The Competitiveness In The Food Industry Marketing Essay

Melville, N. et al. (2004) defined the value of information technology in the organizations as “the organizational performance impacts of information technology at both the intermediate process level and the organization-wide level, and comprising both efficiency impacts and competitive impacts.” The company performance by using it could affect positively with the customers and with the competitors both at the mid level process and the organisational level process.

Adding value to the business comes in the form of cost reduction and by improving the quality of customer service.

What is cost reduction and how it could be achieved?

The total expenditure of company for the purpose of maintaining its inventory management effectively, staffs work schedules and their salary records and relations with the customers. We could drastically reduce this cost by using customised software. By using IT we could implement effective software for track down of the inventory, thus it saves huge money for spending on man power. And even in customer service we could easily reduce the cost by proving a global call centre rather than manpower at each site.

What is information technology?

According to Hitt, L. M’s (1999) research, the information technology has been defined: “as computers as well as related digital communication technology, it has the broad power to reduce the costs and save time for information processing.”

Information technology could help company in many ways, such as:

Data resource management: Data resource management is managerial activity. It is useful in managing data sources between the company and its stake holders.

Inventory management: By using specific software for the tracking products available in our storage area we could plan what we need for the day or for the coming days, and we can plan and interact with our suppliers and order for the raw material as accordingly.

Customer relationship management: Normally called with acronym CRM is huge success when it comes to the interactions with the clients and customers. The primary purpose of the CRM is to track down the buying behaviour of the customers like what they are buying, which product is bought down by which age group, what

type of products are selling in that particular area etc, etc, thus we can plan our business needs effectively.

How this IT could useful in our particular company and how can we get competitive advantage with this?

Our company:

History:

Nando’s is a casual dining restaurant  founded in 1987 by Robert Brozin and Fernando Duarte from South Africa with a Portuguese/Mozambican theme. Nando’s was Chickenland earlier and they renamed it to Nando’s after Duarte. Nando’s operates in 28 countries and on five continents. It specializes in chicken dishes with either lemon and herb, medium, hot or extra hot Peri-Peri marinades (properly known as Galinha à Africana). In some countries, Nando’s has other flavour options like mango and lime, lemon and herb, or Mediterranean. The restaurant incorporated influences from former Portuguese colonists from Mozambique, many of whom had settled on the south-eastern side of Johannesburg, after their homeland’s independence in 1975.

It has branches all over the world. Primarily focused on English speaking countries now it spreads all over the world where the people prefer spicy chicken. It is famous for its peri-peri chicken which is its own brand.

It has 230 branches across UK and it has nearly 6600 employed in all these branches. It primarily focus on its culture. It was awarded no. 1 in food industry by Sunday times. And it has an investor award.

Task1:

Porters five force model:

File:Porters five forces.PNG

A graphical representation of Porters Five Forces

Bargaining power of supplier: the majority of supply is from Faccenda and Freemans of Newent and small supply from Holland and Germany. Nando’s has its own name in the industry although it does matter the raw materials. As long as the supplier is happy with the business there would be no problem, the suppliers are pretty famous in their respective fields as they have very much contracts in their hands. Although

We can say the bargaining power of the suppliers is low. The Nando’s requires huge volumes of raw materials when one supplier step down another one could take up. And there are many suppliers available it would be easy to us to go for another supplier but it is not easy to supplier to loose Nando’s. It is win- win situations

Threat of new entrants:

There is lot market for the food industry and particularly for chicken food as it widely eaten there so much scope for new markets. Nando’s has its own name and it has niche market there and there would be no affect if any new restaurant comes in. Nando’s is more concentrated on its culture and being best than the bigger it is very difficult to new entrants to compete with the Nando’s. So we can say the threat of new entrants is comparatively low.

Threat of substitute products or services:

Items like Portuguese vinaigrette and some cooking sauces, pasta sauces could not stand in the market because of some brand companies in the particular item field.

Instead Nando’s concentrated on some other items like marinades and peri-peri sauces where it has its own influence.

The price factor is very important to not to lose the customer. The customer always looks for the cheap price for the same product. Considering the food products of Nando’s, they are pretty famous for its taste rather than cost thus we can say the threat is low.

Bargaining power of customers:

The power of customer is defined by the volume of them and their information like their age, sex and location etc.etc. Nando’s has niche market which caters for the lovers of spicy food. These customers are generally young and adult. Nando’s has its brand that their chicken is best in their competitors so the customer will not want to go for other restaurant. And there are not substitutes available with this spicy

range with other restaurants we can confidently say that our customers bargaining power is low.

Existing rivalry:

If want to talk about the particular branch which is Stratford, Nando’s we are dealing the primary competitors are The Fox, the Indian gate, Pizzahut, Carrebian scene and the Mukhan. All of these restaurants are highly preferable and they have their best in the particular food. We can say like Pizzahut is famous for its pizza, the Indian gateway for its Indian food although they provide chicken items. None of them are comparable when it comes to the spicy chicken or peri-peri chicken. Nando’s provides huge range variety of products than to other competitors. The price options are also very reasonable when compare to the international brand like Pizzahut or very local The Indain gateway. Therefore we can say the the existing rivalry is low.

The intensity of rivalry for Nando’s is influenced by No of restaurants: increases rivalry because more restaurants must compete for the same customers and resources. The rivalry intensifies if the firms have similar market share, leading to a struggle for market leadership.

Task 2:

Value chain model:

http://enduragement.files.wordpress.com/2008/06/porter-value-chain.png

The Value Chain framework of Michael Porter is a model that helps to analyze specific activities through which firms can create value and competitive advantage.

The value chain helps an organization identify how it creates value for customers and locate where its sources of competitive advantage lie.

Value chain models can be created in both qualitative and quantitative forms. Many organizations do not consciously make decisions to optimize the sources of advantage resident in their value chain and in so doing, risk losing competitive advantage.

What is Value Chain Analysis?

A value chain is a chain of value added activities; products pass through the activities in a chain, gaining value at each stage.

Value chain allows alignment of processes with customers. This generates a quality advantage. Value chain focuses cost management efforts. It provides for efficient processes which improves the timeliness of operations.

The steps in Vaule chain model are:

Inbound logistics:

Inbound logistics of Nando’s deals with receiving goods, storing them . for this we use an dinventory control management system. It deals with everything related to goods and its transportation. This inbound is very important to maintain the warehouse products available effectively without interrupting the business to customers.

Outbound logistics: inbound logistics deals with the good coming upto the warehouse where as the outbound logistics deals with the products reaching to customers. Nando’s has the dedicated transportation service to delivery its products to reach its restaurants on time. It uses PDA’s to track down its vehicles on road where they are at particular time so the restaurants and head office knows when they will reach the destination. This allows the restaurants to plan accordingly.

Marketing and sales:

To attract customers Nando’s approaches in very innovative yet cost effective manner. It provides customers to win prizes when the make orders at restaurants. Some of its promotions include gift cards, Go PERi-lectric with a pair of tickets to Ireland’s Electric Picnic, Brighton Pride and Win a PERi-tastic prize Tickets to the LED festival, Win A Footie Chicken-Fest etc, etc. And Nando’s spend considerable amount of money to promote irs restaurants aggressively through print media and electroninc media. In 2010, Advertising Age magazine named Nando’s as one of the world’s top 30 hottest marketing brands.

Service:

The service mainly here defined as the interaction with customers and the service we provide to them. The better the service the better the chances to increase its brand value.

Procurement:

Procurement mainly deals with the requirement of raw materials, space to setup restaurants, kitchen machinery etc.

Technology Development:

The technology development is to support value chain activities such as design, strategies and tactics , research and development, processing etc. We discuss about this in next task.

Human Resource Management

Human resource management is primarily associated with staff recruiting, staff schedules and salary maintenance and maintaining compensation and benefits to its employees and staff.

Firm Infrastructure

The infrastructure associates with hierarchical process of the firm. It Includes management, planning, finance, legal issues, public relations, accounting and quality management, etc.

Task 3:

How IT can be used to develop business:

I will use Value Chain analysis to explain how IT help Nando’s add value to themselves and obtain competitive advantage in food industry. Value Chain analysis consist of primary activities and support activities, which are detailed from below:

The IT can be used to increases the knowledge of profit zones where there is no profit, It increases the knowledge of forward and/or backward integration opportunities, identifies value process and Identifies win-win alliance opportunities

As consultant for Nando’s restaurant we need to advise them to use value chain models for implementing cost comparison between the companies to other competitors.

What is Strategy? And How Does Porter’s Value Chain Model Fit With Strategy?

Strategy is your business’ direction; and the how, why, what, who and when of following that direction. Most businesses analyze their own internal cost structures but most do not analyze their competitor’s structures.

The five P’s of nando’s to follow to get competitive advantage are:

Plan:

Portugese chiken all over the world

Ploy: not to face competitors but to find a strong market i.e. customers

Position: best rather than biggest

Pattern: culture

Perspective: wants to develop in countries where chiken, spicy and English speaking customers

You only get an edge over rivals by having or doing something that they can’t have or do. Computers have revolutionized the food and beverage industry as they have nearly every other industry. A key management concern of any food and beverage business is the profit margin. In this vital area of business, computers have also proven to be an indispensable tool. Computer systems help manage the entire food service process from ordering the ingredients needed to produce menu items, to forecasting the amount of items to prepare for each dining period based on historical patterns. This helps to reduce wasted food, which is very expensive and comes out of the businesses profit. It also helps in preparing menu items before hand, which reduces customer wait time

The information system should mention the following steps:

People

Data

Networks,

Hardware,

Software.

It costs us to implement any new information technologies in our system. So we have to analyse what is our need and how it would affect the system and how it drive the sales. No better understanding of the system will lead very bad results thus company should go to losses.

The technologies we advice to Nando’s to implement:

Online ordering system: since the Nando’s is major food restaurant, it does not have any online ordering system or telephone order system for the customers to order when they are at work or at home. It is not possible to everyone to come to the restaurant to eat in or take way. Some are older some are busy or the restaurtant are really far from home etc. If we could develop a e-commerce website which allows customer to buy online and we could deliver it to them as soon as possible it would definitely drive our sales at very huge level. Our main competitors for this area Pizzahut have these both online and telephone order service. The people who like Nando’s and cannot come to the restaurant will opt for the service like this provided by our competitors. The investment and maintenance for a e-commerce website for Nando’s may not cost more and the return on investment(ROI) could be get back easily as the sales come from online orders are solely because of website.

Presently we have website for Nando’s which gives the information about the Nando’s available restaurant and their menus with their physical address. We can develop a website the offers online orders and we can integrate this to the already available website.

Mobile application: as the technology rigorously increasing on day to day manner, the people using high end mobile phones is always on the high. Phone manufactures like Nokia, iPhone and Samsung offers third party applications to the mobile customers. If we could develop mobile application thus it features all available information yet briefly it would hugely improve the sales. If we could features restaurant addresses and online order facility it will be useful because the phone is always handy wherever the customer so he could check it and go to the nearest restaurant to his location.

Software program: we could develop software solely for the purpose to gather critical information which needed to choose a site where we want to setup any additional restaurants by verifying the demographics and the distance to other available restaurants and customers information particularly related to food business. The program analyse the area and provides the detailed scenario about how many people lives there and their age group and any eating habits particularly they have. So that we could make decision depending on the information available. For this application to work out very well we need to get census data from government or third party providers or we may take out a survey which cost us a bit which is one time investment. We can also use the data mining techniques depend on the available data thus any already existed restaurant may affect our business or not.

Inventory control: Every day there are lots of raw material comes in lots of material goes out in warehouse. If we use a n inventory management application we could easily track down the data available. Therefore we find out what type of item we have stock and what not we have. It helps us to order new material effectively. Thus we could reduce the food wastage. In a long run it could save several thousand pounds to the company.

Communication – communication between the head office to restaurants through e-mails etc. Etc. CRM software is very useful for this service.

HR job recruitment: information technology is very useful when it comes recruit,emt and human resource management. We could advertise online for the vacancies we have and can accept application made online. Thus it reduces paper publicity cost and paper cost for the applications. Custom software could take all the tasks related to hr.

Loyalty cards: to drive sales very high we introduce loyalty cards which allow regular customers to get free bees. We could offer them discount prices or occasional offers to them. And by adding this loyalty cards to the technology we could get the customer details so that we could plan them accordingly what they bought, what their age group etc. Etc. And we could send them promotional offers or discount coupons if we have their personal address or e-mail id. Information technology make out of home dining a more enjoyable experience for the customer and a more profitable manageable experience for business managers and owners. With the aid of Information technology we are not only able to stream line our business processes but we are also able to get constant information in ‘real time’ that is up to the minute and up to date. In today’s business environment we could consider IT as part of the Organization.