Expanding the Australian-Based Volare Restaurant - Essay Example

REPORT: A feasibility study of expanding the Australian-based Volare Restaurant into India BY YOU YOUR ACADEMIC ORGANISATION HERE HERE REPORT: Afeasibility study of expanding the Australian-based Volare Restaurant into India 1.0 Introduction Volare is an Italian restaurant in Gold Coast Australia, specialising in a wide variety of authentic Italian dishes in the traditional style of Italy. Like most other restaurants of this variety, the majority of fresh and frozen ingredients are purchased locally or through the supply chain encompassing the broader Australian region. It has been determined that in order to boost profitability and expand the Volare brand, the business should consider India as a new, international location for Volare Restaurant. After procuring a suitable location for the construction of Volare India, the in-house services (wait staff, cleaning crew and chefs) will be provided by the local talent in India. To expedite training, several professional chefs and executive leadership will perform a series of training programs to familiarise the staff with Italian cooking procedures, ingredients lists and how to conform to Volare administrative guidelines. This report highlights the current political, legal, socio-cultural and technological environments in India as part of the business’ comprehensive SWOT analysis to determine whether India is actually a viable business opportunity. The report aims to identify the current business environment in India as well as offer recommendations as to how to proceed in this potential business expansion. 2.0 Political Environment India is a developing democracy led by the United Progressive Alliance, a regime in control by electoral process (accessdemocracy.org, 2007). This emerging democracy is similar to that of Australia in which the people are given significant freedoms and are not ruled by a governmental authority which demands subservience. Because there is no research evidence which suggests that there are on-going feuds between parties attempting to gain control over the country, Volare Restaurant will experience no business interruption due to violence or other negative consequences as a result of aggression. The government appears to be relatively stable overall. 2.1 Government and contribution A great deal of India’s current economic success comes from foreign direct investment, suggesting a country which has very liberal policies regarding the expansion of foreign businesses into the country. India is a booming economy which has many sectors that are funded directly by different venture capitalists (Rangaswami, 2008), with no research evidence suggesting that government entities attempt to regulate the flow of international business into India. 2.2 Analysis The lack of governmental regulation regarding new, international businesses represents a significant strength for Volare Restaurant as adequate funding sources exist to promote business growth and the country leadership officials are well-versed in dealing with Westernised businesses, giving advantages in both language and in negotiating business contracts. 3.0 Legal environment India government officials have worked, since 2003, to reduce the cost of compliance with local business regulations (Schroeder, 2004). No research evidence could be located which suggested specific tariff restrictions on imported goods for international business supply chain requirements. 3.1 Labour laws Many of the current labour regulations date back to the 1940s and have not been adjusted since (Basu, 2006). One particular regulation, the Industrial Disputes Act of 1947, makes it exceedingly difficult to lay-off employees in the event of slow periods or economic downturns within the business (Basu). Additionally, there are also laws which protect the rights of child labourers, however this is common in the Australian environment as well and is something Volare is experienced in dealing with. 3.2 Analysis The apparent lack of change regarding outdated labour laws could serve as a detriment to Volare India as it appears there is conflict both at the business level and at the governmental level as to how to go about reform. For Volare, this could potentially cause work stoppages or reduction in available support staff if disputes arise regarding labour policies. 4.0 Economic Environment India maintains a growing economy with a gross domestic product rise of 8.4 percent for year-ending 2007 (Prewitt, 2008). Additionally, even though agriculture and manufacturing have experienced steep declines in India in recent years (EIU Viewswire, 2009), the restaurant sector is currently experiencing measurable growth. 4.1 Exchange Rates The current exchange rate for the Australian dollar compared to the Indian rupee is $33.92 (x-rates.com, 2009). 4.2 Analysis The growth in domestic product indicates a strengthening economy which provides economic opportunity for business expansion. The current exchange rate also represents a significant, potential cost-savings in relation to procuring inventory for food production if the products are ordered with Indian vendors. 5.0 Socio-cultural Environment Cows are still considered to be revered and cherished animals in the Indian culture, therefore many citizens will not eat beef (Kurtz, 2006; Duecy, 2006). These practices are forbidden by the Hindu religion which makes up approximately 81 percent of the entire Indian population. 5.1 Social practices When attempting to create positive relationships with Indian cultures, the presentation of gifts which are wrapped in bright colors represents both luck and a sign of friendship (Kurtz). There are also strong hierarchical demands placed on male and female members of society, however it appears that both groups (in most portions of India) can freely enjoy the benefits of a quality restaurant meal. Seafood restaurants, in addition, are highly popular in many Indian cities (Krannich, 2000). 5.2 Hofstede’s Cultural Dimensions One notable factor in the socio-cultural dimensions for Indian citizens is their propensity to avoid uncertainty in most scenarios (Mathis and Jackson, 2005). Indians prefer structured situations which clearly outline role responsibilities and citizens are not likely to take risks when structured outcomes are achievable. 5.3 Analysis The high volume of citizens which are forbidden by religion and culture to eat meat will radically change the scope of how Volare Restaurant India conducts business and builds its menu. Beef should be offered only in individualised dishes as a specialty menu offering, with a higher focus on vegetarian menus and other Italian pasta dishes. The propensity to avoid uncertain situations is a positive benefit for the new Volare location as it would offer a significant amount of control over employee activities through structured and somewhat-rigid hierarchies of control from a management perspective. 6.0 Technological Environment India appears to maintain a very progressive and modern technological environment, consisting of various mobile phone providers and the infrastructure necessary to promote Internet usage and mass communications. As the company modernises, so does this technological infrastructure. 6.1 Logistics Networks India does not maintain superior supply chain infrastructures in terms of road transportation due to slow urbanisation efforts. However, India’s proximity to a wide variety of water transports can offer ship-bound logistics for inventory and stock ordering to occur at a fairly regular pace. 6.2 Analysis The heavy concentration of communications networks will benefit Volare Restaurant India as it will allow for instantaneous communication with Australian headquarters and also establish a branded business presence for mass volumes of Indian citizens. The ability to use the Internet to offer special promotions and incentives will also help to let citizens view the menu in the virtual environment and the many benefits of dining with Volare. The lack of ground infrastructure, however, would pose a potential problem for Volare India as the procurement of local raw food products could be slowed dramatically. Buying local, due to exchange rates, makes good business sense. This could represent a cost issue by having to have a significant amount of food items delivered by ship to meet supply chain needs. 7.0 SWOT Analysis The following sections represent the strengths, weaknesses, opportunities and threats to Volare India. 7.1 Strengths Volare Restaurants has won many awards for fine Italian dining (volarerestaurants.com, 2004). This can be advertised effectively to illustrate the company’s firm commitment to Italian cuisine to local Indian residents. 7.2 Weaknesses The religious practices will require a full redevelopment of the company menu to satisfy the broad eating demands of Indian citizens. This will represent a significant investment into research and development which could be a cost-related risk to the business. 7.3 Opportunities During recruitment and selection processes, the business maintains the ability to establish positive community relationships with many citizens in India. Through creative marketing efforts and hands-on interaction, word-of-mouth about Volare’s commitment to fine dining can spread through the communities in which Volare might thrive. 7.4 Threats There are a large volume of fast-food chains opening in India, representing significant competition in terms of food options for Indian citizens. Competition is the largest threat to stability and long-term profitability. 8.0 Recommendations It is recommended that Volare begin efforts to enter the Indian market by June 2009 while economic conditions favour the expansion. Menu redevelopment should begin immediately and have this reviewed by a sampling of 50-100 random Indian citizens to determine whether it would be a quality fit for this market. Additionally, market research into how competitors position their businesses for Indian citizens should be conducted immediately to identify any potential methods to gain competitive advantage prior to market entry. Despite any potential conflicts with entry strategy, Volare maintains the resources and management know-how to create a successful Indian version of Volare Restaurants. 9.0 References Accessdemocracy.org. (2007). ‘Republic of India’. Current political and legal overview. http://www.accessdemocracy.org/files/1848_polpart_moneyinpolitics_010105_69_94.pdf (accessed March 9, 2009). Basu, Kaushik. (2006). ‘Why India’s labour laws are a problem’. BBC News. http://news.bbc.co.uk/2/hi/south_asia/4984256.stm. (accessed March 11, 2009). Duecy, Erica. (2006). ‘Western Indian Cuisine’, Nation’s Restaurant News, 40(13): 60-63. http://www.proquest.com. (accesssed March 10, 2009). EIU Viewswire. (2009). ‘India economy: The government releases growth estimates’. New York, March 9. http://www.proquest.com. (accessed March 10, 2009). Krannich, R. and Krannich, C.R. (2000). The Treasures and Pleasures of India: Best of the Best. Manassas Park, Impact Publications. Kurtz, David. (2006). Contemporary Marketing, 12th ed. Thomson South-Western: 336. Mathis, R. and Jackson, J. (2005). Human Resource Management, 10th ed. Australia, Thomson South-Western: 582. Prewitt, Milford. (2008). ‘Opportunities for growth heat up in India’s rapidly rising economy’, Nation’s Restaurant News, New York. 42(3): 1-4. http://www.proquest.com. (accessed March 9, 2009). Rangaswami, Anant. (2008). ‘Booming market faces crunch time over talent’. Campaign, March 28, 17. http://www.proquest.com. (accessed March 10, 2009). Schroder, Michael. (2004). ‘Regulatory Rules Stifle Business In Poor Countries; Nations that Lower Burden On Entrepreneurs May See Economic Gains, Study Says’, Wall Street Journal, New York, NY. Sep 8, 17. http://www.proquest.com. (accessed March 10, 2009). Volarerestaurants.com. (2004). ‘Authentic classic Italian’. http://www.volarerestaurant.com.au. (accessed 9 Mar 2009). x-rates.com. (2009). ‘Indian Rupees to 1 AUD’. http://www.xrates.com/d/INR/USD/graph120.html. 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