Internal Analysis of California Pizza Kitchen - Report Example

Internal Analysis and SWOT Analysis of California Pizza Kitchen Introduction The main purpose of this report is to attempt an internal strategic analysis and SWOT analysis of California Pizza Kitchen (CPK) by analyzing the resource-based view (RBV) framework of the company and considering Porter’s five competitive forces leading to the internal SWOT analysis i.e. the strengths and weaknesses of the company, the California Pizza Kitchen. The strategic analysis would be accomplished by matching the elements of RBV, as defined by Barney to complement Porter’s competitive forces model leading to SWOT analysis of CPK. The CPK strategy would be matched with the parameters of the above stated models to analyze the internal environment of the company. California Pizza Kitchen, Inc., named as ‘the most recommended casual dining chain restaurant’ by the Zocalo Group and MARC Research, is a U.S. based dining restaurants chain serving fast food. The company primarily serves various kinds of hearth-baked pizzas offering a vast choice to the diners of specialized appetizers, desserts, pastas, salads, soups and sandwiches. The major servings of the CPK are: The Original BBQ Chicken Pizza, Thai Chicken Pizza, California Club, The Works, The Greek, Mango Tandoori Chicken, Carne Asada, Shrimp Scampi, Jamaican Jerk Chicken, and Chicken Tequila Fettuccine. In the U.S. the company operates from more than 253 locations in 32 states, the District of Columbia and 10 locations abroad. The CPK has 205 owned restaurants and 48 franchisee restaurants worldwide. The company headquarters are at Dover (Delaware) in the U.S. RBV Framework and CPK The RBV framework can be used in leveraging from the competitive forces model of Porter. The RBV framework provides a theoretical model to analyze the unique and distinct traits of the company and their effect on the competitive forces. In the light of Schwab’s business strategy based on the company’s resources and capabilities, it is assumed that technological expertise is central to a brand’s recognition and an essential resource of the business. It provides a competitive edge for satisfying the needs of the customers that no other company can. Core competencies of a successful firm should be difficult to copy, capture, and channelize (Mateoaboy, 2010). Analyzing the CPK on the parameters of RBV framework, we find the financial capabilities quite robust, as reflected in the statement of Rick Rosenfield and Larry Flax, co-CEOs of California Pizza Kitchen, “… we delivered a strong financial performance for our shareholders for the quarter, exceeding the top-end of our earnings guidance range by $0.04 per share. “ The company conducted Thank You Card Program successfully. For the first time, the comparable sales in the full service restaurants increased after a downturn in sales for two years. The company managed other crucial issues like labor, direct operating and seating costs, which enabled the company to lead in non-GAAP net income in comparison to the previous year quarter results (CPK, 11 Nov. 2010). The company has been adding value to its resources by opening new restaurants and entering into franchisee arrangements worldwide. To create fantasy and appeal for its menu products, it has differentiated product offerings by introducing innovative ideas such as the New Mobile Kitchen. It has got leverage from its competency of serving through mobile arrangement. It has actually succeeded in changing the rules of the competition by offering such schemes the like of Thank You Card Program and leading through innovative ideas and concepts. One can see offers of new schemes such as CPK Gift Card and CPK Rewards Card on the company website. The company is implementing strategies to cut cost, increase sales through menu innovation and unique dining experience. It is focusing on getting a stronghold on its full service platform, which would offer leverage in major ancillary units such as franchisee restaurants and branded grocery products. Further, according to Rosenfield and Flax, “We are focused on enhancing our brand equity and maximizing shareholder value by improving our free cash flow and return on invested capital both inside and outside the restaurants four walls.” (CPK, 11 Nov. 2010). One can see the increasing volume of its business in average weekly sales of 199 full service restaurants reaching $61,161 in comparison to the previous year quarter sales of $60,945 (CPK, 11 Nov. 2010). The CPK’s intangible resources are inherent in its corporate culture focused on customer satisfaction, its involvement in charity causes and alignment of technology with its business strategy is adding wings of competitive advantage and distinct performance. Once capabilities are identified, a company can screen out the areas of competition (Porter, 1979). A low-cost producer company can face buyers in such products that have no alternative and are not vulnerable to competition. After evaluating the forces impacting the competition in the industry and reasons beneath, a corporate strategy can be formulated by identifying a company’s strengths and weaknesses. The critical strengths and weaknesses from a strategic point-of-view are a company’s standing against the underneath causes of market forces (Porter, 1979). In this context, the company has no specific weak area of rivalry because of its differentiated product list and innovative new launches like the CPK Mobile Kitchen. Next course of action for a company is to devise a plan of action by positioning the company so that its capabilities could help in safeguarding the company interests’ vis-à-vis competitive forces. It can affect the competitive forces through strategic action. A company can get hindsight knowledge of changes in the movement of market forces and be prepared strategically to leverage from the change by forming a new strategic balance. For positioning the company, the industry structure is compared with the company’s strengths and weaknesses. Strategy helps in finding ways to strengthen its stronghold against the weakest market forces (Porter, 1979). The same has happened in the case of CPK; it has identified its strengths vis-à-vis market forces. It is on the spree of opening new restaurants in he full service category, entering into partnerships with franchisees, increasing sales through attractive schemes and programs, and offering innovative services through mobile platform. Customer satisfaction is the main motto of the company. It has targeted the taste buds of its customers through a range of delicacies. Conclusion Considering the internal and SWOT analysis of CPK in the light of RBV and Porter’s competitive forces regarding formulation of internal strategy and positioning of the company, it is recommended to the management to work smarter for achieving consistently increased sales and get rid from the recurrent tension due to charges for impairment, legal claims and store closures so that investors’ confidence in the management remains intact. It needs to remain on the alert for always changing consumer tastes and demands, availability of skilled manpower and efficient management besides keeping a check on the cost of food and supply. References CPK. (2010, November 11). California Pizza Kitchen announces financial results for the third quarter 2010.Retrieved from http://investor.cpk.com/releasedetail.cfm?ReleaseID=530114 Porter, Michael E. (1979). Chapter 4: Strategy Analysis -- how competitive forces shape strategy. Harvard Business Review. Retrieved from Ebscohost database. Marketing Teacher. (2009). SWOT analysis: lesson. Retrieved from http://marketingteacher.com/Lessons/lesson_swot.htm Mateo, Aboy. (2009, March 29). RBV Framework Analysis of Schwabs Business and IS/IT Strategy [Web log comment]. Retrieved from http://www.mateoaboy.com/f6/blog_files/c0cf4c2c24f7450a2ad34f16da008678-80.html Read More