PESTEL Analysis for Vineyard Caterers - Case Study Example

Business Plan xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Instructor xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Table of Contents Table of Contents 1 Introduction 2 Marketing Strategy 4 Profile Criteria 5 Place, Price, Promotion and Product 6 Business name 8 PEST analysis 8 Swot Analysis 10 Strengths 10 Weaknesses 11 Opportunities 11 Threats 12 Market entry 12 Barriers to entry 12 Financial Support 13 Physical Environment/ Virtual Environment 14 Nature of Business 14 On going Strategy for Consolidation and growth 15 References 15 Introduction In the past few years, there has been tremendous change in consumer behavior and trends which have affected all business spheres including the hospitality industry (Hormozi et al, 2002). This being the case, there has been notable changes in time management, customer attitudes and even choice of venues have clearly shown what the consumer need and wants are and this calls for a change in way business is done and managed. Most importantly, the economic down turn has affected people’s choices and thus creating a new sector of the population that is looking for value oriented meals. For this reason, food trucks are the kind of a business that will give considerable chances to both consumers and the business owners to co-exist after the economic crisis that all face (Beaver & Jennings, 2000). Having mobile trucks in the city centre offering quality standard of the food, service and sanitation will put this business a notch higher and an option for many clients. The main aim for this business is getting to people of all walks of life; from blue collar workers to high level business executives (Beaver & Prince, 2002). In other words this business will accommodate the low budget customers who are looking for the greatest quality and quantity for the least amount of money and the upscale population who operate with unlimited budgets and are in search of the highest level of service and food quality (Timmons & Spinelli, 2004). Unfortunately, most of the hospitality businesses in out cities do not accommodate all; they are for the selected few, who don’t mind the budget. Our management team will locate, recruit and train local operators in our diverse target market. The recruitment will be based on merits for our key point is quality services Souitaris, Zerbinati & Al-Laham, 2007) Our operator programs will ensure our market position and stability through the whole city and it environs name branding, equipments and operations standardization, high class sanitation and most importantly universally accepted accounting procedures. Our financial package is a very strong one. Our assumptions and all our projections are conservative, the research we have conducted is up to date and the workforce involved in the same is are well positioned with both education and real word experiences. This being the case, we are prepared and ready to take a big step forward and get into the market. To accomplish and implement our program we are asking to secure an investment package worth $ 3,540,000, which with it, our program will be, a reality Marketing Strategy In order for us to be successful, we have concentrated much on marketing our business (Upton, Teal & Felan, 2001). This being the case, the research we conducted was a consumer based research. The reason as to why we concentrated on this methodology is because our business solely involves people, and understanding the preferences, attitudes and behaviors of the target customers in a market based economy is of great importance. We now understand the effects and the comparative success of every marketing campaign that we are going to implement. More than half (67%) of the city population say that they are not satisfied by the catering services in the city due to the kind of services offered, some in that they cannot afford and other that the services are not worth the amount of money they are paying for them. 45% say they would be pleased to get a service provider who will mind the current economic tasks that people are facing. Among the research key finds: 67% are not satisfied with the available services One third (33%) do not have a specific service provider who they are their frequent customers Nearly half (48%) say they don’t budget for catering services in town because it is unaffordable. Profile Criteria This criteria was used to profile who the market is and where they are found. The use of demographic methods, socio economic and geographic location was assessed. In our case we used the geographic which elaborates that there are Location differences in tastes, consumption and preferences (Stewart, 2002). Being in the city centre was found to be a marketing strategy that will be an asset to our business. This geographic segmentation will help us in matters regarding, retail location, advertising/media selection and recruitment. A Classification of Residential Neighborhoods (ACORN) was also used which clearly elaborated on the identity and understanding of the UK population and the demand for products and services. This was very important in the determination of the location. This operates under the notion that, those living in the same areas have the same needs and lifestyles. In our case we used the following geo-demographic. Category Group Type Urban Prosperity Prosperous Professional Educated Urbanites Aspiring singles 13-well off professionals. 14-Older professionals 15-Affluent urban professionals 17-young educated workers 18-multiethnic young 19-suburban professionals 20-students 21-singles 22-low income singles 23- students terraces 25 White collar workers 33-middle income people Place, Price, Promotion and Product We are determined to take the market by a storm and increase the customer base even as we offer the best services in the city. Using the 4C’s developed by Robert Lauterborn for instance will be a boost to our strategy, when it comes to giving the best to the customers, locking them in and making our brand name known in every corner of the city. We are using the 4C’s strategy. Place is Convenience Price is Cost to the user Promotion is Communication Products are Customer solutions We believe that by using the 4C’s is going to enhance increased customer base and value, then we have an obligation of making the place where we are going to market to be convenient to customer who are looking for the best eatery in the town, and that is why we are in the city centre ( Ibrahim, Angelidis & Parsa, 2004). Our next important consideration is the cost. This is because even if the target is for a person from all walks of live, students, low income earners and high income earners. The price will be achievable by all customers and therefore it should be minimized without compromising the quality or the quantity. The next C is about value communication which means that promotion of our products and services will have good communication with the target customers by using proper promotion tools (Chan et al, 2004). We are going to use the mass media; TV radio and news papers as well as billboards to make known of our presence in the city, and finally the satisfy all the needs and wants of the customers is our priority so as to harness many more customers (Hunt & Arnett, 2004) Our products are the best in the market. This is due to the fact that, they have catered for everybody regardless of their income status. In order to attract and retain customers, we will offer a variety of products from traditional to organic foods all at an affordable rate. For those who have a taste of class, they are also not left behind for our trucks will offer all services without compromise (Hunt & Arnett, 2004) Business name Vineyard Caterers PEST analysis The political, economic, social and technological analysis is very important tool for it identifies the opportunities sand threats that encompass a business. A clear understanding of the environment in which our business will operate, will give us a chance to take advantage of the opportunities and minimize the threats therein (Jocumsen, 2004) PESTEL Analysis for Vineyard Caterers Economic Growth and Stability Vineyard caterers are very much concerned of the economic factors. This is due to the fact that, economic factors impact employments which on the other hand incapacitate the demand of production (Jaworski, Kohli & Sahay, 2000). Moreover, this factor also has negative impact on demand, price, profits and costs of products in the mark. Economic factors are above the control of the company but they have profound impact on the marketing mix and the performance of the entire business. The company depends on the UK market and therefore there would be a profound impact if in any way there is deterioration of UK’s food market and most importantly considering other risks like market concentration. Political Trends The political and legislative trends impact all of business in United Kingdom, EU inclusive. In UK any company is supposed to offer diverse employment opportunities which are supposed to cater for all the population considering their social and economic status. In this case, a firm is deemed to offering opportunities which may be flexible, skilled and lower paid. Moreover, so as to accommodate the working parents, the old and students (Thompson, 2001) Our company is aware of the impacts on jobs and people factors, this is due to that, it is local and labor intensive sector. Students, the elderly and the disabled are employed but paid lower rates by the group. These employees offer higher levels of loyalty and therefore represent desirable employees Technological Advancement Technology has influenced in a big way the development and improvement of their products in a big way. The new technology is beneficial to both the customers and the company. As for the customers they enjoy customer satisfaction thought convenient shopping and personalized service. Electronic point of sale and self service option will help improved customer satisfaction in our unit. Social-Cultural Trends The current trend shows that, quality and inexpensive is currently common among the British customers, it is accelerated by the diverse social changes. Vineyard Caterers will counter this by increasing food products in their menu. Demographic dynamism like the aging population, increased women workforce and decline in home meal preparation means that UK retailers are also focusing on added value products and services. Also a focus on own label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. The type of foods and services demand by customers is a function of their social conditioning and their consequents attitudes and beliefs. Health issues are also becoming an issue to the customers and their attitudes towards food. We are going for product mix so as address the demand of organic products. Cheques and cash checkout as payment tools in the in the truck is also an option Environmental Factors All leaders in the business markets are demanded to act responsibly to the society, and should therefore prove this in all their actions and decision which should be beneficial to the society (Wensley, 2002,). Food retailers are threatened by environmental issues, which are very important for companies to act in a socially responsible way. The government launched a new strategy for sustainable consumption and production to cut waste, reduce consumption of resources and minimize environmental damage. Recently, there has been the introduction of a new tax on advertising highly processed and fatty foods. This will affect the Vineyard’s relationships with both supplier and customers. Legal and Regulatory Issues Policies and governmental legislations will influence the performance of Vineyard Caterers. For example, the enforcement of code of practice to issues such as determining payments from suppliers change and changing agreed prices without notice. Price wars and requirements for products differentiation are common in the market field. Moreover, policies for monopoly controls and reduction of buyer’s power to put at bay the entry to the sector by using licenses requirements and access to law materials, are called for by the government. In order to have politically compliance prices, this firm will offer lowered prices on promoted goods while prices of some other options will be raised to compensate. Swot Analysis In this section, focus is on the internal and external factors that affect the performance of the firm (Panagiotou, 2003) Strengths Variety of product- the business will give the market a variety of products depending with their cultures, economic status and even ages. Convenience – the new product will be located at the city centre and will be offering pocket friendly, quality foods, without compromised quality in the city centre making it stand out from the other eateries. Brand Image – If marketed comprehensively and having a variety of products will make us the only option. Good Price – low priced products are our priority lower than any other caterers in the city. The current price is good and valuable. Weaknesses Corporate Brand Image – we may not have a reputation such as the James’s Sandwich bar in the entire market. Price Variety – The set price and does not vary much for other consumers in the market. Opportunities Increased demand quality low priced foods – Vineyard Caters will continually target various markets that enjoy the use of quality foods at affordable prices. Partnership – Vineyard can combine with food vendors and flood the market Food trucks and in the long run increase the customer base. On the other hand this will reduce the costs of marketing and will increase the revenue in the company. Threats Competition – there is an increase in competition in the market today. Number of food vendors has tremendously increased in London city. More companies are flooding the market. Market entry Our success is founded and solely depends on how we utilize customer service, advertising, cost controls and product differentiation (Stonehouse & Pemberton, 2002). Our staff will be knowledgeable, courteous and capable of resolving any conflict. We will target specific customers and cater their price amenities and advertising strategies. We are also committed to giving low price products. Price differentiation will start with our location, and provide specific services that cater to the theme of the hotel (Beaver & Jennings, 2000). Barriers to entry Capital – the capital to start up the equipments and every requirement big Advertising – there are some food caterers who have invested so much in advertisements making it difficult for the new competitors (Fielden, Davidson & Makin, 2000). Distributor’s agreements – agreements with key distributors make it difficult for other food caterers to enter the market Zoning – Governments allows certain economic activities in a specified areas and excluding others. Inelastic demand – penetrating the market through a lower price than other firms is ineffective with price incentive clients Financial Support We are looking, $3,540,000 as the investment package as the startup amount. This will enable use buy all the equipments and three trucks. Vineyard caterers Projected Income statements Year 1 year 2 Sales $400,000 $600,000 Cost of goods sold Fixed costs $100,000 $100,000 Variable Costs (20% of sales) $80,000 $120,000 Total Cost of Goods sold $180,000 $220,000 Gross profits $220,000 $380,000 Operating expenses Fixed expenses $50,000 $50,000 Variable expenses (30% of sales) $120,000 $180,000 Total operating expenses $170,000 $230,000 Operating profits $50,000 $150,000 Interest expenses (Interest rate 12%) $18,000 $24,000 Earnings before tax $ 32,000 $ 126,000 Taxes (25% of the earning before tax ) $8,000 $31,500 Net income $24,000 $94,500 Physical Environment/ Virtual Environment The organization will work with the following distribution channel: We do not intend to use any middle men or channels; we will link direct to the customers; using “direct marketing” channel (Wiklund, Davidsson & Delmar, 2003). We have also partnered with suppliers who will be supplying us with farm fresh products for the best quality food in the city. We will create a website that will create a platform for marketing. Nature of Business Our company is a partnership company owned by people who share the same vision and are ready to work towards achieving the seat goals and objectives Our patents on products are found on quality and availability of all the products anytime. this is under a notion ‘You Need It, We Got It’. Our accounting system clearly defines how we will be able to pay the central government revenues inform of income tax, national insurance and VAT. On going Strategy for Consolidation and growth With time it is in our plans to have branches even in other cities other than London. Within the next five year, we expect to have at least a truck in every city fully operational. Our main agenda is to have satisfied customers and therefore, we will work as per the will of our customers (French, Kelly & Harrison, 2004). With this we expect to have a large market share for to us, our customers are kings. Having that our business can be mobile; we can build that market and still offer outside catering services for weddings and parties. However, out main agenda is to market our brand completely and exhaustively throughout London city and its environs (Wensley, 2002). References Beaver, G., & Jennings, P. 2000. Small business, entrepreneurship and enterprise development. Strategic Change, 9(7), 397-403. Beaver, G., & Prince, C. 2002. Innovation, entrepreneurship and competitive advantage in the entrepreneurial venture. Journal of Small Business and Enterprise Development, 9(1), 28 37. 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