Cheesecake Factory: Segments of the General Environment, Forces of Competition (Research Paper Sample)

Cheesecake Factory.
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Part 1: Segments of the general environment.
Six segments of the general environment influence most businesses including the Cheesecake Factory. The segment includes; Political, Economic, Social, Technological, Environment and legal segments (PESTEL). (Madura, 2007).Without proper control mechanism of the six segments of the general environment then the business is destined to fail. Considering the Cheesecake Factory which is in the hospitality industry, the major segments of the general environment affecting the company are the Technological and social areas.
Technological segments- This deals with better means or methods of production of goods and services. It entails adding value to an existing product using modern means of production. The Cheesecake Factory majorly keeps up with the new technology which is coming up to improve its service delivery to its customers as well earning reputation and loyalty as the best restaurant in the United States and the other branches worldwide. The Technological factors include; better means of communication that are using the high-speed internet to order for supplies. Customer Delivery at doorstep, maintaining proper accounting records using the latest technology that is ensuring that the point-of –sale systems are according to the new specification of the industry, improve customer satisfaction by continually updating of the Company's website. Similarly, Cheesecake Factory should enhance its production of the goods and offering of its services according to the latest technology. (Ketchen, 2011). The main reasons why Cheesecake Factory should keep up with the latest technology is to come up with the better means of production and keep off competition offered by other companies in the related industry.
Social segment- This deals with the demographic trends such as sex, age, population size and cultural trends such as consumer behavior towards certain foods such as eating of fats cause obesity so some customers may avoid foods containing fats, different types of ethnics among others. These social factors do affect the sale of most of the restaurants and hotels. (Madura, 2007). Before opening a branch in any place, the cheesecake factory first needs to investigate the social factors. According to statistics, the majority of customers of the Cheesecake factory are women, so the environment suitable for the business composed of women and students. Through that its boosts the sales and thereby ensuring the company continues to earn billion and billions of profit annually.
Part 2: Forces of competition.
The five forces of competition that influence the cheesecake factory include; Competitive intensity, threats of substitutes, Buyer power, supplier power and barriers to entry. The two forces of competition that are most significant in our case is a competitive intensity and the threats of substitute's goods. (Ross, 2015). Under the industry where Cheesecake Factory operates, there is a lot of competition and the fact that cheesecake factory doesn't control a significant percentage of the market it means that the company needs to invent methods to gain a proportion of market share. Similarly, the products offered by Cheesecake factory like birthday cakes have substitutes which are cheaper and affordable to customers hence Cheesecake Factory needs to have a superior method to fend off the threats being offered by substitute’s goods.
In the recent past, the Cheesecake factory has been dealing with competitive intensity by raising and lowering prices to gain control of the market. Such pricing strategy whereby the Company rises the prices when the demand for its product is high like during the festive seasons and lowers when the demand is low. (Dessler & Philips, 2008). In this case, the company gain temporary advantage and thus generate high revenue from its sales. The other way which the company addresses the competitive intensity is by inventing new methods of production. With technology keeping on changing day by day, the Company has developed better means to improve it productivity as well as improve customer delivery. Some of the innovations include the use of automated routing and cook line balancing that enhances the productivity in the kitchen also they regularly update its main website such that they display the products they offer. Similarly, you can order online and be delivered to the doorstep. The other way in which they address the competitive intensity is by conducting research on competitor’s actions. In that, the employees can visit the competitors websites and able to gather information once the company has acquired such information then it conduct further research to add more information hence when it comes to implementation then the company is in a better position to face competition. (Ross, 2015).
The Cheesecake Factory has addressed the threats of substitute goods by differentiation of it products which creates the product of the company different from its competitors. Packaging and labeling strategies are different from its competitors because it has the option of either eating at the restaurant, "take away" whereby you buy only and go to eat anywhere that is suitable. Through packaging, the company has highly skilled employees who are design how different product are to be packaged and labeled. The labeling of the product is attractive in the sense that customers prefer the company product and sees competitor's product as an alternative. (Dessler &Philips, 2008).
Part 3.
Soon, the company will address the competitive intensity by opening up more and more branches which I think is a goal of the enterprise. The company has opened up more branches in the Middle East and Asia to earn a substantial market share globally. Through opening up several branches, customers served in the required manner then customers will choose your product over others. Also the fact that technology is growing rapidly it implies that the Cheesecake Factory needs to be on the lookout to deliver quality products with the latest technology to its customers. The rise of new technology leads to better means of production and operation thereby needs to be adopted if the company needs to challenge the competitors and earn a substantial market share. Also, the company needs to update continuously the main website on the services and the product they offer. (Ross, 2015).
Continually advertising also helps counter competitive intensity in that the company advertises its products in mass media and social networks such as Facebook, Twitter and the rest by that majority of the people will know the company and hence the company will own a large market share. (Dessler & Philips, 2008).
Soon, the threat of substitutes will be reduced by offering differentiated products that rely majorly on technology. Through technology, the company will package and label it product in a manner that it is attractive to customers and different from your competitors. Similarly, the company needs to offers delivery to clients who order online within a short time. One may be a small issue, but the majority of customers are available online, so they order online and wait for the response, of course, the company needs to be time conscious because some cheap substitute goods are at his disposal. Also by offering varieties of your products it means that the threat of substitute will reduce to a great extent. So the radical solution to threats of substitute goods is by differentiating your product so that they look different from your competitors. (Ketchen, 2011).
Part 4:
The Cheesecake Factory faces different threats which include competition for the market share of companies entering the market and those that are still existing. This threat since Cheesecake Factory owns only a small percentage of the market share.Hence, competition from new and the companies that do exist and own large market share like McDonalds is a big threat that lower its sales volume and this result in reduced revenue in the form of net profit hence leading to losses in business operation. (Madura, 2007).
The other threat is that since Cheesecake Factory is dealing with food stuff, therefore it needs to be careful of the health of the consumers of its products. Therefore, there are a lot of rules regarding the products which they offer to ensure that the food they cook and prepare is of high standards. The threats are that when a consumer become conscious, this will cause closure of business or high penalties imposed on the company. Hence, this reduces the net profit and result in loss of customers to competitors. (Dessler & Philips, 2008).
There are some cases where the business faces economic issues like a rise in inflation which forces the price of the product to go up. Economic issues is a threat since the majority of customers will shift to places where the goods and services are of low prices and this result in low sales which in turn causes low net profit. (Ross, 2015).
The Cheesecake Factory has several opportunities at its disposal which include; it can expand its market to other overseas countries. The Cheesecake Factory has realized it potential of opening up different branches. Currently, it has started opening up some branches in the Middle East and Asia. (Ketchen, 2011). Opening up international market is advantageous because the company can own a large market share and thereby boosting sales also it avoids competition from the local well-established companies like KFC.
The other opportunity is that through branding and marketing, the product can expand its markets. Marketing is done by regularly advertising of the company through mass media, social networks and billboards and many other forms. By that, the customers are aware of the products which are offered by the...