. Business level and corporate level strategy will be discussed as BreadTalk Group Limited used both of these strategies to improve the company's performance.
Business Level Strategy
Business level strategy could work as separating out and formulating a competitive strategy at the level of individual business product and sometimes referred as proper business device (SBU) which centers upon a specific market or marketplaces for its products and services. (Anthony H, 2008) Business unit is required to devise a strategy to permit it compete successfully to industry and donate to corporate strategy. Business level strategy can be assessed by using Porter's universal competitive strategies as business strategy is always in search of a sustainable competitive benefit. (Anthony H, 2008) Porter's seminal work on industry and rival examination (Porter 1980) argues that exactly what will drives an organization's performance and differential company performance which is also referred as to the "positioning" of the firm within the industry to make the most and the appeal or success of an industry depends upon his five makes framework.
Generic Competitive Strategies
Performing different activities or similar activities in several ways which will be recognized as being more advanced than its competition can create a lasting competitive edge. Porter (1980) argues that competitive strategy create a defendable position within an industry which permit the organization to package effectively with the five competitive pushes and create superior return on investment for the firm.
BreadTalk can perform it by pursuing these steps; first, BreadTalk can offer its products at a lesser price than competitors but without reducing the quality of products. Second, BreadTalk can produce differentiated product with premium price for customers who understand better value than from rival companies, third BreadTalk should choose which market sections to contend within. Porter (1980) developed three universal ways of help business to outperform competitors and position itself against the five causes within the industry which can be Overall Cost Leadership Strategies, Differentiation Strategies and Focus Strategies.
Overall Cost Control Strategies
This strategy entails organization to be the lowest-cost company within the industry and concentrate on its products and services at a wide market to outperform rivals within the industry as it bill lower prices and its lowest-cost-base can still earn superior income where in fact the rival just can't match. Corresponding to Porter, cost command strategy require organization to pursue "aggressive engineering of efficient-scale facilities, strenuous pursuit of cost reductions from experience, limited cost and overhead control, avoidance of marginal customer accounts, cost minimization in areas like research and advancements, service, sales force and advertising. " (Porter 1980, p. 35)
BreadTalk generate above-average profitability where intense tournaments can be found in Singapore. Its less expensive bottom part allows BreadTalk to still earn comes back after other more expensive direct main competitors like Gardenia, Four Leaves and my bakery (CIMB research report, 2009) to competed away their profit through rivalry. A low cost position allows BreadTalk to guard itself against buyers who can only price right down to the next most efficient competitor. BreadTalk give a hedge against any increases in their suggestions prices when facing with the bargaining power of suppliers as BreadTalk is being a low-cost producer. BreadTalk reaches useful position to compete prices to prevent the risk of entry and acts as barrier to accessibility.
Differentiation strategy means company produce unique or different products at a broad market for consumers looked after works as an chance to meet different customer needs. Customers prepared to pay a premium price for unique products and services. The major benefit of this strategy is that rivals will see it difficult to imitate. Group can differentiate their product offerings like design, brand image, market skills, reliability, creativity, customer support and so forth.
BreadTalk different themselves from other bakeries with the open-concept design and space-age looking store facades which actually allowed customers to view the bakers while they will work and it also generated curiosity about customers of their products. (Unique Theory and Branding, 2009) BreadTalk also offer extensive range of baked products every four a few months to gratify every customer's. All the creative and impressive differentiation methods will establish BreadTalk away aside from their rival. (Wide Range of Products, 2009)
Corporate level strategy
Corporate level strategy can be defined as "the opportunity of the market sectors and marketplaces within which the organization competes in order to accomplish its organizational purpose". (Anthony H, 2008) The professionals of sections have liberty of action to generate their business level strategy with the knowledge of local marketplaces, customers and competitors and show their business strategy ultimately to donate to the corporate strategy. Corporate and business parenting is out there when an organization is composed with multiple business units which those levels of management that aren't part of customer-facing and revenue run business within the multi-business company. (Anthony H, 2008) There are various strategies in corporate level strategies like Growth Strategies, related diversification, unrelated diversification etc.
Ansoft (1965) developed a matrix to analyze different strategic guidelines organizations can perform and there are four approaches for organization to check out, market penetration, product development, market development, and diversification.
i) Market penetration
Market penetration increase market show in existing market segments by using existing products aiming to get new customers to maximize organization's profits. Firm will improve its products quality and degree of service and add on with promotional spend prior to the company will achieve market penetration. This plan is relatively low risk as firm will use the existing resources and capacities to penetrate to the new market. (Anthony H, 2008)
In 2009, BreadTalk efficiently penetrate new market segments and also infiltrated in countries like Singapore, PRC, Hong Kong, Malaysia, Thailand with 119 outlet stores and 182 franchise retailers in Indonesia, Philippines, Kuwait, United Arab Emirates, Oman, Bahrain, India, Korea, PRC. (BreadTalk Financial Review 2009)
ii) Market development
Market development requires entering new marketplaces with organization's existing products like focusing on new market sections and new geographical areas. Certain cultural and cultural modifications will be produced to ensure the products will meet up with the needs of particular geographical market sections. (Anthony H, 2008)
BreadTalk increase their market share by penetrating their next to existing market like Malaysia, Indonesia, China, Taiwan and India using their existing products. BreadTalk has good store locations in China's fast multiplying shopping malls that happen to be easy found. (Daily Bread, 2008) BreadTalk is trying to get halal qualification in order to fully develop its enlargement in Malaysia and Indonesia. Apart from this, BreadTalk got made some changes on its current existing cooked products to satisfy the demand of china and India customer as they may have different cultural values and preferences in baked products
Product development will establish new products to market in existing marketplaces. A technique of product development is necessary where organizations are confronted with immediate changes in consumer marketplaces and shorter product life-cycle. In food handling industries, organizations are required to continuously develop services to keep competitors on the defensive and keep maintaining and increase their market show. (Anthony H, 2008)
In bakery market sectors like BreadTalk, BreadTalk must produce services to keep up its position on the market to avoid its competition to overtake it positions as customers will change to competitor's products and services if BreadTalk never change its menu of serving. BreadTalk always produce with new cooked products every four calendar months to satisfy customer must support its position in the existing markets. The latest special was springtime summer(fresh from oven, 2009)
Diversification can be explained as develop services to provide new marketplaces, in another word, company that move away from its current products and markets to carefully turn into new products and new market segments to broaden its opportunity of activities will be the steps of diversification for organizations. Broadening the scope of the business can help to disperse risk by lowering the reliance of anybody market or product. (Anthony H, 2008)
Not only they feature convenient atypical of other typical breads stores, BreadTalk diversified their business by starting restaurants like Din Tai Fung targeting on family market as their priority market apart from relying too much on your competition in the neighborhood food processing companies. BreadTalk diversify their operations far away like China to start a new market looking to dominate the new market and become dominant by importing the concept of smart food beverage retail and sells western-style cooked goods. (Daily Bread, 2008) BreadTalk now not have only Bakery business, they may have varied into Restaurant and Food Atria businesses. On 17 Dec 2007, BreadTalk Group Limited acquires and manages the franchise agreement with J. co Donuts & caffeine.
The best formulated strategy on the globe would are unsuccessful if the strategy is poorly implemented. To be able to execute effective strategies, it needs corporation to be sufficiently flexible in its organizational design and effectively communicated and properly resourced, the changes must be clearly recognized and properly coordinated with stakeholders inside and outside the organization. Strategy execution allocates resources for strategy-critical activities and set up strategy-supportive policies and motivate visitors to pursue the
4. 1 Management issues
There are a whole lot of management issues in BreadTalk like annual objectives, regulations, resources organizational composition, restructuring, rewards, level of resistance to change, environment, supportive culture, functions, and recruiting to be carried out. BreadTalk must manage issues in the management issues but not all conflict is usually bad and no conflict may sign apathy. Issues can energize the opposing groups to action and also can help managers to identify problems. (Fred R. David, 2009) According to Chandler's (1962) strategy-structure romance, he says whenever a new strategy is created, new administrative problems will emerge and cause the organizational performance to declines and a new organizational framework will be founded and lastly organizational performance will improve and BreadTalk experienced this issue when they start putting into action their developed strategies. To be able to let BreadTalk to become more effieciency, staff must be cared for well in order for them to work willingly for the firm as employees will be the greatest property for company. Human resources strategic responsibilities are to assess staffing needs and costs, develop performance bonuses, employee stock possession plans, child health care policies, work-life balance issues. (Fred R. David, 2009) By putting into action all the extra benefits to workers, it will diverse labor force like improves commercial culture, improves worker morale, increases creativeness, increases productivity, permits the organization to go into emerging marketplaces, maximizes brand identification, leads to higher retention of employees, reduces issues and litigation, lower interpersonal discord, reduces training costs etc.
4. 2 Marketing strategies
In an effective strategy implementation, organization will maintain a good market and providing and experiencing well services and raise needed working capital. Marketing adjustable will affect success or failing of strategy execution. Marketing issues like market segmentation and product placement are centrally important to implementation. (Fred R. David, 2009) Marketing segmentation can be explained as company subdividing marketplaces into smaller segments which can be reached more effectively and effectively with products and services that match customer's unique needs and buying habits while product setting can be explained as the way of something identified by customer on important characteristics like the area of the product occupies in customers' intellects relative to contend products. (Kotler P, Armstrong G, 2008) BreadTalk is facing issue of marketing segmentation around all its shops across the world when employing and formulating its commercial strategy level.
4. 2. 1 Marketing segmentation
Marketing segmentation is associated with corporate level strategy's progress strategy on market-development, product-development, market-penetration, and diversification. Market segmentation will straight influence the marketing mixture parameters like product, place, promotion and price. (Kotler P, Armstrong G, 2008)
Product means the combo of products and services offer by the company to their targeted market segments. Product influence make a difference on consumer patterns which is important for the marketers to identify their products from rivals to create a conception to consumer that the merchandise will probably be worth purchasing. (J. Paul Peter and Adam H. Donnelly, 2003) In order to sustain and keep maintaining its strong brand name, BreadTalk has to offers more than 150 types of cooked products, special occasions products and other services to provide more selections to customers and make its company to vary from its strong rivals like Gardenia in order to sustain on the market and success on its strategy formulation.
Place means how the offer of product available to target consumers. Places of something and services can affect on consumer's buying electric power. A perfect location of a services or products should be in a convenient and tactical spot to ensure consumers can find and purchase them easily. (J. Paul Peter and Adam H. Donnelly, 2003) To be able to support to its strategy formulation and apply it, BreadTalk only open up its outlet location near general public transport systems like bus terminals, Mass Rapid Transit, and Light Rail Travel, departmental stores, supermarkets to attract potential customers and to tag down sales territories as having high customer traffic stream is essential to Breadtalk's success of shops and avoid customers change their buying capacity to opponents' offerings.
Promotion means activities that communicate the merit of the product and persuade focus on customer to buy it. Campaigns can effect consumers' thoughts, feelings and experience about purchasing and using the merchandise. (J. Paul Peter and Wayne H. Donnelly, 2003) Every 4 months BreadTalk will offer you special new baked products with campaign and for normal promotions with discount rates for customers so that customers will not get tired and change to alternative or opponents and inform consumers about products and services while creating favourable images and perceptions.
Price is the amount charged on the products which need to be paid to get the products. The price of products and services often effect consumers whether to purchase them or not. (J. Paul Peter and James H. Donnelly, 2003) BreadTalk has to offers affordable prices on the products even sometimes at reduction to capture potential clients and take the devotion of existing customers as their local competition are offering less expensive to compete with BreadTalk but at the same times, BreadTalk offers some offerings with higher prices but this will not deter customers to purchase as customer believe that their products are higher quality or more renowned.
Market Segment Basis
Organization must try different segmentation factors in alone and combinations to find the best way to see market structure and there are few major factors mostly found in segmenting consumer marketplaces, the Geographic, Demographic, Psychographic and Behavioral. . (J. Paul Peter and Wayne H. Donnelly, 2003)
Geographic can divide market into different geographical items like region, country size, city size, density, weather etc. (J. Paul Peter and Adam H. Donnelly, 2003) Although Singapore's inhabitants is greater than Madium, singapore's rival is much higher and intense as it is a modern country, Madium has bigger field and resources and it is a potential opportunity for BreadTalk's business.
Demographic can divide a market into groups predicated on variables like era, family size, family life pattern, income or occupation, education, religion, race or nationality. (J. Paul Peter and James H. Donnelly, 2003) Madiun is a small city in Indonesia and small people, despite small but there is no store that can fulfill their needs from south to west, but BreadTalk type in the market having its impressive and creative products and they know very well what different cultured customer desires as they may have been successful in every business wide, from small inhabitants to big. After they obtained the halal certificate, they started to penetrate into muslim marketplaces like Jakarta, Malaysia and then Madiun.
Psychographic can separate a market into groups predicated on social category, lifestyle and personality. (J. Paul Peter and Wayne H. Donnelly, 2003) Customers in Madiun wants healthy food choices, BreadTalk as offered four new varieties to bargain as healthy meals and giving their state in grain in their country.
Behavioral can split a market into groups based on use occasion, benefits sought, user status, utilization rate, loyalty position, readiness stage and attitude toward product. (J. Paul Peter and Adam H. Donnelly, 2003) BreadTalk is rolling out a strong brand name and brand commitment to customers, therefore customers are ready and they contain the readiness to buy. BreadTalk sometimes will offer promotions to induce purchases.
5. 0 Strategic Leadership
Management issues can be solved by using strategic leadership. Leadership is concerned with creating a shared perspective of what and where the organization is trying to purpose and achieve, and formulate strategies to bring up needed changes to do this eye-sight while management is about dealing with the complexity to produce orderly and steady results. Command activities tend to be more to formulating strategy and then encourage and inspire employees while management activities put into practice strategy and control behavior and solving problems to ensure the strategy is carried out. (Fred R. David, 2009) The role of innovator can help making a learning firm and help develop in shared perspective and shaping the worthiness of a business. The learning group can be defined as "an organization which facilitates the learning of all its associates and continuously change itself and (Senge, 1990) it comprises adaptive and making learning. Adaptive learning is the ability to handle changes in one's environment and generative learning is about creating change when you are ready to question the way we look at the world. (Fred R. David, 2009) The chairman of BreadTalk, Dr. George Quek, as known as the creator is a good head in leading its marketing team as he has 30 years of experience in the food and drink industry. The chairman is usually aided by his older management whom have huge experience in the meals and drink or retail sectors, when a leader leads a team successfully, the performance rate will be maximum.
6. 0 Conclusion
Strategic management is important to every organization's employees to manage strategically in corporation to execute well performance and it can act as a fundamental in technique to determine why do organizations succeed or are unsuccessful. Every organization uses proper management principles and strategy to enjoy higher levels of performance.