Management Simulation - Manchester - Case Study Example

Management Simulation Management Simulation Manchester is situated in U.Ks third largest urban area with an estimated population of over 500,000 people. Opening of a pizza place could be an extremely successful venture PESTEL Analysis Political Political factors have a huge impact on different marketing decisions. The laws regulating businesses have increases and have become stricter in the recent years. A major development is that of introduction and the recent increase from 17.5% to 20% in the Goods and Service Tax (Brisban Times, 2010). This has caused an increase the overall prices of food especially food served in food outlets. Hence there is increased pressure on food outlets to provide quality food along with excellent service so that customers can distinguish home from restaurant and justify the high prices they have to pay for eating out. Another factor that affects the food industry is that of the law stating that food items using any genetically modified organism should label those particular food items. This law has been passed since April 2004 (Food Standards Agency, 2008) and the United Kingdom strictly enforces this law so that customers are always well informed about what they are eating and whether there food contains any genetically modified organisms. Economic The market is forever growing and the demand for fast food is increasing with the changed lifestyles. In times of recession and extremely high inflation, people tend to reduce their expenses as much as is possible. Fast food restaurants thrive in times like these for they provide food at comparatively lower prices and whatever the socio-economic environment is like, people have still got to eat. Social People living in the United Kingdom live a lifestyle that is fast paced and extremely busy. As such, people do not have the time to sit around and wait for an order in a restaurant. Food outlets gain popularity based on how quick and efficient their service is. Convenience is a major factor for food consumers today. Another factor that needs to be given special attention is the increasing orientation towards healthy foods. People now are extremely health conscious especially due to the increasing obesity issue. Fast food restaurants are known for producing high calorie food that is not very healthy. A new pizza place will have to consider all these factors before starting operations. Technological Seemingly, technology doesn’t have much to do with food but that’s not true. Technological implications on the food industry are quite wide. The extremely high internet usage and increasing trend home deliveries mean that restaurants need to have excellent websites that can attract customers and convince them to pace orders. Once the order taking is computerized, billing systems will need to be aligned with technology as well. There are increased regulations on food producers to follow strict standards of safety so that the customer has no doubt or apprehensions about the standards or quality of food they are consuming. Environmental The fast food outlets that are well known for serving meat products need to be extremely careful of activists rallying against mistreatment of animals in slaughter houses. Proper measures need to be taken to ensure these individuals that the food outlet is paying special attention to animal care. It is also important to realize that in toady’s extremely environmental conscious consumer, a restaurant paying special attention to environment has an extremely good public image. The food industry is no exception to the rule. Environment friendly packaging and reduced use of plastics as well as introduction of recyclable tissue papers have worked extremely well in establishing different outlets as house hold names for now the consumers are ensured that the food they are eating is not harmful for the environment. Law The fast food industry has to strictly comply with all the appropriate Health and Safety guidelines related with food. Failing to comply with these standards not only result in legal ramifications but create an extremely bad image in the mind of consumers about the particular place. The Food Standard Agency (FSA) is in charge of all the issues pertaining to food and health of individuals in the United Kingdom. Every restaurant has to act in accordance with the policies of FSA. Porters Five Forces Model Buyer Power The increased number of fast food outlets means that consumers have a lot of choice. There is almost zero switching cost because of the widely popular concept of ‘free home deliver’. To attract and then retain consumers, food outlets have to offer something up and above just quality food. The value offered to the consumers, the brand name, the environment and style of the restaurant are all important because of the increased bargaining power of the consumers. In a situation like this where buying power is high, advertisements plays an important role in attracting consumers. Supplier Power The food supply market in the United Kingdom has a lot of players and is highly concentrated. The extremely strict health and safety measures that companies have to take means that not every supplier can be used by a food company. Considerable time and effort needs to be put in to choose a supplier that will meet all the government’s requirements as well as that of the food company. It is vital that the food outlets keep suppliers who are offering quality food at affordable prices. Hence, it can be said that the supplier power is high in U.K. Labor supply is another important factor in the food industry for most restaurants offer not only food but service as well. Various laws such as minimum wages protect the workers and give them leverage over their employees. As such, labor power is also high. Threat of New Entrants The regulations within UK create certain barriers to entry. Limitation on the number and types of restaurants by local authorities is hindrance for companies who want to start their operations. The low consumer loyalty means that earning profits initially is extremely difficult. The cost of opening up the outlet at prime locations or at locations that consumers can easily access is often very high. Rivals may have also bought a location and signed contracts that would ensure no other company could open up an outlet in that particular location. However, despite all this, setting up a new food chain is not extremely costly. Hence the threat of new entrants is high. Threat of Substitutes Threat of substitutes is extremely high because today’s consumer is extremely health conscious. Fast food are not famous for providing healthy food and hence the face tough competition from healthier food options. Rivalry between Existing Firms The food industry is highly competitive with firms trying to emulate any offer that a rival comes up with and is successful in attracting consumers. Increased rivalry amongst competitors means that a company always has to stay on its toes if it wants to survive and grow. Company’s Strategy Product Differentiation Strategy: The company should aim at developing products that differ from its rivals so that consumers can easily distinguish this company from all the others. The intense competition in the market means that the only way to attract consumers is to offer them something that is new or at least better than they already have. Cost Advantage (Anon., 2006): for a new firm, it is difficult to offer extremely low priced products because it has to regain some of the money spent in setting up. However, if they can offer quality products at somewhat lower prices that the competition, they have a huge chance of success. Vision To become the best food outlet in the United Kingdom Mission Our mission is to provide quality food to people in the United Kingdom while building profitable relationship with our stakeholders. To accomplish our goals, we believe in empowering our workforce. The purpose of our operations is to serve the community as a whole by maintaining extremely high quality standards and protecting the environment to the best of our abilities Objectives To provide of quality food To maintain high health standards To become the best pizza parlor in town To maximize profits Major Risks and Uncertainties, and Contingency Plans The major risk involved with this kind of business is if people do not like the taste of the product offered. The fast food market is huge and there is room for more another player. However, if the pizza parlor does not come up to expectations of the consumers, the company is in big trouble. The best way to avoid this problem is by distributing some food samples and asking people for their opinion before the official opening of the place. Risk Assessment The restaurant policy would be such that in case of any accidents because of faulty equipment e.g. ovens, the insurance will cover any losses. We are trying our utmost to purchase and install the safest equipment but if the machinery malfunctions and any employee are harmed because of such an occurrence, he/she would be compensated for by the restaurant. As already mentioned, service is an important part of the food industry and excellent staff is an absolute must. The hiring and training of competent workers is a major part of meeting company’s goal. The manager of the restaurant will be responsible for issues involving employment. The employees will be briefed about safe working conditions and their rights and responsibilities at the time they are hired, with standard operating procedures displayed near all machinery to eliminate chances of injury. The work involves the use of equipment such as ovens and all the employees will be provided with safety instructions as related to the use of equipment. This place is a food joint meaning that at all times a healthy environment should be maintained keeping in line the vision of the restaurant. The building chosen for opening up the restaurant has an extremely viable evacuation plan. The management part of the job is to make sure that this evacuation plan is placed somewhere where everybody, the employees as well as workers could see it so that in case of an emergency situation, people know what to do. Maintaining a healthy environment is extremely important. Installation off mosquito and bee traps is the first important step that needs to be undertaken to ensure that none of the food is infected and any visitor health doesn’t come to harm. Working with industrial stoves and oven, there is always a risk of fire. The restaurant management will install state of the art fire alarms, install fire extinguishers and display evacuation plans to protect visitors and employees from getting harmed in a potential fire. There is always a risk tripping and slipping involved. Excellent housekeeping and ‘wet floor’ signs will take care of this problem. Bibliography Anon., 2006. Business Strategy. [Online] Available at: www.jan-caha.eu/eko/busstrategy.ppt [Accessed 24 11 2012]. Brisban Times, 2010. UK raises GST to 20%, imposes bank levy. [Online] Available at: http://news.brisbanetimes.com.au/breaking-news-world/uk-raises-gst-to-20-imposes-bank-levy-20100622-ysvc.html [Accessed 24 11 2012]. Food Standards Agency, 2008. GM labelling. [Online] Available at: http://www.food.gov.uk/policy-advice/gm/gm_labelling#.ULCnyTDiibM [Accessed 24 11 2012]. Read More