Strategies Needed for CitySnacks Restaurants - Case Study Example

CitySnacks Restaurants Case Study Table of Contents Summary…………………………………………………………………………………..3 Introduction ……………………………………………………………………………….3 Situational Analysis……………………………………………………………………….4 Opportunities ……………………………………………………………………...4 Threats …………………………………………………………………………….5 Development of Strategy …………………………………………………………………6 Importance of Projects…………………………………………………………….7 Participants on the Project Teams…………………………………………………9 Measures of Performance………………………………………………………..10 Implementation ………………………………………………………………………….11 References………………………………………………………………………………..15 1.0. Summary CitySnacks is a well established business organization in the fast food market in United Kingdom. The fast food market poses some opportunities which need to be exploited by the company in order to remain competitive. The opportunities in the market include consistent market growth and presence of various types of customers in the fast food market. However, the market also poses some threats which may reduce the competitiveness of the company if not well addressed. These threats include stiff competition and increased rate of shifting of employees to rival organizations. In order to exploit these opportunities and control the threats, the organization is supposed to establish three projects which will be carried out by cross-functional teams. The three projects include improvement of employees’ working condition, designing and development of desirable products and a project to enhance the efficiency of production and operation technology. These projects will be of great importance since they will increase the profitability of the company thus raising its profile in the market. In order for the projects to be successful, the teams will consists of various managers and employees from various departments. However, various barriers are likely to render the projects unsuccessful if not well addressed. Some of these barriers include inadequate financial resources, resistance from staffs and managers and lack of adequate time. However, these barriers will be broken by proper financial planning, involvement of all stakeholders in project planning, financial borrowing from financial institution, preparation of effective action plan schedule and proper communication to all stakeholders. 2.0. Introduction Business organizations usually consist of various divisions which include marketing, finance, information technology, human resource and procurement. Though these divisions of a business organization play different rules within an organization, their functions are interrelated thus they must work together to attain organizational goals and objectives (Kerin & Rudelius, 2003, p.154). Marketing department is unlikely to attain its goals and objectives if it doe s not get adequate support from other business departments. This is clearly evidenced in this case of CitySnacks where the business organization is likely to experience a substantial decline in revenue collection if the opportunities are not fully utilized and threats are not fully controlled. The competitiveness of CitySnacks is being threatened by various environmental factors which affect its operation negatively. However, various environmental factors pose opportunities which can increase the competitiveness of the organization if well utilized. As a result, CitySnacks is supposed to establish and implement effective strategies which will eliminate or minimize the effects of threats and utilize fully the opportunities presented by the business environmental factors (Kerin & Rudelius, 2003, p.156). 3.0. Situational Analysis Situation Analysis is a marketing term which involves evaluating the situation and trends in a particular company’s market. In order to satisfy customer needs effectively, an organization must understand its external and internal situation, including the market, the environment, and its own capabilities. Analyzing the situation before making a strategic plan or decision is the key factor to generate competitive advantage. Critical analysis of the case study indicates that CitySnacks is a well established business organization in the fast food market since it has established various restaurants in United Kingdom. The company has been employing a massive expansion strategy in order to increase its sales target. CitySnacks is a division of Pleasure Foods which controls its major operations. CitySnacks has been faced by various opportunities which increase its competitiveness in the market if well utilized. However, various environmental factors pose threats to the organization thus can lower its competitiveness if not well addressed. Optimum utilization of opportunities and optimum control of the effects of threatening factors is one of the major challenges faced by the new marketing director, Tim Cairns. Such a process requires support from all major departmental heads (Stapleton & Thomas, 1997, p.81). 3.1. Opportunities Proper utilization of opportunities can enable a business organization to meet its goals and objectives effectively. CitySnarks is faced by various opportunities which should be fully utilized in order to gain competitive advantage. According to Porter’s competitive advantage theory, “Competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price.” (Scocco, 2007). Porter is of the opinion that there are two ways through which one can gain competitive advantage. First is through cost and the second through product differentiation. One of the major opportunities of the company as presented in the case study is expected market growth. The fast food sector has been experiencing a substantial growth for the past years. According to historical growth and forecast expectations, the market sector is expected to grow at the rate of 4% for a period of five years. In this regard, the business organization is supposed to establish effective strategies to meet the needs of the growing market. Growth of the market will lead to increased demand of the products and services of fast food business organizations. Increased demand is likely to result to increased sales volume thus high profitability. This increase in demand can be taken as an opportunity to bring about cost leadership, through economies of scales and better relationship with suppliers and thus gain competitive advantage. The competitiveness of CitySnacks is likely to increase if proper strategies are established and implemented to meet the increased demands in the market (Stapleton & Thomas, 1997, p.85). Availability of variety of customers in the market is another opportunity which should be exploited by CitySnacks to increase its competitiveness. This can be taken as an opportunity to bring about significant product differentiation to gain competitive advantage. The fast food market in United Kingdom consists of a wide mix of customer types ranging from city business and service workers to families, shoppers, tourists and children parties. A diverse customer base reflects an opportunity which should be exploited by an organization by ensuring that the demands and needs of all customers are met. A diverse customer base enables a business organization to protect itself from the negative effects of seasonal business operations. For instance, depending on tourists as the only customers will lead to a seasonal business organization thus preventing the organization from attaining its goals and objectives. However, in this case CitySnacks has got various customers which are willing and able to purchase its products. As a result, it is upon the organization to meet the preferences of all types of customers. (Stapleton & Thomas, 1997, p.97). Meeting the needs of all types of customers requires product differentiation. If product differentiation can be successfully brought about, CitySnacks can gain competitive advantage according to Porter’s theory. 3.2. Threats Business organizations are usually faced with various threats which emanate from external factors. Failure of a business organization to control these threats effectively normally results in the decline of competitiveness. CitySnack is not an exception of business organizations being faced by threats from the environmental factors. Once threats are identified, business organization managers are supposed to come up with effective measures to minimize or eliminate the effects of such threats on the operations of the business organization (Stapleton & Thomas, 1997, p.101). One of the major threats facing CitySnack is the stiff competition in the market. Many business organizations in United Kingdom have invested in fast food market thus posing threat to the survival of CitySnack. Fast food market is made up of a few major players and many small entrepreneurial business organizations. One of the major competitors is the MacDonald’s. MacDonald’s is a reputable business organization in the food market thus being more competitive. MacDonald’s has established many subsidiaries in various continents thus having a stable capital base and high market share in international market. Due to stiff competition, CitySnack is threatened to lose part of its market share to competitors in future. Fast food market has no effective barriers of entries since small business organization can enter into the market easily. In this regard, CitySnack has to establish effective strategies to retain or even gain market share (Stapleton & Thomas, 1997, p.112). High rate of employee turnover is a threat to CitySnack since the company is going to lose experienced and high skilled employees. For instance, resignation of two graduate market analysts left a major vacuum in the marketing department. This led to poor running of Saver Card Loyalty Scheme and Mystery Customer Market Research Program. High rate of employees’ turnover has a negative impact on performance of a business organization. To start with, an organization which experiences high employee turnover rate usually suffers high cost of frequent recruitment and training of new employees. Besides, the quality of services and products offered by such an organization is likely to be compromised due to lack of high skilled employees. In addition, employees who resign are usually absorbed by competitors. As a result, high skills are transferred from an organization to its competitors. For instance, in this case, the Mystery Customer Market Research Program graduate joined MacDonald’s after leaving CitySnack. As a result, the managers of CitySnack need to embrace adoption of effective strategies which will attract and retain employees (Stapleton & Thomas, 1997, p.118). 4.0. Development of Strategy Current dynamic business environment, innovative efforts and improvement initiatives normally bring company workers from various departments of an organization together to address a complex issue or undertake a long-term project. The major aim of forming a cross-functional team is to ensure that problems facing an organization are solved efficiently and the operation of the organization is substantially improved. Cross-functional teams are usually formed by managers and employees from different departments within the business organization. Many important business projects need a wide variety of skills and knowledge in order to be completed effectively. In order for CitySnack to exploit the opportunities and control threats effectively, cross-functional teams need to be formed to carry out various strategic projects (Roy & Stewart, 2006, p.139). A project to improve the working condition of employees is one of the major projects which can be handled by a cross-functional team. Increased rate of employee turnover is caused by the poor working condition in the business organization. To start with, the finance department of the company aims at reducing the cost of operation and production thus offering poor remuneration packages to employees. Besides, employees of CitySnacks are not supported by the management team on their creativity. For instance, one of the major reasons why a graduate market analyst resigned was failure of management team to embrace his recommendations. MARS model can be used to help in improving the motivation of employees. The MARS model is an acronym for individual Motivation, Abilities, Role Perception and Situational factors. This is a model that seeks to elaborate behavior of individuals as a result of both internal and external factors as well as influences acting together. Individual perceptions, values, emotions, attitudes and stress and personality form a basis on which the factors interact. This model shows effects on employee performance within an organization. If any of the four factors of its constituents weakens, employee performance will be affected in negative manner. In this case, the quality of work is affected by lack of motivation, abilities, role perception as well as situational factors as described by the MARS model (MARS Model-Organizational Behavior). Product designing and development is another project which will require to be carried out by a cross-functional team. The company needs to design and develop products and services which are admired by customers in the market. Products and services of the organization are supposed to meet the demands and needs of various types of customers in the market. Moreover, a project to identify and adopt effective technology for production and provision of services will play a major role in improving the performance of the business organization (Roy & Stewart, 2006, p.145). 4.1. Importance of the Projects It is evidence that the aforementioned projects will be of great importance to CitySnack. To start with, the project to improve the working conditions of employees will help the organization to minimize the rate of employees’ turnover. As observed in the case study, some of the highly skilled employees of the company resigned due to poor working conditions in the organization. Employees are very important resources within an organization thus their interests need to be met. One of the major interests of employees within a business organization is to have a good working condition (Roy & Stewart, 2006, p.142). Once the working condition of employees is improved, the motivation of employees will be enhanced. As a result, the company will experience low rate of employee turnover. This will pose great benefits to the organization since the cost of recruitment and training of employees will substantially go down thus enabling the organization to enhance its profitability. Besides, improved working condition has a positive impact on the quality of products and services of the business organization. Due to enhanced motivation, employees will be willing to put more efforts in production as well as innovation. As a result, the competitiveness of the organization will be enhanced. Generally, this project will play a major role in reducing employees’ turnover rate and controlling the threat of increased competition in the market (Roy & Stewart, 2006, p.147). Initiating a project for designing and development of new products will be of great important to the business organization. Since the fast food market is growing with an increase in the number and variety of customers, product designing and product differentiation is of utmost importance. To start with, forming a cross-functional team to participate in designing and developing of company products and services will enhance the quality of products. Quality is one of major factors which are considered by customers while making a purchase decision. In this regard, the products of the organization will be highly demanded thus increasing the organizational revenue. Besides, due to existence of various types of customers in the market, the product designing and development team will come up with preferable products and services for each type of customers. As a result, the business organization is likely to experience increased sales volume (Roy & Stewart, 2006, p.154). Adopting effective technology in production and provision of services is of importance to the organization. Effective technology will enhance the efficiency of operation and production in the business organization. Bearing in mind that the business organization is faced with an opportunity of consistent growth of the fast food market, the company needs effective production technology which can produce more products to meet the demands of customers. Availability of products and services at the right time and at the right place will attract many customers thus boosting organizational sales volume. Besides, improved efficiency in production and provision of services will prevent customers from shifting to rival business organization. Generally, establishment of effective technology in production and provision of services will enable the organization to meet the increased demands of its products due to the growth of the market (Kerin & Rudelius, 2003, p.171). 4.2. Participants in Project Teams and Reasons for Participation Managers, employees and directors from various functions in the organization will have to participate in the project teams for the projects to be successful. To start with, the project of improving the working conditions of employees will consists of four major functional managers which include human resource, finance as well as I.T. managers and a representative of the employees. Human resource manager will play a major role in improving the terms and conditions of employment. Finance manager will be important in this group since he will guide the team on financial issues to ensure that the financial interests of all stakeholders of the business organization are observed. I.T. manager will play a major role in ensuring that the team gets relevant and adequate information for decision making. Besides, representatives of employees from all functions of the organization need to be involved in work condition improvement team since they will provide basic information concerning the problems faced by employees (Parker, 2002, p.254). In the project of designing and developing products and increasing the efficiency of technology, operations, finance, I.T., sales and promotions managers need to be members. Sales and promotions managers will help in carrying out market research to identify the preferences of various types of customers. Besides, operations managers are involved directly with production and provision of services thus they will give guidance on how preferred products will be produced. The I.T manager will play a major role in ensuring that adequate and relevant information is available for decision making. Moreover, the finance manager will be of significance in analyzing the cost effectiveness of the project and giving out proper financial guidance (Parker, 2002, p.250). 4.3. Performance Measures to Track Progress It is crucial to measure the performance of the three aforementioned projects in order to keep track of the progress of the projects. Measuring the performance of the projects will enable team participants to consider changes to work plan in a timely and efficient manner if necessary. Measuring the performance of projects will be crucial in building an evidence base on effective measures of addressing certain issues. To start with, the performance of project of improving the working conditions of employees will be measured by the rate of employees’ turnover in the organization. Substantial decrease in the rate of employee turnover is an indication that the project is meeting its objectives and vise versa (Cook, 2004, 221). Besides, the project of designing and development of products will be measured by the increased sales volume as well as demand of organization’s products. Increase on demand and sales volume of company’s products and services, will indicate that the cross-functional team has designed and developed products and services which are admired by customers and vise versa. In addition, the project of enhancing the efficiency of technology will measured by production rate within the organization. Increase in production rate will indicate that the efficiency of production and service provision technology has improved. Moreover, the cost of production and provision of services will also be utilized to measure the performance of the project. Substantial increase of cost of production will indicate that the project is not viable thus calling for revision of the plan (Cook, 2004, 225). 5.0. Implementation Implementation of the projects is likely to be faced by various barriers or constraints in terms of implementing and sustaining them. According to Goldratt’s Theory of Constraints, a change made to most of the variables in the organization will have only a small impact on it as a whole. However there are a small set of variables where considerable improvement or change can result in a significant, visible impact on the organization as a whole. These variables are called constraints. According to Goldratt, identifying these constraints is the first step in making an effective change that will impact the organization (Value Based Management, Online). Three basic constraints in the implementation of the above mentioned projects have been identified. They include power struggle, financial constraints and time constraint. To start with, implementation of the projects will favor interests of certain stakeholders of the organization and affect others negatively. In this regard, various stakeholders of the organization will resist change. For instance, the management team is likely to resist such projects since their power in the organization will be minimal. The fact that employees and managers from various departments will form one group to make decision concerning a certain project interferes with the managerial power vested on managers and directors. As a result, such a change may lead to conflicts and power struggles within the organization which may interrupt its operations (Zoerman, 2008). Implementation of the projects will also be faced by the constraint of inadequate financial resources. Increasing the efficiency of technology in production will be more costly since the organization will be required to purchase high quality production and operation equipments. Besides, improvement of employees’ working condition will increase the cost of operation within the organization. As a result, the projects are likely to be turned down by the financial managers and directors of the parent company (Cameron, 2004, p. 65). Another constraint facing the implementation of the projects is the limited time available. Bearing in mind that the teams consist of individuals from various departments, it will be hard to come up with effective time for meetings for all participants. In this regard, the implementation of the projects is likely to take long time thus being more costly to the business organization (Zoerman, 2008). However, the implementation of the projects will be of great success since the barriers or constraints can be addressed effectively. The second step in getting rid of constraints according to Goldratt is focusing on them. The final step is to follow them through with on going improvement. In order for implementation of the projects to be effective, the project members must have a broad understanding of the effort required. Basic systems and structure of the organization must be well analyzed. Understanding project efforts required will enable the company to consider all stakeholders of the organization by analyzing impact of the implementation of projects. To attain this, all stakeholders of the organization will be informed concerning the new projects and their benefits to the organization in advance to avoid resistance. Representatives of all stakeholders will be invited in a meeting to get first hand information and give out their suggestions before the projects are implemented (Zoerman, 2008). Various strategies need to be implemented in order to accommodate the production rate the company needs as well satisfying employees. The People’s Capability Maturity Model proposed by Carnegie Mellon SEI can be used to develop maturity in workforce and address the critical people issues in the organization. It helps the organization to characterize the maturity of the workforce practices, to establish programs for constant workforce development, set priorities for improvement actions to integrate workforce development with process improvement and lastly to establish a culture of excellence. One of the major strategies to be utilized is introduction of a training program for both new and existing employees. New employees usually require training on the operation of their respective departments as well as the organization is a whole in order to be quickly accustomed to the new working environment. Besides, existing employees need to often undergo training in order to understand new developments in technology industry. Such a strategy will ensure the safety of employees while handling machines. Moreover, skills and motivation will be enhanced hence increasing the output of the organization (Cameron, 2004, p.124). Workers should be promoted based on their education, skills and professional knowledge. Moreover, the output of employees should be one of the factors during employees’ promotion. Such a move ensures that only competent employees are assigned high level duties thus being able to carry out the management and supervisory tasks more effectively. Participative leadership style should be employed in the organization to replace the unproductive authoritative leadership style. Participative leadership style will enable employees to be motivated since their contributions in decision making will be valued. Moreover, participative leadership will enhance innovation and creativity within the organization thus boosting its competitiveness in the market (McNamara, 1997). Introduction of a more flattened organizational structure will play a major role in ensuring that communication within the organization is effective. A more hierarchical organizational hinders effectiveness of communication hence should be abolished. This action is based on the Contingency Theories, which states that there is no one best way of organizing and that organizational style that is effective in some situations may not be effective in others. The optimal organizational style is contingent upon many internal and external factors. Hence changing the organizational style based on the situation and the internal and external factors will only contribute towards the progress and development of the organization as such. Various levels of management should be scraped in order to allow employees to be able to convey their grievances or decisions to the top management level of the organization. Such a move will result to a friendlier environment where employees interact freely with top management team. The managers should practice face to face or oral communication where possible in order to enhance the understanding of information being passed. Written communication should only be used where oral communication is not applicable. Managers should hold regular meetings with employees to discuss issues prevailing, performance of the organization and reward the best performing employees. In addition, the strength of the organization will be developed from receptivity, willingness and ability to learn more from colleagues. For the organization to prevent arrogance of its members, it has to develop and communicate clearly its objectives and goals. Employees will understand the impact of their contributions to the entire organizational performance hence be willing assist one another (McNamara, 1997). In assistance by the finance manager, the project teams must carry out proper financial planning in order to ensure that the business organization does not face financial difficulties due to implementation of the projects. Critical financial analysis need to be carried out to ensure that the cost of projects is minimized while their benefits are optimized. In order to address the issue inadequate financial resources to support the projects, the company will seek funds from its parent company. Besides, the organization will borrow funds in financial institutions offering low interest rates in order to minimize cost of financing activities (Cook, 2004, p. 95). In order to address the issue of time, all departments involved in the projects will be consulted during the formation of meeting schedules. Besides, project implementation plan will be formed for each project to ensure that projects are implemented effectively. Proper implementation of the three projects will substantially boost the competitiveness of CitySnacks. References Cameron, E 2004, Making sense of change management, Kogan Page Publishers, ISBN 0749440872. Cook, S 2004, Change management excellent, Kogan Page Publishers, .ISBN 0749440333. Kerin, R & Rudelius, W 2003, Marketing: The Core, McGraw-Hill Professional, New York. McNamara, C. (1997). Organizational change and development. Retrieved July 26, 2009, from http://managementhelp.org/org_chng/org_chng.htm MARS Model-Organizational Behavior. ( 2008). Retrieved July 26, 2009, http://www.scribd.com/doc/4825509/MARS-Model- organizational-behaviour Parker, G 2002, Cross-Functional Teams: Working with Allies, Enemies and other Strangers, John Wiley and Sons, New York. Stapleton, J & Thomas, M 1997, How to prepare a marketing plan: a guide to reaching the consumer, Gower Publishing Ltd. New York. Scocco, D (2007). Competitive Advantage: Introduction. Innovative Zen. Retrieved July 22, 2009. http://innovationzen.com/blog/2007/01/24/competitive-advantage-introduction/ Roy, Y & Stewart, D 2006, Marketing Champions: Practical Strategies for Improving Marketing Power, Influence and Business Impact, John Wiley and Sons, New York. Value Based Management. Theory of Constraints. Value Based Management.net. Retrieved July 22, 2009. http://www.valuebasedmanagement.net/methods_goldratt_theory_of_constraints.html Zoerman, K 2008, Cross-Functional Efficiency, viewed on July 22, 2009, < file:///D:/cros%20%20team.htm>. Read More