Eat2Eat Company Business - Essay Example

? Assignment EAT2EAT CASE ANALYSIS Due EAT2EAT CASE ANALYSIS Company Business Eat2Eat.Com is basically engaged in restaurant reservation service for its clientele base. However, there is a peculiar approach to this business as it is delivered primarily through an online portal. This means that customers make reservations to various restaurants through the website of the company. Primarily, the company started its services across the Asia Pacific region taking over from the Singapore based Eat2Eat Pte Ltd. Since then, it has built a clientele base that is made up of internet users who prefer to make reservations to restaurants. Indirectly therefore, there are two groups of clients that the company serves. The first of these are the restanrants to whom Eat2Eat.com gives buyers to. The second are the buyers or online users of the website who make the actual reservations. However, in the context of this case analysis, much of reference to clients shall refer to the latter. Eat2Eat.Com uses a business model that grinds on the whiles of promotion of fine dining in the Asia Pacific region through the use of internet-based portal. This business model requires that the company works directly with subscribers to their website, such that the more subscribers the company has, the more customers they have and thus the more profits the will make. Presently, this business model has been introduced in nine identical geographic markets, spanning around countries in the Asia Pacific region and abroad. As far as the Asia Pacific region is concerned, this business model could be described as unique as it is the first of its kind in the region. Fortunately, Eat2Eat.Com has received positive results from a brand recognition that has been established in the region in the last five years, leading to increases in sales at a rate of 42% from 2004 - 2005 Specific strategy that the company is using to implement its business model The implementation of the said business model has revolved around the use of specific strategies, which are discussed in this section of the writing. Generally, the strategy used by the company was based on two major factors, which are market segmentation and approach to market (Browne and Cudeck, 1992). As far as market segmentation is concerned, there was a strategy to focus solely on what Aggawal referred to as first-tier restaurants. These are restaurants perceived to be of the higher class status that are moderately expensive, popular and accepts reservations (Wofford and Liska, 1993). Much of the strategy used on the market segment was personalized as Aggawal made personal approaches to these restaurants to personally win their indulgence and approval to be supplied with reservations. Reviews on the restaurants were also undertaken on a personalized basis by Aggawal and his employees. As far as approach to market is concerned, Eat2Eat had a strategy o focusing mainly on corporate customers rather than personal customers. This is because most of these corporate institutions made reservations for diners for various programs and activities. However with time, personal customers would be included because within the various companies, about 15% of employees would register to be part of the service. Out of the 15%, 10% of registered employees would eventually become active members on the company’s website. The strategy has also fairly involved the incorporation of services whereby customers looking for online reservations are automatically redirected to the website of Eat2Eat.Com. Another important feature is when the company went mobile, operating on mobile devices. In totality however, it would be noted that the company is currently operating a focused culture strategy that takes all its inspiration from the Asia Pacific region. Effectiveness of the management team and CEO are in implementing the business model Availability of company statistics, financial statements and research data makes it very easy to assess the effectiveness of the management team and the CEO in the implementation of the focused culture strategy to its market segmentation and market approach. For the past 5 years, there has been massive expansion in the market size of the company. This has been so massive that the company now has nine geographic markets. In the year 2004 to 2005 alone, this expansion was turned into 42% of sales. The management and the CEO have undoubtedly done a commendable work by establishing firm brand equity within the focused culture in which it operates. This is because within the region, any mention of online restaurant reservations seems to point directly at Eat2Eat.Com. It is not surprising that as it stands now the company has a very large user base not made up of corporate customers alone but of combination corporate and personal customers with the corporate customer base leading 57% as against 47% of personal customers (Eat2Eat.com, pg.6). Of the vast user base that the management and CEO has been able to create with the focused culture strategy, there is average revenue per user of $40.31. In reality therefore, the advantage with the existing strategy is that it has made it possible for the management and CEO to have a commanding understanding of its market segment and how to manipulate it to yield results. All of these notwithstanding, there is an underlying problem of the cost involved in getting one user worked out on. According to the company, even though each user produces revenue of $40.31, the amount spent on getting this is $45.03. This means that even though the management and CEO are putting much effort, the business model being used is not working out best. Company's Financial Performance Based on the financial balance sheet of the company available in exhibit 1, it a number of descriptions can be made of the company’s financial success. For example, the increase in sales per year is commendable with the 2004 to 2005 increase quoted at 42% of growth. It is however of negative effect that the company spends more than it earns in terms of cost per acquiring a user and revenue generated from a user, which is $45.03 as against $40.31. Generally, the financial success of the company is not even as different markets yield different profit results. As of 2005, the Tokyo market was known to be the most profitable and fastest growing. This means that the company has not been able to undertake a result oriented monitoring of its markets to ensure that there is evenness in growth. The company is not very conservative about its spending because in Tokyo and Hong Kong alone, it is known from the exhibit that salesmen alone cost the company $5,500 in a month. This is rather on the higher side and a contributing factor to why even though the rate of sales and number of users keep going up, the company is not able to balance up with sales earned. It is commendable however that the company is being very pragmatic in its approach to reducing other forms of internal costs so as to raise profit. An example of this is shown in the exhibit where Aggarwal has cut down on traveling expenses in order to generate profit of $718,760. As far as financial success is concerned therefore, it can be concluded that Eat2Eat has not been financially viable even though from the exhibit, we see that no losses have been incurred. Recommendations for the future growth of the Company The analysis performed so far gives a clear indication that there must be a change to the company’s business model strategy. The very first recommendation that is made therefore has to do with the need to adapt a multi-natural model strategy to ensure that there is an inclusion of other cultures and market segmentations outside the Asia Pacific region. This will ensure that the company will open itself up to newer opportunities and business growth interventions that exist in other markets (McKee, Simmers and Licata, 2006). With the expansion of marketing strategy outside the Asia-Pacific region, there is a subsequent recommendation for the company to consider including other language interface on their website. Clearly, this can cause a user base growth by the number of users who are new to the English language and thus expand the user base of the company. Closely related to this sought of expansion will also be the need to hire new sales staff across new markets. The staff of the company may be seen as the lifeline to the company’s growth because they are the people who will be interacting directly with customers (Jeon and Choi, 2012). Finally, there is evidence that Shangai and Singapore are not yielding the intended revenues for the company even though the company was founded in Singapore. To this end, it is recommended that less emphasis be put on these two markets in order to save the company $124,941 as posited in the exhibit. Cited Works Browne, M.W. and Cudeck, R. 1992, “Alternative ways of assessing model fit”, Sociological Method and Research, Vol. 21, November, pp. 230-58. Print. Jeon, H., & Choi, B. 2012. The relationship between employee satisfaction and customer satisfaction. The Journal of Services Marketing, 26(5), 332-341. Print. doi:http://dx.doi.org/10.1108/08876041211245236 McKee, D., Simmers, C.S. and Licata, J. 2006, “Customer self-efficacy and response to service”, Journal of Service Research, Vol. 8, pp. 207-20. Print. Wofford, J.C. and Liska, L.Z. 1993, “Path-goal theories of leadership: a meta-analysis”, Journal of Management, Vol. 19 No. 4, pp. 857-76. Print. Read More