Questions- This assessment will cover the following questions:
- Critically analyse the internal and external factor that helps in gaining competitive advantage to the organisation.
- What is the role of marketing in a contemporary modern business and how it influences the behaviour of the consumer.
- What are the associated threats and opportunities and the role of business plan to overcome potential threat in the organisation.
This report is based on an idea of starting a cafe. Cafe is meant to provide is like an restaurant in small form. It can also be said that cafe offers small eatery and drinks like tea and coffee. Cafe is also known as coffee shop that provides a more clear idea what cafe is and what it offers. Idea of cafe has been included in this report because of two reasons one is that owner possesses relevant expertise that is professional education in cooking and bakery. Location for cafe has been chosen which has Park in its one side and collage on other side both this element assures that cafe business will be successful. This report includes PESTLE and Competitive analysis and later discuss target market.
Objective behind opening a cafe is that its success will open new ways and enable to open a big business in form of cafe chains which come under business of food chain. There are various factors that requires to be considered while one in thinking to open a business. In context of cafe which need to face strong competition from the starting and need to provide specific elements that can contribute in taking advantage of competition (Rita, and et.al., 2018). Firstly external factors are being analysed for cafe business which are known as PESTLE.
Analysis of External Environment
Political Factor- A cafe business initially possess very less chances of getting affected by political factor. Because this factor includes political ideology and values and perception of ruling party in UK. Food or cafe business do not get affected by any of this and that is why initially owner do not need to consider that. However later when one cafe changes in cafe chains this factor might affect the business.
Economic Factor- Economic factor includes consideration for economic status of people to whom individual is offering its services. In context of cafe price policy have been kept moderating that is affordable and reasonable for everyone and people will not have to think before entering the cafe and price policy also have a space for those who like to sit in high end cafe and restaurants. This way economic factor does not seem to have any negative impact (Lowry, Michaely and Volkova, 2017). Moreover, target audience for the business is young adults and teenagers who are always ready to spend their money at cafe and relevant services.
Social Factor- The only factor that need to be given focus is social factor for a business. This factor includes values and opinion of people and society towards a product and service. In context with cafe business it is important that those who are coming to cafe like taste of food and drinks of the cafe and also the environment of cafe. Considering this factor look of cafe from inside out have been designed which includes sophisticated modern architecture and interior which is supposed to be like by everyone. In relation with food it can be said that initial experiments with food and its taste have been successful. Cafe plan also includes offering diet food and drink products and other food and drinks items will also be prepared considering health factor as most of the people are becoming health conscious and related to social factor in food business this is most important consideration in present day environment.
Technical Factor- Technical factors' does not have any significant impact and basic services like pay from cards and digital payment services have been included in the business plan. Food and drinks will be prepared in traditional way to keep their taste more organic and realistic. Though when it comes to marketing café's marketing plan includes social media and digital media marketing (Adamowicz and ZióÅ‚kowska, 2018). In future up-gradation in technical factors that is concerned with marketing can be adopted by cafe.
Legal Factor- Not having a direct impact on regular business this is one most critical factor to deal with. In legal factor one need to consider business structure and that is single proprietorship, other legal requirements for the business is its registration and license. To acquire license for running the cafe, procedure for food testing has to be completed by cafe and coffee shops. This step is pending and soon will be completed by cafe before its starting.
Environmental Factor - Plan for cafe business includes due consideration on environmental factor. Considering this factor plan has included not to use any kind of material that harms environment and increase pollution. Business plan has also included that material that is required for cooking is also of good quality that avoid all kind of harm on health of customers. Considering environmental factor plan also includes that all the waste of cafe will be recycled (Greene, 2018). This action has two-way impact recycling will reduce cost and also avoid harms that environment can have because of waste.
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After discussing features and impact of external analysis of business next important consideration before starting a business is analysis of competition that cafe may have and how and in what manners cafe can achieve competitive advantage.
Competition and Competitive Advantage
Competition refers to those who are working in same industry providing similar or supplementary products and services. Competition can be simplify in a way that more than one person is involved in a likely business and trying to win in business it means having more customers and more financial benefits by offering something which have more value than those what value is provided by competitors' product.
In relation with cafe industry competition is very strong as it is not something unique or innovative and factors that enable cafe to win and stay ahead in competition is what extra and specific value is provided by the food and drink products of a place and cafe that are different from others.
Competitiveness in cafe industry and present competitive situation of cafe industry is very strong as due to its increasing demand and success (SHTAL and et.al., 2018). There are various cafe have been started and other than national and local coffee shops cafe also have to compete with many international cafe. This clearly shows what kind of competition is being faced by coffee shop industry. From the time cafe enters in market it needs to compete with coffee chains like Starbucks, Costa Coffee etc.
To analyse competition for Cafe five forces model of porter have been used which includes Threats to new entry, Threats of substitute, Bargaining power of suppliers, Bargaining power of buyers and rivalry among existing firms. After analysis, it has been concluded that threats to new entry are higher that created a challenge for starting business, threats of substitute is also strong that is also a big challenge for cafe, when it comes to bargaining power of supplier that is not a big challenges reason being there are various suppliers for the material which is required to run cafe and prepare final products, bargaining power of buyers is also high and propose a difficulty for business as there are many sellers and brand is new so chances of brand loyalty are also not to gain competitive advantage.
Direct-indirect competitors for cafe are all the local cafe and international coffee chains that are there in area where cafe is supposed to get started (Nguyen, 2016). In relation to this cafe a big advantage lies in form of place as where cafe have been proposed to open only one cafe is there in range of 5 kilometres and that is also local competitor. When it comes to indirect competition restaurants and Fast food chains are strong competitors as they are offer food and drink items and fast food chains are also an attraction for the target audience.
Discussing competitors drag attention to a major factor that is competitive advantage. Cafe is new and about to start so it does not have any advantage in form of brand loyalty and goodwill of the business. Advantage for the company lies in what it has to offer and how business communicate their message in most convincing ways (Wei and Davis-Ngatai, 2017). This cafe also have some advantage in its offerings and marketing strategies that are-
Diet food Menu- Looking at increasing number of people who are very conscious about their health and fitness diet food menu have been proposed in business plan. This is a big point and feature for gaining competitive advantage.
Less no. of direct competitors- Direct competitors for the cafe are also very limited in number providing an advantage for the cafe.
Place- Target customer group of the cafe is young adults and its place that is located around collage and Park gives it an advantage to attract its customers towards itself.
All these features of business plan and what are naturally available to cafe can work as its competitive advantage.
Target market of cafe is young adults and teenagers who are more likely to spend their money at cafe. For targeting customers and market STP (Segmentation, Targeting and positioning) strategy have been used. On the basis of this strategy market was firstly segmented on psychographic and demographic basis. This is important as cafe business can serve to only those customers who are in a limited access (El-Sherie and Ghanem, 2016). Psychographic segmentation includes segmentation on the basis of thought, perception and interests. This concluded that teenager and young adults are more likely to spend their time at cafe and middle and old age people are less likely to go to such places and are more likely to go to restaurants. Segmentation was later followed by targeting and number of young adults and teenagers living in and occupying he area where cafe has been proposed to open were higher. This also suggested that cafe should include teenagers and young adults in their target market. All the features and strategies applied suggest that teenagers and young adults should be target audience this not just specify who will be the target market but also justify its selection.
In relation with these it is advisable that cafe should focus on its marketing strategies and that needs to be specific as the aidience is teenagers who are all well aware of all the strategies that are used for marketing and this target market is also used to of different innovative marketing strategies that are applied to them by various companies (Gujral, Rauzela and Chuchu, 2016). In relation with marketing cafe should not only use traditional marketing techniques and social media and digital marketing techniques because teenagers are well aware of all these techniques and these efforts are usually ignored by them. They are need to be convinced by showing brand personality, teenagers these days are very brand conscious and get attracted towards brand and brand personality and for that cafe can use its unique architecture and interior.
Teenagers should be convinced by user generated content that refers to what users think about a particular brand, and they have not yet aware of that. This will convince them to use services of a particular place and cafe. To use customer reviews is must because for this target group this matters.
Social groups should be targeted. Teenagers are most likely to get affected in their group. For instance opinion of one friend is accepted by all the others and social group of teenagers and young adults is most likely to be their friends (Huang and Wood, 2017). They need to be delivered content when they are in group. When targeting teenagers as potential market these strategies are very effective in context of marketing.
This report included various aspects that are required to consider before starting a business. Cafe business that have many competitors direct and indirect. These are required to be dealt tactfully. And as all the businesses come up with their own significance and individuality business that have been proposed in this report have also managed to do so. Cafe in most cases having advantage and only threat is restaurants that might resist those people who are not its target market but are likely to visit cafe for once or twice as experience. Cafe have come up with diet food and drinks that are a big advantage over competition.
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