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Porter’s Five Forces Analysis:
1. Buyer Power: High
There are a lot of competitors on this type of industry such as McDonald’s, Tim Hortons, and Starbucks to name a few and since Halifax only has around 500,000 people; this makes it hard to have more people come at Broadway Cafe because there are one too many choices to make. One thing to consider is that Broadway Cafe has been declining for the past five years and that’s what made the buyer power even higher.
To reduce this, Broadway Cafe should have some sort of strategy. Customer Relationship Management or CRM should be their main focus so that they would keep the customers they already have and hopefully generate new customers. Loyalty programs are very essential in this and combine it with excellent customer service and high quality products. In relation to switching costs, they must be kept high so that customers are discouraged to switch to a competitor.
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This goes back to CRM and product differentiation and as well as maintaining that low-cost pricing.
5. Rivalry among existing customers: High
Ever notice that whenever McDonald’s or Tim Hortons produce a new product, the other competitors also follow? That simply implies that there is definitely a tough competition out there for Cafes. Not only that, it’s not just Cafe shops Broadway Cafe has to be worried about, think about gas stations and other restaurants (such as Steak and Stein) that offer the same products.
The key here is to be on top of everything. It may be difficult, but it is definitely worth it. It requires to have innovative employees. It also carries risk because there’s no guarantee that the customer would embrace the innovation. So it is important to look at trends as to how the market evolved when it comes to their coffee, tea, food,
We can offer coffee samples to customers and ask them to share their opinions about our products. We can have our customers evaluate what products they like the most and which ones need improvement. For example, we can get our customers trust and loyalty by offering them a rewards program. Which would offer them a 5% discount on the first five purchases, then after ten purchases they
Therefore, by launching an e-business, Broadway Café will have an opportunity to leverage it current assets, its customers. To follow in this opportunity will be the employees, technology infrastructure, and information to gain and maintain market share.
And the customer are sensitive to the price since those products are using only few times and need to be change all the time.
Developing a loyalty program is challenging. You team must understand what will keep your current customers interested and what will spark them to purchase multiple times.
Reason: Meeting buyers needs will increase demand. Higher demand=potential increase in profit and market share.
Having a low supplier power to begin with brings a high threat of new entrants to the café in that it is easy for the new entrants to come across what they will need to launch a business in this industry. However, it is tough to come into the restaurant industry and at the same time hard to establish a distinct brand name (McDonald, 2010). Large, well established coffee/tea businesses such as Starbucks have well-built brand identities. This being it does make it a lot harder for competitors like the Broadway café to enter and succeed within the industry. Also, “new entrants find that they are faced with price competition from existing chain restaurants (McDonald, 2010)”. But, the Broadway Café will keep its prices “artificially low as a strategy to prevent potential entrants from entering the market,
The Café at Rosemont is located in a sweet and lovely building that will feel like a home away from home. Produce is locally sourced and can be tasted in the dishes. There are also many vegetarian and vegan options as well, making it a great place for everyone to find something tasty to eat. The Café at Rosemont serves breakfast and lunch, with pop-up dinners thrown in there as well.
Starbucks is known for their Frappuccino’s; unfortunately they are on a downward spiral in sales due to competitors such as McDonalds. In 2008 Starbucks admits to its losses due to their competitors. “Company executives now freely admit that such thinking is largely to blame for the woes that led to Tuesday’s announcement that Starbucks will close 600 U.S. stores and eliminate thousands of jobs. The coffee giant’s missteps have come at a spectacularly bad time, hitting as the economic slump deepens and consumers are seeing their discretionary spending eaten up by rising gas prices and grocery bills (Linn).”
Starbucks can follow some strategies to differentiate their product even more that will lead to vary their menu prices. For example, Starbucks might create “saving menu” by selling some products at a lower prices to attract even more customers. Also, Starbucks might take into consideration the strategies of opening “Starbucks carts” that open in smaller express places that don’t fit for a whole store. Those “Starbucks carts” will attract even more customers because it is easier to get access to. “Starbucks carts” may provide the customers with low cost products to draw larger market base. To be a best cost provider in the market will allow Starbucks to be the most attractive company in the coffee market internationally. Thus, Starbucks will have a competitive advantage over its rivals by fulfilling the needs of a huge customer base in the market, by providing a high quality products and provide products with the best costs.
Accounting helps to measure an organizations activities, process data into reports, and translate the results to decision makers. Financial statements and reports help to present the company to the public in financial terms. The information on these data statements can used to evaluate the company through vertical and horizontal analysis. Vertical analysis is the proportional analysis of a financial statement. Normally, vertical analysis is done with a financial statement over a period of time. When using vertical analysis, a line item on a financial statement is listed as a percentage of another item (Harrison, 2015). A horizontal analysis is the comparison of information or ratios over a series of reporting periods. Horizontal analysis helps investors and analysts to control how a company has grown over time. Analysts and investors could use horizontal analysis to compare a company's growth rates in relation to its competitors and industry.
Starbucks’ lead in the specialty coffee industry exemplifies the result of deftly executing a well-planned business strategy. Moreover, Starbucks is well positioned for what is expected to be a continuing rise in the popularity of specialty coffee products. The question before Starbucks’ leadership, however, is what avenues will lead to Starbucks’ goal of remaining true to its core, the highest quality coffee products while providing a “total coffee experience” for its customers?
In conclusion, the Broadway Café faces a strong buying power and rivalry among competitors due to the large volume of shops offering the same products and services. The threat of new substitute products and alternatives is also high for the same reasons for buyer power. The Café also faces the threat of new entrants due to the lack of insignificant entry barriers. One upside is the relatively weak supplier power. The coffee industry is huge as stated above and vendors are more than ample. With this information we can conceive our business focus. The Broadway Café is best suit for a focused differentiation strategy. We plan to achieve
This paper addresses the use of Porter’s Five Forces model and how it can benefit Broadway Cafe by identifying and analyzing the effect of these forces on its business. The benefits include improved decision making, faster time to market, better productivity, improved competitive advantage, more profits and greater customer satisfaction. It also helps in achieving operational excellence.
Many coffee companies are currently in the market, making competition fierce. Although Starbucks has a strong reputation in North America, direct and indirect competitors still pose a threat. To establish market niche, competitors use location,
In terms of competition and the forces, which could limit the success of Starbucks it is important they stay ahead or even with other companies concerning innovative products. Many more micro companies are coming up with new products with a similar quality and a lower price/cost. It is important that Starbucks continues to search for innovative products to continually satisfy their customers. At the same time “rivalry” amongst Starbucks and smaller providers of coffee will continue to increase as the demand for coffee continues. The buyers bargaining power is significant as they can determine the cost, type of product, quantity and ultimately