Introduction of a New Fast Food Business Outlet - Case Study Example

SERVICE OPERATION MANAGEMENT FOR A STARTUP BUSINESS By Introduction 1 Purpose The purpose of this report is to highlight the major strategic and management decisions key to the introduction of a new fast food business outlet. 1.2 Background The fast food industry is a lucrative one yet needs a great understanding of its dynamics and operability in order to succeed. To achieve this, an in depth understanding of strategic management issues and measures in this field is necessary, coupled with integrating good management capable of making informed decisions that favor the life of the business. In line with this, we explore the target market segment, the means to develop a suitable service strategy for the business as well as ways of managing the business operability in this competitive field of fast food trade. To this end, the paper will make use of developmental strategies espoused by Cooper and Kleinschmidt (2011) as being integral to launching a product or a business unit in any market. These concepts include defining the target market, identifying the needs, preference and wants of the potential customer, as well as defining the product and/or business concept, its specifications and requirements, in an adequate and satisfactory manner. 2.0 Target market and selected service package In order to be able to maximize sales, it is important that we understand the nature of the target customer, more so their preference and desires. Through this, the business is able to establish the existence of a potent customer base as well as learn how to render the service or product in the best way that meets the needs of the customers. In addition, the business is able to develop appropriate marketing strategies capable of reaching the customer base as well as ways of improving the delivery of the marketing strategies (Neelankavil and Rai, 2014). Availing information on the service package on the other hand enables the business to define the different services bundles ranging from supporting facility to facilitating goods, explicit to implicit services, and their impacts on the wellbeing of the business. 2.1 The target market segment For years, the target market for fast food businesses has been the young generation. This is so because the young people have an insatiable appetite for good food available on the go. This group also forms the largest of our target market for this business, and in addition to which we are introducing other food that appeal to the elderly as well. This diversification is aimed at reaching out to a larger market segment in order to guarantee quantifiable sales at the onset of the business, and to lay ground for our brand identification as an all-inclusive one. Shenkar, Luo and Chi (2014) advance that focusing on a younger market segment is important to the success of a business as it allows the business to study the demography of its market, thereby being able to introduce change adjustments as and when prevailing conditions demand. The business also diversifies its range of products that will be available once it begins operating. This range of products includes those that target vegans as well as low fat and low sugar products targeting especially young people keen on the type of food they consume. As opposed to the usual market routine of targeting kids in terms of fast foods, this new outlet aims to maximize its output by offering services to persons cutting across all ages, with an objective of luring even those opposed to fast foods on basis that are yet to be determined. 2.2 The service package Service package refers to the bundle of goods and services available in some given set of environment. To this end, the business defines the available and expected service packages for this upcoming fast food outlet under such aspects as supporting facilities, the necessary facilitating goods, as well as implicit and explicit services that are integral to the establishment of the business. Supporting facility - This entails the resources that must be in place before the business commences its operations (Verma, 2012). These facilities encompass both tangible and intangible necessities. In this context, the tangible facilities include then building in which the business will operate, the furniture, cookery, among others. The intangible facilities include personality development of e.g. the labor force expertise in terms of customer service and cash management that will be necessary for the operation of the business. Facilitating goods – refers to the materials that are availed for sale to the customers. In this context, the term refers to the food products that the outlet will be offering. These are majorly ready to eat foods and include among others pizza, hamburgers, French fries and tacos. In addition to these, the menu of our outlet will include other ready-to-eat foods that are low in fat content as well as sugar content. Explicit services – these according to Verma, refer to the readily observable benefits that can be detected by the human senses. In the context of fast food service outlet, this entails the satisfaction that our customers will have after dining at our restaurant. A point to note is that our facility will provide the best of quality fast foods, served with a dedicated team, and made with the taste of the consumer in mind, thereby guaranteeing utmost satisfaction. This forms the essential feature of our service, utmost customer satisfaction. Implicit services – are the psychological benefits that the customers only experience a vague feeling about. In the context of catering, this could as well be taken to imply the happiness that comes with satisfaction and quality service enjoyed at our outlet. 3.0 Service strategy and system design In order to have the business run smoothly, it is imperative that the business establish a success-oriented service strategy. The strategy should be designed in such a way that there is minimal utilization of resources with maximum output to enable the business stay competitively potent. According to Lotich (2014) good customer service strategy should: Have an elaborate customer service vision that is clear to the employees for better performance of the business. Allow for detailed assessment of the needs of the customer in order to establish their preferences, a moving target whose understanding require soliciting for feedback from the customers. Offer the management an opportunity to access an experienced pool of employees with a disposition to provide a strong customer service environment. Be able to set and pursue goals for customer service as a follow up program to identifying and measuring customer satisfaction. Lay provision for train on service skills to new employees, and retraining existing ones on important skills such as good complain handling skills. Establish the level of accountability of all parties and individuals involved, junior and senior staff alike. Provide for a system of recognizing and rewarding good service especially when employees demonstrate the desired behaviors of good customer service culture. 3.1 Information and physical flow of service supply chain The physical flow of service supply chain determines the level of reception a new product will have in the market, or in this context, how the market will welcome a new entrant into the fast food market. One aspect of improving such an impact for this business will be through offering after sales services such as home delivery on online orders. Cohen (2005) notes that this practice offers great profit to the business due to the fact that with increased commoditization of products, the margins of new products shrink making them harder to sell, thereby availing an opportunity to drive sales upwards through enhanced service delivery mechanisms. Additionally, after sales service provides a low risk and long-term stream of revenue. 3.2 Capacity of the service facility and the workforce configuration Given the fact that the business is just being introduced, its success is capacity-constrained, hence necessitating the ability of the management to use the available time and production capacity in a more efficient and profitable way. While it is apparent that achieving this is never easy due to the presence of sequential operations for managing associated risks simultaneously, integrating a balanced equipment and labor capacity offers good results in dealing with the scenario (Lovelock, Patterson and Wirtz, 2014). The workforce configuration will be such that it avails at a glance age and gender of the workforce, plus the cost of maintaining it as well as future projection of the said cost. The workforce should embrace teamwork for better delivery of services and smooth running of the business. To this end, the business ought to adopt an enterprise configuration capable of supporting any number of employees at any given location, thereby easing the management of group locations at minimum cost. This system ensures the existence of strong security controls, efficient management of qualifications and credentials of employees and their skills, as well as a sustainable way of managing the organization’s rules, employee locations, roles and location settings (Raygan, 2007). 3.3 Demonstration of service delivery model using process flow diagram 4.0 Managing service Service management is important to any business, for not only service providing business but also literally for any form of business since there is always some level of service provision in an organization. However, this practice is most important for businesses such as the one we have in question for it enables the business to understand the market forces that may have extensive impact on the business. Harvey (2014) notes that good service management helps create value for customers especially when rigorously executed through logical validity and discipline. In line with this, we explore the existence of dynamicity or the lack of it in the market as well as strategies that can be used to manage capacity and demand. 4.1 Existence of demand variation in market Demand variation is characteristic of market trends in the current world economic order. Several reasons give rise to such variations, some of which include seasonal change in behavior of consumers as well as change in the trade volume and prices of supportive goods and services. However, a point to note is that the demand for fast foods tend to remain unaffected all-round the year, though in recent times the industry has been experiencing fluctuations in demand following the financial crisis of 2008 and anti-fast food campaigns. According to the National Restaurant Association (2015), the recession period brought a completely different culture in fast food consumption. The usual behavior of individuals consuming three meals a day has been replaced by a culture of ordering less during main meals, and then showing up for snacks later. This has made the snack business more lucrative at the detriment of fast food business, a phenomenon that necessitates diversification of products offered. 4.2 Strategies for managing capacity and demand One strategy for matching demand and capacity involves shifting demand and stretching or aligning capacity to meet demand. In the event that such a move fails to yield desired results, another strategy that involves adjusting the basic mix and using the available resources creatively to meet the fluctuations in demand. Some of the approaches of achieving this as outlined by Brown, Bessant and Lamming (2013) include: Hiring part time employees especially during peak hours and/or peak seasons to supplement the regular workforce in conducting the operations. This work force can be easily sourced from college students or personnel on off duty. Cross training of employees so that they are able to perform various tasks. This comes in handy when their respective routine tasks are less needed at a particular time. Modifying or moving facilities and equipment to accommodate the need especially when the pressure is on such materials. Sharing of the available capacity in the event that it becomes underutilized e.g. due to less demand. Stretching the existing capacity is another practical approach. Under this approach, the business does not have to add equipment or labor force, but institutes a plan that effectively utilizes the available resources, e.g. by asking the employees to work harder if the pressure is directly on them. During low demand period, the business can opt for a down time schedule that sees renovations of equipment and re-training of employees being undertaken. The business can also involve customers by turning certain operations to self-service, even though this is not advisable since the business losses some level of service quality control, an occurrence not so healthy for the business. References Brown, S., Bessant, J. & Lamming, R. (2013). Strategic operations management. London, Routledge. Cohen, M. A. (2005). The service supply chain: turning potential into profits. Integrated Logistics Supply Chain Management. Retrieved from http://www.inboundlogistics.com/cms/article/the-service-supply-chain-turning-potential-into-profit/ Cooper, R. G. & Kleinschmidt, E. J. (2011). New Products: The Key Factors in Success. Marketing Classics Press. HARVEY, J. (2010). Complex service delivery processes: strategy to operations. Milwaukee, Wis, ASQ Quality Press. Lotich, P. (2014). Creating a customer service strategy. The thriving small business. Retrieved from http://thethrivingsmallbusiness.com/7-steps-to-creating-a-customer-service-strategy/ Lovelock, C., Patterson, P. G. & Wirtz, J. (2014). Services marketing. Pearson Australia. Neelankavil, J. P. & Rai, A. (2014). Basics of International Business. London, Routledge. Raygan, R. E. (2007). Enterprise Configuration Management in a Service-oriented Architecture Environment Delivering IT Services. Birmigham, University of Alabama. Shenkar, O., Luo, Y. & Chi, T. (2014). International business. London, Routledge. National Restaurant Association. (2015). Increase revenue during off-peak hours. Retrieved from http://www.restaurant.org/Manage-My-Restaurant/Marketing-Sales/Food/Increase-revenue-during-off-peak-hours VERMA, H. V. (2012). Services marketing: text and cases. New Delhi, Pearson Education. Read More