The owner of the restaurant Woodpecker hired the author as a consultant to solve a business problem. Woodpecker was opened about two decades back and did not face any competition during its first decade and its sales were constantly increasing. However, in its second decade of business competitors started to enter into the market. The intensity of the competition increased continuously and dented the business of Woodpecker badly. During the last five years, its sales decreased continuously and during last three years, Woodpecker has to sustain operating losses.
A survey was also conducted by the owner to find the business position of its competitors. The owner found that the competitors were happy with their businesses as they were able to achieve growth and earn profits. As a consultant the author will conduct external and internal environment analysis and then will suggest the owner how to exploit the opportunities and how the business could be saved from threats.
The name used for the restaurant is “Woodpecker”. There are large numbers of restaurants with similar name but none of them have provided information that they are two decades older except http://www.woodpeckerbar.co.uk/. Keeping in view the limitation of the information provided, the author has to present this report in context of Woodpecker Bar & Restaurant.
First the external environment of the restaurant will be analyzed with the help of PESTLE analysis, competitor, and customer analysis. After that internal environment of the restaurant will be analyzed this will include analysis of the business strategy, marketing strategy, customer services experience and resources.
ANALYSIS OF THE EXTERNAL BUSINESS ENVIRONMENT
Due to limitation of space, only two political factors will be discussed here. The first key factor which needs to be considered by the restaurant in terms of political factors is tax policy of the government. Due to last recession, almost all parts of the world have been affected negatively. (Benn 2014) The governments have cut jobs, decreased incentives and have increased the tax rates and taxes are expected to increase more in future, therefore the Woodpecker restaurant must considered it as a threat. Woodpecker should hire a tax consultant who can help the restaurant in minimizing its tax liability. (Benn 2014)
The other factor is trade tariffs and restrictions. This world has converted into a global village. Governments understand the importance of international business. Therefore, they accommodate international business. It is great opportunity for the restaurant to expand or shift its business operations to other location or country. (Benn 2014)
Due to last recession, overall, the economic growth has slowed down and businesses are under pressure. The slowdown of Chinese economy is also having a negative impact on the overall economic condition of the world. Economic slowdown is a threat for Woodpecker; however, to overcome to this issue, Woodpecker may decide to focus on developing market such as India which is achieving growth continuously and relatively fast. (Benn 2014)
Due to economic slowdown, business activities also have been decreased. In order to boost business and economic activity, governments have decreased interest rates overall. It is an opportunity for the restaurant to finance its business at lower cost. (Benn 2014)
In terms of social factors, a key change in the behaviour which can be noted is that the people now have become more health conscious. This is neither a threat nor an opportunity for the restaurant but the restaurant has to focus on offering of healthier menu for its target customers. (Benn 2014)
On the same lines, the importance of safety is also increasing. It is a threat for Woodpeckers. Due to increase in the number of terror attacks in the developed nations, the issue of safety has extra significance. The restaurant have to specifically focus on ensuring the safety of its business and its customers because if somehow, any mishap happened then it will be very difficult for the restaurant to gain back the confidence of its customers.
As for the technological aspect of the external environment is concerned, the successful firms specifically focus on research and development to improve their products and processes. The technological changes are taking place at a very fast speed. If a firm does not able to keep pace with the technological changes then it is very hard for the firm to remain in the business profitably. (Benn 2014)
This factor is threat and opportunity at the same moment for the restaurant. The restaurant must do investment in the research and development to improve its products and processes. If the restaurant is able to achieve its objectives then it will give competitive advantage to the restaurant otherwise it will be disaster for the restaurant and it will not be able to compete with its competitors. (Gustafsson 2005)
Due to increasing voices against the violations of labour rights, the labour laws have been improved and their implementation has been ensured. On the same lines, due to increasing terror activities and involvement of certain businesses in illegal activities, the governments have tightened the rules and regulations for establishment of a new business and for the operations of the existing business. All the laws are a threat for the restaurant. The restaurant must appoint a legal advisor for right compliance of labour and other laws. (Benn 2014)
As was the case in the labour abuses, the voices for environmental protection and against environment abuse have also increased substantially. Recently, countries agreed to tighten their environment protection rules and regulations especially for the businesses. It has certain pros and cons. At current, it seems a threat for the business of the restaurant. (Chumpitaz Caceres 2007) The restaurant must ensure to protect environment by providing environment friendly products and using services of a good PR specialist to improve its public image in terms of corporate social responsibility. (Benn 2014)
The restaurants in the area which are providing products and services like Woodpecker are the direct competitors of the Woodpecker such as the restaurants which are offering good quality foods, private dining, and bar products. While, the others who are providing substitute products such as fast food like pizza and are offering soft drinks are the indirect competitors. (Schneider 2010)
The main strengths of the competitors of Woodpecker are that they are proving higher quality services and providing higher value for the money paid by their customers. While, the key weakness in the competitors of Woodpecker is that most of the restaurants do not provide home cooked food which is speciality of Woodpeckers. (Zimmerer 2005)
As for the expectation of entry of new competitor is concerned, according to information provided in the case study almost all of the competitors of Woodpeckers are happy with their last five years performance. (Saad Andaleeb 2006)The competitors are happy because they are gaining growth and earning profits which are an enticement for new entrants. There does not seem any serious barrier into the entry of new competitor. All what need is that the investor must have a handful amount and skilled and trained staff to enter into the market. (Chumpitaz Caceres 2007)
The customers who are in the market and targeted by Woodpecker are of two types. First types of customers are one who is looking for home cooked food which is targeted by Woodpecker. There are others who are looking for alone dining. There are others who are looking for party. There are yet others who are looking for spicy food with hard drinks. Some of them regularly go out to a restaurant while others use to go out time to time. (Mithas 2005)
There are some who are loyal with a particular restaurant where they find product of their choice while there are others who cannot remain loyal with a particular restaurant and change their taste and restaurant time to time. They expect products according to their needs and liking. When they look the products according to their need and liking, they become excited and most of them become loyal with that restaurant. (Benn 2014) As for their decision making process is concerned, there are five basic steps which are followed by the customers when they purchase anything and there is no difference with the restaurant customer. The five steps are; need recognition, searching information, evaluating alternatives, purchasing, and doing evaluation. (study.com 2015)