Opportunities and Threats by Using Porter Five Forces - Essay Example

A. Case Jumbo Seafood is a seafood restaurant that is upscale and located in Singapore. Established in 1987, the restaurant has grown to a chain of 9 restaurants, including two in Japan. Since this time, they have won numerous awards, including awards for being the most popular seafood restaurant in Singapore, and awards for being in the top 10 most popular restaurants in Singapore. This situational audit will analyzed the strengths, weaknesses, opportunities and threats by using Porter’s Five Forces and a PEST analysis by using information about the company that has been accumulated and is available on the Internet. Enough information is available to develop a three year strategic plan for the restaurant chain. B. Vision Statement (Proposed) Our vision is to become a destination for Singapore tourists hungry for delicious seafood in an upscale atmosphere. C. Mission Statement (Proposed) Our mission is to provide the best quality seafood to our customers, with top notch service and leaving no stone unturned in making sure that our customers have the best experience possible while dining in our restaurant. At the same time, we want to make sure that the seafood that is brought to the table is ethically farmed and/or wild caught, and we will strive to ensure that we only serve seafood products that are not captured in polluted waters. We strive to be a friend to the community, which means doing our part of for the environment while striving to provide the top-quality seafood and service that our guests demand and deserve. D. External Audit a. Opportunities i. Singapore is becoming known for their food regulations, which not only helps Singapore become one of the leaders in food exportation, but also helps tourists and locals to know that the food served in the restaurants is safe (Stringent Food Regulation Fuel Singapore Growth). ii. Tourism is a huge industry in Singapore, and, in 2010, over 11,000,000 tourists came to Singapore, which is twice the population of Singapore. This represented growth of over 20% from the previous year (Singapore Tourism Board). iii. The city of Singapore has recently completed 9 new major tourist developments, with 5 more major developments to be completed. (Singapore Tourism Board) iv. The downtown mass rapid transit line will have its first stage completed in 2013 (Mun, 2008). v. The fact that tourism has spiked so much in one year is a sign that the recession in Singapore might be abating. vi. The key indicators in the Singapore restaurant industry all increased between the years 2008 and 2009, with the operating surplus increasing 4.3% between those two years (Economic Surveys Series). vii. Rapidly increasing Singapore local population. viii. The median income for Singaporeans increased in 2010 by 4.2% over the year before (Department of Statistics Singapore). ix. Discretionary income of Singaporeans is high due to government’s discouragement of spending money on big ticket items such as houses and cars, which means more money to spend on entertainment (Business Strategies International). x. Singapore has one of the strongest economies in Asia, boasting the third highest per capita income in Asia, behind Japan and Hong Kong (Business Strategies International). b. Threats i. More competitors in the Singapore restaurant scene means slimmer profit margins and staffing shortages (Wong, 2007). ii. The Japanese tsunami and the nuclear meltdown might lead to the perception of polluted waters (Japan Earthquake/Tsunami Update). iii. The lingering global recession means fewer dollars in the hands of Singapore locals and fewer discretionary dollars from tourists (Wong-Anan, 2010). iv. The Singapore restaurant industry is highly competitive (Wong, 2007). v. The Gulf of Thailand has been overfished, resulting in undersized fish and a decreasing volume of commercially important fish, which has threatened Gulf fisheries (Ahmed et al., 2007). vi. At the same time, individual fishing vessels have seen falling profits, which means that the fishing industry in the Gulf might not continue to be economically viable (Ahmed et al., 2007). vii. Volatile oil prices may result in increased transportation costs (Maritime Administration, U.S. Department of Transportation). viii. Pervasive governmental regulations may stifle growth (Business Strategies International). ix. There is a growing obesity epidemic, so eating rich food may fall out of favor (Foo & Yarbrough, 2009). x. The Japanese tsunami may decrease tourism due to the perception of aftershocks and the possibility that the same thing might occur in Singapore (Four Aftershocks Hit Japan). CPM – Competitive Profile Matrix Critical Success Factors Jumbo Seafood Long Beach Seafood Weight Ranking Weighted Score Ranking Weighted Score Ability to Capitalize on Tourism .2 3 .6 3 .6 Winning Awards .05 2 .1 2 .1 Advertising Campaign .15 2 .3 2 .3 Quality of Food .3 3 .9 2 .6 Perception of Food Quality .2 3 .6 2 .6 Being Environmentally Friendly .1 2 .2 2 .2 Totals 2.7 2.4 External Factor Matrix Key External Factors Weight Rating Weighted Score Opportunities Singapore is becoming known for their food regulations, which not only helps Singapore become one of the leaders in food exportation, but also helps tourists and locals to know that the food served in the restaurants is safe. .01 3 .03 Tourism is a huge industry in Singapore, and, in 2010, over 11,000,000 tourists came to Singapore, which is twice the population of Singapore. This represented growth of over 20% from the previous year. .10 3 .3 The city of Singapore has recently completed 9 new major tourist developments, with 5 more major developments to be completed. .02 3 .06 The downtown mass rapid transit line will have its first stage completed in 2013. .02 4 .08 The fact that tourism has spiked so much in one year is a sign that the recession in Singapore might be abating. .10 3 .3 The key indicators in the Singapore restaurant industry all increased between the years 2008 and 2009, with the operating surplus increasing 4.3% between those two years. .10 3 .3 Rapidly increasing Singapore local population. .03 3 .09 Discretionary income of Singaporeans is high due to government’s discouragement of spending money on big ticket items such as houses and cars, which means more money to spend on entertainment. .05 3 .15 Singapore has one of the strongest economies in Asia, boasting the third highest per capita income in Asia, behind Japan and Hong Kong. .02 4 .08 Threats More competitors in the Singapore restaurant scene means slimmer profit margins and staffing shortages. .10 3 .3 The Japanese tsunami and the nuclear meltdown might lead to the perception of polluted waters. .02 2 .04 The lingering global recession means fewer dollars in the hands of Singapore locals and fewer discretionary dollars from tourists. .03 2 .06 The Singapore restaurant industry is highly competitive. .10 3 .30 The Gulf of Thailand has been overfished, resulting in undersized fish and a decreasing volume of commercially important fish, which has threatened Gulf fisheries. .04 2 .08 Volatile oil prices may result in increased transportation costs. .10 3 .3 Pervasive governmental regulations may stifle growth. .10 3 .3 There is a growing obesity epidemic, so eating rich food may fall out of favor. .01 4 .04 The Japanese tsunami may decrease tourism due to the perception of aftershocks and the possibility that the same thing might occur in Singapore. .05 2 .1 Total 1.0 53 2.91 E. Internal Audit a. Strengths i. The fact that there are nine stores shows positive growth. ii. On Tripadvisor.com, the restaurant got a rating of 3.5 stars out of 5, which ranks it #48 out of 1,614 restaurants (Tripadvisor.com). iii. The restaurant is famous for their Chilli Crab (jumboseafood.com). iv. The restaurant has won a number of accolades, with recent awards being the fact that they were selected one of the top five winners in the Gourmet Choice award, the Top 50 restaurants award, and Top Restaurants of 2008 award (jumboseafood.com). v. The restaurant has started a Mystery Diner program, in which a Mystery Diner dines in the different stores to report the results to management, which enables the restaurant to make adjustments according to what is reported (jumboseafood.com). vi. Jumbo Seafood has recently begun managing a Japanese Ramen concept restaurant, which shows diversification of the brand (jumboseafood.com). vii. Jumbo Seafood also has a catering service, which will provide an additional income stream to the business (jumboseafood.com). viii. Jumbo Seafood is also a standout in Singapore restaurants, as it is one of only 6 restaurants that serve live seafood (jumboseafood.com). ix. On Tripadvisor.com, 81% of reviewers recommended the restaurant (tripadvisor.com). x. There are 125 hotels in the vicinity of the East Coast Seafood Centre, which is where the main restaurant is located (booking.com). b. Weaknesses i. The website leaves much to be desired. For instance, there is not a menu on the website, so there is no indication of prices. Many people may not go to the restaurant if they do not have any idea beforehand how much the dishes will cost them. ii. There is no attempt to cater to individuals who might be on a diet, or at least on the website there is no indication that there might be diet-friendly dishes. iii. The major accolades, such as the Excellent Service Award, The Most Popular Seafood Restaurant Award, and the 10 Most Popular Seafood Restaurant Award are outdated, Jumbo having won these awards in the early 2000s, which would lead people to believe that the best days are behind it. iv. Jumbo has not tried to address the issue of the environment and overfishing by indicating that they try to ethically catch seafood. v. Many of the reviews on Tripadvisor.com were not friendly, as a number of people have complained about the restaurant being too crowded, the service is bad, and several customers have complained that the food standard is poor as well. vi. The Jumbo Rewards are not great deals. vii. The website’s individual pages are slow-loading, so, for instance, if you want to click on the featured dishes one by one it takes a long time for each dish to load up, which is frustrating and would make someone not want to look at each featured dish. viii. There is no information about the chefs on the website, so individuals who read the website will not know what awards their chefs have won, or if the chefs have won any awards. ix. It is unclear from looking at the website what the targeted segments are for this restaurant, which is again because it does not have a menu with pricing, and there is no picture of the interior of the restaurant, so it is impossible to tell what kind of restaurant this is – upscale, casual, upscale-casual, etc. x. The website also has obvious misspellings, which leads to the perception of carelessness that might extend to the restaurant itself. Key Internal Factors Weight Rating Weighted Score Strengths The fact that there are nine stores shows positive growth. On Tripadvisor.com, the restaurant got a rating of 3.5 stars out of 5, which ranks it #48 out of 1,614 restaurants. The restaurant is famous for their Chilli Crab. The restaurant has won a number of accolades, with recent awards being the fact that they were selected one of the top five winners in the Gourmet Choice award, the Top 50 restaurants award, and Top Restaurants of 2008 award. The restaurant has started a Mystery Diner program, in which a Mystery Diner dines in the different stores to report the results to management, which enables the restaurant to make adjustments according to what is reported. Jumbo Seafood has recently begun managing a Japanese Ramen concept restaurant, which shows diversification of the brand. Jumbo Seafood also has a catering service, which will provide an additional income stream to the business. Jumbo Seafood is also a standout in Singapore restaurants, as it is one of only 6 restaurants that serve live seafood. On Tripadvisor.com, 81% of reviewers recommended the restaurant. There are 125 hotels in the vicinity of the East Coast Seafood Centre, which is where the main restaurant is located. Weaknesses The website leaves much to be desired. For instance, there is not a menu on the website, so there is no indication of prices. Many people may not go to the restaurant if they do not have any idea beforehand how much the dishes will cost them. There is no attempt to cater to individuals who might be on a diet, or at least on the website there is no indication that there might be diet-friendly dishes. The major accolades, such as the Excellent Service Award, The Most Popular Seafood Restaurant Award, and the 10 Most Popular Seafood Restaurant Award are outdated, Jumbo having won these awards in the early 2000s, which would lead people to believe that the best days are behind it. Jumbo has not tried to address the issue of the environment and overfishing by indicating that they try to ethically catch seafood. Many of the reviews on Tripadvisor.com were not friendly, as a number of people have complained about the restaurant being too crowded, the service is bad, and several customers have complained that the food standard is poor as well. The Jumbo Rewards are not great deals. The website’s individual pages are slow-loading, so, for instance, if you want to click on the featured dishes one by one it takes a long time for each dish to load up, which is frustrating and would make someone not want to look at each featured dish. There is no information about the chefs on the website, so individuals who read the website will not know what awards their chefs have won, or if the chefs have won any awards. It is unclear from looking at the website what the targeted segments are for this restaurant, which is again because it does not have a menu with pricing, and there is no picture of the interior of the restaurant, so it is impossible to tell what kind of restaurant this is – upscale, casual, upscale-casual, etc. The website also has obvious misspellings, which leads to the perception of carelessness that might extend to the restaurant itself. .05 .02 .1 .02 .02 .03 .02 .04 .05 .07 .1 .05 .15 .02 .02 .01 .02 .07 .1 .04 3 3 4 2 2 2 2 3 3 3 4 3 4 2 3 3 3 4 4 2 .15 .06 .4 .04 .04 .06 .04 .12 .15 .21 .4 .15 .60 .04 .06 .03 .06 .28 .4 .08 Total 1.0 3.37 F. SWOT Matrix Strengths Weaknesses The fact that there are nine stores shows positive growth. On Tripadvisor.com, the restaurant got a rating of 3.5 stars out of 5, which ranks it #48 out of 1,614 restaurants. The restaurant is famous for their Chilli Crab. The restaurant has won a number of accolades, with recent awards being the fact that they were selected one of the top five winners in the Gourmet Choice award, the Top 50 restaurants award, and Top Restaurants of 2008 award. The restaurant has started a Mystery Diner program, in which a Mystery Diner dines in the different stores to report the results to management, which enables the restaurant to make adjustments according to what is reported. Jumbo Seafood has recently begun managing a Japanese Ramen concept restaurant, which shows diversification of the brand. Jumbo Seafood also has a catering service, which will provide an additional income stream to the business. Jumbo Seafood is also a standout in Singapore restaurants, as it is one of only 6 restaurants that serve live seafood. On Tripadvisor.com, 81% of reviewers recommended the restaurant. There are 125 hotels in the vicinity of the East Coast Seafood Centre, which is where the main restaurant is located. There is no attempt to cater to individuals who might be on a diet, or at least on the website there is no indication that there might be diet-friendly dishes. The major accolades, such as the Excellent Service Award, The Most Popular Seafood Restaurant Award, and the 10 Most Popular Seafood Restaurant Award are outdated, Jumbo having won these awards in the early 2000s, which would lead people to believe that the best days are behind it. Jumbo has not tried to address the issue of the environment and overfishing by indicating that they try to ethically catch seafood. Many of the reviews on Tripadvisor.com were not friendly, as a number of people have complained about the restaurant being too crowded, the service is bad, and several customers have complained that the food standard is poor as well. The Jumbo Rewards are not great deals. The website’s individual pages are slow-loading, so, for instance, if you want to click on the featured dishes one by one it takes a long time for each dish to load up, which is frustrating and would make someone not want to look at each featured dish. There is no information about the chefs on the website, so individuals who read the website will not know what awards their chefs have won, or if the chefs have won any awards. It is unclear from looking at the website what the targeted segments are for this restaurant, which is again because it does not have a menu with pricing, and there is no picture of the interior of the restaurant, so it is impossible to tell what kind of restaurant this is – upscale, casual, upscale-casual, etc. The website also has obvious misspellings, which leads to the perception of carelessness that might extend to the restaurant itself. Opportunities S-O Strategies W-O Strategies Singapore is becoming known for their food regulations, which not only helps Singapore become one of the leaders in food exportation, but also helps tourists and locals to know that the food served in the restaurants is safe. Tourism is a huge industry in Singapore, and, in 2010, over 11,000,000 tourists came to Singapore, which is twice the population of Singapore. This represented growth of over 20% from the previous year. The city of Singapore has recently completed 9 new major tourist developments, with 5 more major developments to be completed. The downtown mass rapid transit line will have its first stage completed in 2013. The fact that tourism has spiked so much in one year is a sign that the recession in Singapore might be abating. The key indicators in the Singapore restaurant industry all increased between the years 2008 and 2009, with the operating surplus increasing 4.3% between those two years. Rapidly increasing Singapore local population. The median income for Singaporeans increased in 2010 by 4.2% over the year before. Discretionary income of Singaporeans is high due to government’s discouragement of spending money on big ticket items such as houses and cars, which means more money to spend on entertainment. Singapore has one of the strongest economies in Asia, boasting the third highest per capita income in Asia, behind Japan and Hong Kong. Increase the Jumbo Reward deals that reward repeat business. While the Jumbo Dollars is a good program, it could be made even better by giving better incentives, such as offering a free Chilli Crab dinner with every $100 in Jumbo Dollars redeemed. Jumbo needs to advertise heavily in the upscale hotels that are located around the restaurants. This would involve flyers, a possible shuttle service to the restaurant, and cards placed in each room. For new locations, Jumbo should concentrate on locations that are around the new tourist destinations and on the mass rapid transit lines, so that tourists from all over the city can easily get to the restaurants. Jumbo needs to concentrate on getting the awards that they used to get, including the Top Seafood Restaurant award, and the Excellent Service Award. This would involve finding out why they are no longer getting these awards, and rectifying these problems within one year. Improve the speed of the website, so that the pages load quicker. Improve the look of the website, so that there is more information about the different dishes that are offered. On second look, there is a menu for the items. However, I missed this menu the first few times I looked at the site, so the menu must be displayed more prominently. Jumbo needs to attract award-winning chefs. Because they charge enormously high prices, people will only be attracted to their restaurant if their accolades for their chefs are equal to the prices they charge. And, if they attract award-winning chefs, they need to display prominently the awards that their chefs have won on the website and all their other advertisements. Jumbo needs to really utilize its mystery diner program, so that the problems that are occurring can be pinpointed and worked out on a timely basis. Jumbo should attempt to get their chefs on popular programs, like the “Iron Chef” program, where top chefs compete against the Iron Chef for the prize of having the top dishes. Jumbo should make sure that the service in its restaurant is impeccable. To this end, they should search the world for the best wait staff, pay the staff handsomely, make sure that the staff is properly trained with their etiquette, and get feedback from guests about their dining experience. Also, their waiters should not have too many tables to wait on, so that each waiter gives the best service possible to each guest. Threats S-T Strategies W-T Strategies More competitors in the Singapore restaurant scene means slimmer profit margins and staffing shortages. The Japanese tsunami and the nuclear meltdown might lead to the perception of polluted waters. The lingering global recession means fewer dollars in the hands of Singapore locals and fewer discretionary dollars from tourists. The Singapore restaurant industry is highly competitive. The Gulf of Thailand has been overfished, resulting in undersized fish and a decreasing volume of commercially important fish, which has threatened Gulf fisheries. At the same time, individual fishing vessels have seen falling profits, which means that the fishing industry in the Gulf might not continue to be economically viable. Volatile oil prices may result in increased transportation costs. Pervasive governmental regulations may stifle growth. There is a growing obesity epidemic, so eating rich food may fall out of favor. The Japanese tsunami may decrease tourism due to the perception of aftershocks and the possibility that the same thing might occur in Singapore. Jumbo should place advertisements in local papers, magazines and websites that are editorials, opinions and blogs. These editorials, opinions and blogs should focus on the safety of the seafood industry, the benefits of ethical fishing, reassurances about the nuclear fallout from Japan, the fact that Singapore has tight regulations on food quality, and the like so that people will feel comfortable dining out in general, and dining out on seafood in particular. Jumbo needs to ensure that they fish they get are ethically farmed or caught, from waters that have low pollution levels, and that their fish are not on an endangered species list. Then Jumbo needs to advertise this fact on their website, to show that they are ethically and socially responsible in catching their seafood. Jumbo should offer a number of lower calorie, lower fat and lower carb options, with an indication on the menu what the calories, fat and carb content is for these dishes. Jumbo should use their Japanese Ramen concept restaurants to advertise the Jumbo brand, and use these restaurants as diversification, attracting people who may not be able to afford to go to Jumbo. Jumbo needs to show solidarity with Japan, and donate a certain percentage of its earnings to the Japanese relief effort, as well as holding fund raising dinners to aid in the effort. They also need to make sure that this aid is prominently advertised in their website and other advertisements. Sources Used Ahmed, M., Boonchuwongse, P., Dechboon, W. & Squires, D. 2007. “Overfishing in the Gulf of Thailand: Policy challenges and bioeconomic analysis,” Environment and Development Economics, vol. 12, pp. 145-172. 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