PART I. COMPETITIVE ADVANTAGE
The key to long term financial performance is a sustainable competitive advantage. Over time, all advantages erode due to competitive forces, but by building high and thick wall of competition, the businesses can sustain their advantage.
Porter’s Five Forces analysis will help to dig out the power sources of the Cafe. It will help us to understand the strength of our current competitive position and evaluate the future position. It will help to think outside-in for creating value. The potential of the business will be determined by this tool. It will provide a blueprint for planning process. After analyzing these forces, it will be possible for the cafe to plan about future perspective to strengthen the Cafe in the area.
Place New Order
Since The Broadway Cafe has been in business since 1952 and has never had a single competitor in the neighborhood, buyer power is low. However this may change as Starbucks is going to open a store few blocks away. The steady decline of the Cafe in the past five years is also an alarming situation. The cafe needs to deploy transformational effort on different promotional programs to rehabilitate its position. These programs may vary in form but all of them will require the company to use IT.
The possible advantages for customers from loyalty program are:
- Easy reservation with preferred seats;
- Special promotional offers;
- Feeling of ownership of the cafe;
- Customized products
- Less effort to decide and order i-e less decision cost.
- Personalized treatment with desired presentation of ordered products.
- Desired environment.
- The research has proven that loyalty member clients return more often than non-members. They also spend much more money than non-members and they are less likely to switch to the competition. The Broadway Cafe needs to evaluate providers that handle the processing of loyalty programs as well as the best plastic card products and choose the best solution in order to implement the program.(1)
Although from the case we don’t know much about Cafe’s supply chain, with the use of IT, firm can definitely reduce supply power. One of the possibilities is to use a business-to-business marketplace and a private exchange by which Cafe can be offered better prices. The cafe can choose one of the following ways to influence its suppliers.
- Broadway Cafe can choose to get supplies from many small suppliers instead of one or a few large ones.
- The cafe can sign long term contracts to dictate its terms to the supplier.
- The Cafe can become its own supplier and go into backward integration to hold its supplies.
Threat of substitute products or services
Broadway cafe offers different kinds of specialized coffee, teas, a full service bakery, and homemade sandwiches, soups, and salads. As the cafe is providing a wide mix of products, the threat of substitutes is low. The customer may choose to go to a fast food restaurant. But it may be an indirect substitute to spend leisure time.
Threat of new entrants
- The threat of new entrants is very high. Broadway Cafe is operating in an area where there is not other cafe. Attracted by the success of the Broadway Cafe, other cafes may opt to operate in this area. International coffee shop i-e Starbucks is deciding to cater this area.
- Dealing with an international player is no doubt challenging. But the local and indigenous Broadway cafe can thicken the wall of competition around it to make it difficult for the competitors to enter and compete it. The Cafe should strengthen its ties with the local customers to develop their loyalty with their Cafe. The customer’s taste for the baked goods and soups from family recipes should be developed. In this way, it will be hard for the competitor to pull the customers in spite of its international spell. The cafe needs to focus on developing its unique products and promoting them as brands. The public awareness of the special offers of the Cafe will help the business to strengthen its present position and pave ways for future expansion.
Rivalry among existing competition
Currently there is no competitor of Broadway Cafe in the area. Due to this reason rivalry among existing competition is low. The barrier for new entrants is low. The entry barrier is about 60 years of experience of the Cafe and affiliation of customers to the brands because of its unique products. But this barrier is weakening since last five years.
Porter’s generic strategy
I will use Differentiation strategy to rebuild the Broadway Cafe for 21st century. The cafe is encouraged to promote its differentiated recipes and develop the taste of its customers for its unique product offers. This strategy will prove beneficial to minimize the effect of negative forces. Customer loyalty and commitment will discourage potential entrants to enter in this business. If the cafe will deliver uniqueness then it will be difficult for the customers to switch to competitors and the customer’s power will be decreased. Strength due to differentiation will prove the strength to dictate terms to the suppliers. The threat of substitutes will be lowered when customers will become attached with the Cafe’s products and their taste will be developed. Cafe loyalty will make the rival’s offers less appealing for the loyal customers.
PART II. E-BUSINESS
E-business is conducting a business on the Internet, which is an attractive solution for Broadway Cafe in many ways..
- First, it is the best way to promote new and already existing products of the cafe.
- Second, advertising is inexpensive and can take on many different forms.
- Third, it is crucial for increasing revenues as it will enable the Broadway cafe to keep data records, enhance customer relationships, and operate efficiently.
- Virtual Tours will make clients more confident and will support their decision about selecting firm’s products. Viral marketing will be the best option to approach the community and create awareness of the product. Social net networking sites like facebook will be used for this purpose. The brand awareness will be created in target community and the effect of viral marketing will be multiplied and distributed quickly.
- Wireless coupons will increase the customer in take.
- Memberships offered to the customers will build a bond of commitment and association between the customer and the Cafe.
In relation to the e-business strategy at Broadway Cafe, the following points will be covered.
- A website of the Broadway cafe will be developed. The website will be community-centered. An e-business strategy will help the Cafe to attract and retain customers by customer satisfaction through seamless promotional activities. As my grandfather had terrific memory and knew all of the customers by name. But this is not possible in the 21st century. When there will be a log-in for the customers, they will be feel ownership of the business and it will be easy for the Cafe to store their personal statistics to deliver them customized offers. It is not possible for the Cafe to operate the same way as it did in 1952. It has to move along the time and shift to the electronic age. As it is also not possible to rely on the word-of-mouth to promote the Cafe, an e-business strategy will help to promote it.
Electronic Inventory management needs to be introduced not only to enhance efficiency but also to develop a database of the cafe’s sales etc. Manual inventory tracking is not only time-consuming and cumbersome but also not up to the mark. The family recipes will be stored electronically to save them. Electronic order processing will make the Cafe’s operations swift.
- The website will provide information like Customer log-in, Customer feedback, Customer Service, cafe information, Product range, Search, Marketing campaigns, store events,
- I would develop such a website where I can track the metrics like time spent on the Cafe’s website, number of hits, total purchase, and customer ID. Keeping track of this information will be beneficial in many ways. Firstly, it will help to find out what the customers are looking for. Secondly, it will be help to find out most valuable customers by their purchases. Lastly, it will help to communicate with customers focusing on their interest. It will be possible for me to measure the success of my website by analyzing these metrics.
- An e-business strategy can help to partner with the suppliers by automatic inventory tracking system. Coherence between the cafe and its suppliers will be established when there will be an electronically maintained system to record orders of the customers and supplier will be able to track tat information. The supplier will come to know that what is demanded when and he will make the on-time delivery possible.
- Employees are an important asset of every business. Broadway cafe will be able to keep record of its employees by providing portal for them. Their performance, pay, timings, incentives etc will be communicated through their portal service. Retaining employees is as important as retaining customers. It not only saves cost in hiring but also builds brand name by continuously providing better quality. Work history will help the Cafe retain its employees.
- Yes, I will use Kiosks in the cafe. Kiosks will help to build the brand of the Cafe as well as to save money. Fewer employees will be needed when services like product information, order placement and payment of bill will be provided by kiosks. It will make the cafe efficient and bring it in line against the modern cafes.
PART III. NETWORKS, TELECOMMUNICATIONS, AND WIRELESS COMPUTING
Coupons are used for inducing customers to buy the product of the retailer for the first time, converting those first time users into regular customers, encouraging large purchases, increasing usage and protecting market share against competitors (Levy & Weitz 2007, p. 416).
Sending a coupon on mobile is better than just sending an SMS about your product. According to a survey conducted on the attractiveness of m-coupons for smart phone users, only 15% of the users were interested in only the ads through SMS while the other 85% were interested in m-coupons. The reason is the convenience these m-coupons offer. You don’t need to remember to carry something extra while going to the retailer. There is no fear of forgetting your coupon at home.
Mike Romano, executive vice president of SmartReply suggests to find out those customers who have not been in your store lately and choose them to send m-coupons to attract them. Howard Wilcox, the author of the Mobile Coupons report said that m-coupons are better because they can be tailored according to the taste and purchase patterns of various segments of customers. M-coupons can help to intelligently leverage the potential spending of the customers. M-coupons will prove to be a win-win approach for Broadway cafe to attract its customers innovatively. No doubt, mobiles are ready to replace the conventional wallet. According to Juniper research estimates, consumer usage of mobile coupons is expected to generate upwards of $6 billion globally in retail redemption value by year 2014.
The costs which our Cafe will have to bear to promote its offers through m-coupons will be much lower than traditional ways of promotion and the redemption rates will be high due to convenience. The traditional coupon process is not only time consuming but also convoluted. M- coupons have an advantage over the web coupons too. The customers have to download those coupons from the Web and then bring paper scraps of those coupons while shopping. M-coupons offered by Broadway cafe will deliver the offer right in the palms of our customers. Another benefits of M-coupons is that these are ethically feasible because no trees of forests have to be cut to prepare those coupons. These are electronic coupons and are green. Economic saving effect coupled with green effect enhances the acceptability of m-coupons (Romeo).
Mobile marketing is not free from potential risks. According to a report, m-marketing may become “an intrusive practice if it invades the personal spheres of the receivers without the previous consent” (Cleff, 2007). The application of mobile communication technologies collects personal data beyond requirement which creates risks to individual’s privacy. So, the issue of the level and the type of consent required to collect personal data is unresolved. Sending unsolicited messages is also an open issue.
When a record of the redemption rate and the customers who redeemed will kept, it will offer the cafe an opportunity to maintain a data of those customers. They can later be communicated regarding any new offers. The response of customers to the m-coupons and their experience with the cafe will help to design future strategies for the cafe. If an m-coupon is forwarded to another mobile, the cafe will be promoted to others as well.
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PART IV. CUSTOMER RELATIONSHIP MANAGEMENT
Communication is highly important to sustain in today’s competitive business world. A communication program designed by Broadway cafe will help it in building its brand image in the minds of its customers, increasing sales and store’s traffic and providing information about the cafe’s location, offerings and special activities.
With the progress of internet, new ways to communicate with your customers have come on the scene. YouTube is one of those innovative ways of communicating with your customers. As my cafe is facing some operational issues, I would communicate with my customers to ensure them that our cafe is well aware of those issues and is committed to resolving them as soon as possible. I would like to convey my concern for my customers and the way I am coping with it to facilitate them.
No doubt, YouTube is a highly effective tool to communicate with mass customers; it might not be much effective in my business. As, Broadway cafe is not catering the mass customers and its not a global or even country wide business, I will not be able to reach my target customers. So, the inappropriate target market is the basic flaw with the YouTube. At the same time its efficient and free way too. I would supplement YouTube communication with in-store communication for the success of my cafe.
As a customer communication vehicle, facebook is also a highly effective tool. I will make a facebook page dedicated to the customers of Broadway cafe. The page will be personalized keeping in mind the philosophy of my business. All the updates related to the cafe will be conveyed to the customers through that page. The customers will feel a membership and belongingness to the cafe and will listen and respond to us along with sharing their experiences. Customer complaints will be listened and an action will be taken accordingly to rectify those loop holes.
PART V. SYSTEMS DEVELOPMENT
As an SME, Broadway Cafe has reached in its growth. Keeping in pace with other initiatives I have taken for the success of my cafe and as a very basic step towards adopting ERP (Enterprise Resource planning), I want to bring in an automated employees tracking system at my cafe. Time and attendance software will help to ensure that I have the right employees, at the right time, in the right place at my cafe. An automated employee tracking system will help me track employees’ attendance, absenteeism, pay roll, and schedule etc. It will enable me to analyze the operational inefficiencies and rectify them before the situation get out of control. With the spread of technology, I can afford to have software at my cafe.
Nick Zele is a highly technical employee of my cafe. He has offered me to develop a custom system for me. As an alternative I can opt to get my system customized by an outsourcing firm. Keeping in view the possible pros and cons of both the alternatives, I have decided to outsource the development of a system with COTS applications customized according to the needs of my business.
If I would have chosen to get my system developed by Mr. Nick Zele, I will have to share important information of my business with him. Sharing important business information with an employee can backfire and prove to be fatal. I will be overly dependent upon one employee and if he leaves the cafe, it will prove to be disaster for my business. On the other hand, if I had opted to get the system developed by my employee, I would have a chance to communicate more closely. My employee, having an experience with the issues faced by our cafe and the solutions, would have developed a better customized solution.
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In contrast, the outsourcing firm will have amore dynamic picture of my business and will not prove to be a potential threat for my business. There might occur some problems in customization because that firm does not exactly know what I want in my system. The successful development of the system will depend upon the uninterrupted communication with the outsourcing company.
My older employees will feel difficulties in cooping up with the changes system. It will be difficult to manage with the new system because now the record of their attendance, absenteeism, performance, salaries and timings etc will be kept in software rather than on a manual register.
Change is hardly acceptable in the beginning. People take time to understand the change and modify their behavior accordingly. Having an understanding of the problems faced by my older employees due to this change, I will plan to lessen their anxiety. I will provide them sufficient time to understand the new process. They will be given a general relaxation during the probation period of my new system. Once everything will be in order and all the processes will be clear to them, they will automatically get used to with this new system.
Once the system will be properly adopted in my cafe, it will ensure me that there will no over or understaffing in the cafe. The labor expenses i-e the largest expense of Broadway Cafe will be controlled and minimized through this change. It will directly impact the sales of the cafe to rise substantially.