Business Strategy of Crystal Jade - Assignment Example

Crystal Jade Business Strategy Introduction Crystal Jade is a diversified food and beverage company that is aimed at preserving Chinese traditional foods in modern ways. This company has always offered quality services to customers making it one of the best performers in the Food and beverage industry. Some of the dining concepts of Crystal Jade Company include Teochew and traditional Cantonese that have been enjoyed for years. Apart from Teochew and Cantonese, Crystal Jade Restaurants also offers style cafes and continental boutique services. The good and quality service offered by this company has led to spread of its outlets in 9 countries and 21 cities. Crystal Jade is listed as one of the top market performers and they still strive to maintain their position through laying various business strategies. 1. External Analysis i) Crystal Jade Porters five forces Threat of Potential Entrants is high Limited barriers to entry inform of patents and rights. Most of foods and beverages offered by Crystal Jade are not strictly regulated through patents and legal rights making it easier for other players to sell and offer similar goods and services. Minimal regulation limits inform of government policies and regulations making it easy for both big and small players to compete for the same market share, Easy access to market and low startup capital favorable to small players Product indiffferentiation-competitors also offer Chinese cuisine Easy access to distribution channel. It is very easy for both small and big players in the industry to get clients or even the suppliers. No technical skills required to start up a firm. Unlike in highly controlled industries such as law, engineering, and medical where technical skills is paramount no or limited technical ability is required to start and run a restaurant successfully Bargaining Power of Buyers is high There are several eating options available to consumers. Lack of product differentiation. Most of the Chinese cuisine offered by rivals in the industry is high identical making it easy for buyers to switch between competitors. Switching cost very low-most of the customers can get Chinese cuisine from competitors at similar or lower cost than that offered by Crystal Jade. Buyers have the ability to produce the menus offered by the company in their own homes Bargaining Power of Suppliers of considerably low The suppliers are incapable of controlling majority of the players in the industry including Crystal Jade owing to a number of reasons key among them: The supplier’s industry itself is highly competitive because most food inputs used by restaurants are common basic commodities locally available to every player. Switching cost of firms by the restaurants substantially low owing to lack of differentiation of inputs There exits limited threat of forward integration in the food and beverage industry. This means that suppliers have the ability to merge an engage in restaurant and food business. Threat of Substitutes is high There is a wide variety of close substitute in foods and Chinese cuisines offered by rivals in the market Limited perceived level differentiation among the product offering Low cost of switching cost by buyers. Buyers can access other forms of Chinese cuisine at relatively low price and easily from competitors There is high probability of buyers going for substitutes owing wide range of Chinese cuisines offering by competitors. Rivalry among Competitors is high Competitors are high in number and equally balanced in key areas of operation. Crystal Jade is face intense competition both locally and internationally. Key among its competitors include but not limited to Old Chang Kee, Sakae Sushi, KLG, Marrybrown Restaurant, Es Teler 77, and Hoka Hoka Bento. Minimal opportunities for maintaining competitive advantage owing to inability sustain product differentiation or through application of technology. ii) Crystal Jade PESTLE Analysis Political Crystal Jade has been enjoying political stability all its areas of operation. The company currently operates at least 121 outlets in approximately 9 different countries across Asia and in the United States all of which are political stabile. However being a multinational company Crystal Jade has to deal with varied public issues such as taxation policies, different trade and labour laws and regulations which may have direct impact on the operations of the business. For instance, The US operate different labour and tax laws compared to China and Singapore and such differences may be a significant challenge to the growth and expansion of business if they are not addressed effectively. Economical It is quite plausible that Crystal Jade is operating its business in a number of the most flourishing economies in Asian region. Key global economic bodies such as World Bank and IMF have ranked China, Singapore, Thailand and Indonesia as being among the fasted growing economies globally owing to the increasing number of middle class and indicator that is good for business. Social Emphasis on Cultural aspects such as choice of food by different people in Asian region will be a hindrance to the growth Crystal Jade to a certain extent. The company is focused on promoting Chinese cuisines an idea that may not go well with either the Philippine or the Japanese market. Most importantly Asia boasts a high population growth rate and this is a big opportunity for companies such as Crystal Jade and the entire industry considering that an increase in population will lead to a significant growth in market. Technological Rapid Change in technology has to greater extent affected operations of different industries globally, but fortunately, food and beverage industry has not been a major casualty considering that most of menus are not dependant on technological aspects. The Only key technological issues that most food and beverage outlets have adapted involves automation of service offering in the restaurants which may be evident in payment of services as well as ordering of services and food. Legal There company is operating in an industry with a significant number of health and hygiene certification requirements. All the players are expected to uphold high standards of hygiene. Additionally food safety is another major legal concern in this industry as no cases food safety issues should arise from the restaurants. Environmental Crystal Jade is operating in a very sensitive industry considering that their operation touches on a number of environment aspects. For instance, increased demand for fresh farm vegetables will translate to destruction of vegetation to meet the demand for food. Killing land and sea animals for food is also another major environmental concern considering that these animals form a significant component of the ecosystem. Packaging as well as serving materials used by food and beverage outlets is a major environmental concern as use of polythene and plastic materials has been found to be a major cause of environmental pollution. 2. Internal Analysis i) Resources/ Capabilities/ Corporation culture Crystal Jade as a restaurant or company has many resources that have helped it achieve good market results over the years. The company only deals in Chinese traditional delicacies though adopting contemporary methods of preparation, preservation and distribution. There are many employees that have been recruited to meet customer needs with Crystal Jade being one of the trusted food restaurants within the Chinese empire. This has helped in boosting their market profit due to the volume of food preparation and distribution. Apart from big number of employees, Crystal Jade cover a huge part of Japan, Singapore and other Chinese empires through its outlet distribution and this proves its credibility based on quality services. The company is capable of stretching its outlets to the outside market considering the huge number of employees and current outlets with the Chinese empire (Kourdi 2003, p121). The current outlets serve as a pillar or base that can enhance company expansion without fail. Crystal Jade Company branding another vital pillar of success that the company can rely on to make certain economic or strategic moves in the outside market. The company’s cash flow can also support additional employee recruitment in the international market making it one of the financially stable restaurants in world top market. Crystal Jade corporation culture favours both its employees and customers. The company culture is one of the contributing factors to its success in the world market. The strength of this company tends to outweigh its weaknesses and that triggered success and good marketing strategy. 3. SWOT Analysis Strength Cheap labour force that makes it possible for the company to high enough employees who are able to meet customer needs. Distribution of the company outlets makes it easy to its services from any part of the Chinese cities or towns. Availability of various technological tools needed to boost the speed of food preparation and preservation. Affordable quality services as one of the business strategies of attracting clients. Good management system that ensures all the company activities are fully executed in line with the company’s ethics. Strong company brand. The company brand also serves as a marketing tool that has helped it achieve good market forces. Weaknesses Lack of diversification being that the company only deals in Chinese traditional foods only Lack of good employee-employer coordination. Low differentiation. The fact that most of the dishes offered in the menu are traditional food it has been very hard for the company to take advanatage of differentiation strategy. Opportunities The company has free space for diversification. It can decide to deal in other delicacies apart from the Chinese cuisines Rapid population growth in their market area hence good market for their goods and services. Space in the international market. Crystal Jade has most of its outlets in Asia and it is yet to fully explore international markets particularly Europe and Africa which has a large customer base for Chinese cuisine. Space to partner with other companies. Collaborating with other companies can help in boosting Crystal Jade’s service and product distribution network. Threats Stiff competition from other companies in the same line of service delivery. This completion reduces the market strength of Crystal Jade through client division. Emergence of new technology. Technology tends to displace the company products and service delivery introducing new food preparation techniques. 4. Strategic Options In order to enhance sustainability and gain competitive advantage over its fierce rivals in the food and beverage industry Crystal Jade Company tends to use two key strategies that are; lower cost strategy and Cooperative Strategies. As economies become more interconnected due to globalization, most companies across the globe also aim higher for a share of international markets. A number of factors key among them ease of communication, harmonised tax and labour policies, ease of transport, and political stability have made it possible for several companies to grow outside their national boarders in search of customers abroad. The food and beverage industry is no exception as the world is continuing to witness an upsurge of food and beverage restaurants expanding into the international markets rapidly in order to serve the international consumers with unique menu offerings. Accessing international markets has been a big challenge to various multinational business operators owing to a number of challenges key among them being large capital requirement, legal barrier, and taxation policies. However, cooperative strategy which majorly involve strategic alliances, licensing and joint ventures has made it much easy for multinational companies to share risk, cut on the cost of capital requirements and most importantly outdo the legal barriers that may arise. Crystal Jade Restaurant has risen from a humble background where it was founded in Singapore in 1991 to a huge food and beverage industry player in at least nine countries (Yun, 2013). Crystal Jade has not achieved this tremendous growth through sheer coincidence but through hard work, innovation and most importantly cooperative strategies. It is noteworthy that cooperative strategies have been one of the dominant success determinants for Crystal Jade Restaurant over the past twenty years. The company has been using strategic alliances with its partners to expand its outlets aggressively across Asia’s region, which has a huge growth potential in food and beverage industry. Thanks to strategic alliances with financial lenders, the company currently boasts of substantial market presence in Asia with more than 120 outlets. The company’s biggest ambition is to become a globally recognised food and beverage chain restaurant through provision of diversified food and beverages that comes with high quality. One of the key cooperative strategies entered into by Crystal Jade involves a joint venture deal with Mr Ghassan Murad to open the first Crystal Jade restaurant outlet outside Asia. Crystal Jade entered into a joint venture agreement worth approximately US$7-million (S$8.9-million) with Mr. Ghassan Murad in 2013 to open a food and beverage restaurant in San Francisco, California (Yun, 2013). According to the company’s Concepts chairman and chief executive Mr. Ip Yiu Tung alluded his belief in the future growth and expansion of their company’s in the entire US and beyond the borders through strategic partnerships with US based companies to exploit Asian cuisine market in the US valued at approximately US$29 billion by 2016. International Enterprise (IE) Singapore, is another significant strategic partner of Crystal Jade Restaurant who has helped the company to spread its wings across the globe especially in Asia. According to various business experts, the type of business strategies is critical in determining success of a company and lower cost strategy is one of the key highlighted business strategies that can guarantee a company success in a highly competitive environment. Lower cost strategy, is the most commonly used strategies at Crystal Jade (Lafley & Martin 2013, p68). This is because it is efficient and manageable. This type of strategy is only healthy to fully-grown companies with huge number of employees. Growing companies may experience many challenges pegged on profit realization and this may later lead to collapse. Crystal Jade meets all the requirements needed to employ this kind of business strategy. Due to inflation rates that vary from time to time; it has widely affected the results and output of the organization. The rise in rates leads to excellent performance of the company and on the other hand, low rates lead to poor performance due to low transactions made. Demand and supply level also can tell how far the company is able to move and what kind of strategy to use. Due to its accessibility, Crystal Jade is having a ready market to sell its products and enabled constant supply of goods and services thus benefiting from the lower cost strategy. When there is an inflation of commodities, Crystal Jade will still enjoy the lower cost strategy because the cost of labour will still remain constant. This makes lower cost strategy ideal for this kind of company. The lower cost strategy has attracted many customers to the business and this has led to increased growth in the Asian region where Crystal Jade boasts of wide market base and strong brand recognition. The surrounding of the restaurant is occupied by individuals who are in favour with the products, services, and foods offered by the restaurant. This has made the business to do well because the customers are ready to be served and get service from the restaurant. It has enhanced the good relation of the inhabitants and the staff members. The labour cost also has fostered the positive performance, the staffs working in crystal jade restaurant reside near the restaurant, and payments made are affordable to the firm. The business scope of Crystal Jade cannot support differentiation strategy because they deal in food and beverages (Eigenhuis & Dijk 2007 p97). 5. Recommended strategy Lower cost strategy is recommended for Crystal Jade due to the company setting. The cost of labour in this company is affordable hence lowering product or service cost seems to be easy as compared to high labour cost. The profit margins after sales of Crystal Jade product tend to be slim and this means that the company has to invest in producing volumes to realise good after-sale profits. According to the company’s financial analysis, lowering costs of foodstuff helps Crystal Jade in marketing its products and remain a force to reckon with food and beverage industry. Business strategy is the main factor considered in determining and analyzing the outcome of the company. The high level of population growth rate has enabled advancement in the hotel, this is because the customers increases in number and demand rises. Also, availability of labour has improved the services offered to the customers. Most people residing in the location are employed and this improves purchasing ability. Furthermore, the advertisements and sales made by the hotel are upright and ethical, it has attracted many customers to finding services from the restaurant, and this has widely contributed to stability of the organization. Acceptable management and sound account balancing enables the hotel to correctly make transaction and avoid financial strain. The firm also, has strong marketing standards. Recruitment of employees is also acceptable and therefore, the people are not discriminated on basis of ethnic groups and thus having different employees with varied skills has enabled acquisition of new ideas and positive relation of the firm and the community at large. The availability of labour in times of need makes lower cost strategy ideal for Crystal Jade. 6. Conclusion Crystal Jade uses two business strategies though majoring on the lower cost strategy due to high number of employees. According to the analysis, crystal jade company tend to supply and distribute many products to customers via its outlets. When the cost of production is low as mentioned above, the low cost of products does not affect the company. Crystal Jade has several strengths, opportunities and minor weaknesses due to the type of strategy it uses to face the world market. Bibliographies Lafley, A. G., & Martin, R. L. (2013). Playing to win: how strategy really works. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=675208. Kourdi, J. (2003). Business Strategy A Guide to Effective Decision Making. New York, Bloomberg Press. http://search.ebscohost.com/direct.asp?db=bth&jid=1VSI&scope=site. Eigenhuis, A., & Dijk, R. V. (2007). High performance business strategy: inspiring success through effective human resource management. London [u.a.], Kogan Page. Yun, T, H.(2013). Crystal Jade to open in San Francisco. The Straits Times. http://www.straitstimes.com/the-big-story/case-you-missed-it/story/crystal-jade-open-san-francisco-20130709 Read More