Introduction and Overall Strategy (Term Paper Sample)

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Introduction and Overall Strategy
Environmental scanning is vital for the purpose of formulating business strategies of a firm. This is because business is largely influenced by economic, technological, political, socio-cultural, legal, natural and global factors. Therefore, environmental analysis is required to analyze the impact of the aforementioned factors on an organization. It should be noted that firms that carry out systematic analysis and diagnosis on the environment are more effective than those that do not analyze the environment (Jain, Trehan and Trehan 21).
This study analyses the hospitality and tourism industry, particularly, the hotel industry of London. According to Ruddick, hotels in London are expected to face a weaker trading market this year because of the Olympics hangover. Furthermore, there is an expectation that tremendous growth will be recorded in the hotel industry of the U.K towards the end of the year, as they are expected to make improvements. The hotel market has been chosen for analysis because hotels represent an important element of London’s tourism industry, and the London hotel market is distinct (Cushman&WakefieldHospitality 4). Given that the London hotel market is distinct, this analysis aims at identifying the weakness and threats that face a specific restaurant. It also identifies the hotel’s strengths and opportunities. Further, the analysis provides recommendations on how the restaurant can improve and maintain its strengths, as well as, capitalize on opportunities. Information will be gathered from customer reviews, annual financial reports and hotel websites.
In this analysis, an environmental scan of Rainforest Café, located in London will be carried out. The economic, technological, political, socio-cultural, legal, natural and global factors that influence the organization’s operations and success in the market will be analyzed. This will be done in comparison with the major competitors of Rainforest Café. First, the analysis will begin with an internal SWOT analysis of Rainforest Café to identify its strengths, and threats. Recommendations will be made on how the Café can improve on its weakness and maintain its strengths to ensure outstanding performance in the market now and in the future. Secondly, an external SWOT analysis will be carried out to identify the restaurant’s strengths, weaknesses, threats and opportunities. Finally, a competitive analysis for Rainforest café will be carried out to identify organizations that compete with the café in general and in terms of product form, product category and budget.
Rainforest Café
Rainforest Café is located found in 20 Shaftesbury Avenue, Piccadilly Circus in London (Porter) Par 13. The café is committed to supporting worthwhile environmental causes (Rainforest Café Par 1). The rainforest café works with a UK-based charity, World Land Trust, to try to save as much tropical forest as possible (Rainforest Café Par 3). The café is among the largest family restaurants in London. The restaurant is built in sucha way that it is jungle-like, and this jungle feel is enhanced by the roaring elephants and other special effects (Porter Par 1). It is themed as a tropical rainforest. Started in 1997, the café has been popular ever since The Rainforest Café uses information technology to support food services operations, with a remarkable and direct use of information technology. There are other branches across North America and other international locations. This group of hotels entered the industry, and is characterized by significant investments in the physical and operational infrastructures of food services to create a distinct atmosphere and unique theme-based experience for their clients.
Apart from providing hotel services, the Rainforest Café sells merchandise to both adults and children related to the rainforest theme. The rainforest theme is intended to foster in adult and child customers a sense of excitement about nature, concern for survival in the tropical rainforest ecosystems and a strong loyalty to the firm’s food services and retail products. The table space in the restaurant is characterized with a rapid turnover, which results in a capacity utilization of retail space that has been significantly, higher than most of its competitors. Therefore, the firm’s sales per table and its ability to generate repeat customer visits have been quite high for its industry (Papp 31). Furthermore, the restaurant uses a point-of-sale system which enables its retail managers to track revenue generation easily. The point-of-sale system is user friendly. Further still, the hotel uses a two way two-way radio to facilitate communication between those who serve food, within the restaurant. Rainforest Café does not use pager technology as many of its competitors do (Papp 32). Instead, the servers remain in constant physical proximity to the customers. The restaurant uses customer relationship management software to track customer purchasing behavior and offer promotions that stimulate more customer visits during periods of diminished capacity utilization (Papp 33).
SWOT Analysis
Information about the strengths, weaknesses, opportunities and threats that surround the Rainforest Café has been analyzed to come up with a SWOT analysis. The information has been gathered from customer reviews, annual financial reports and hotel websites of both the Rainforest café and its competitors in the hotel market. The Rainforest Café’s strengths and weaknesses and the market’s opportunities and threats are tabulated below.
Internal SWOT Analysis for the Rainforest Cafe
The Restaurant’s ’s Strengths and Weaknesses
Market’s Opportunities and Threats
Operations
Strength
Innovation whereby the point of sale system is user friendly.
The hotel uses a two way two way radio to facilitate communication between those who serve food, within the restaurant.
The restaurant is characterized by flexibility in technological advances
Economic
Opportunity
The restaurant can capitalize on its high asset leverage and obtain more capital from financial institutions for expansion purposes.
Can engage in expansion programs such as takeovers and amalgamations with other restaurants to increase competitive edge (Los Angeles Times).Weakness
Frequent loss of connection in the web based system that is used in the restaurant.
There is low Research and developmentThreat
There are high levels of uncertainty in financial markets, making raising money through debt difficulty (Earnest and Young).
The restaurant has an overleveraged financial position, which is a threat to the restaurants capability of expansion.
The restaurant’s engagement in research and development is low, compared to other restaurants.
Fluctuations in exchange rates.
Low cost competitors.Recommendation
Efficient use of information technology by upgrading the internet based system of the restaurant.
The restaurant should in robust research and development to enhance innovation and new market creation.Recommendation
Engage in productive research and development programs to improve the restaurants performance in the hotel market by improving service quality and product quality.
Reduce or avoid debt financing to improve the restaurant’s credit worthiness and facilitate easy external finance acquisition.Social, Cultural, Demographic
Opportunity
The restaurant’s format can be developed at the existing units and be utilizes in multiple, high traffic locations with favorable demographics such as malls and entertainment centers (SEC Par 6). Can capitalize on the many residents of London and visitors who like themed restaurants to generate more revenue by selling merchandise and food to both adult and child customers.
Can capitalize of many social events held in London to make more revenue.Threat
There is a likelihood of losing some clients to the restaurant’s competitors
Recommendation
The restaurant should offer incentives to clients to build and maintain loyaltyMarketing
Strength
Offers adventure in iconic destination markets across the globe
(World Franchise Associates Par 4).
The use of online marketing in promoting and selling its services and products.
Strong dominance on the market share, where the restaurant has market share leadership.
Markets and sells unique products to both its adult and child clients.
The restaurant uses a point of sale system to market and sell merchandise.
The use of customer relationship management software to track customer purchasing behavior and offer promotions that stimulate more customer visits during periods of diminished capacity utilization (Papp 33).
Political, Legal
Opportunity
Can capitalize on the environmental friendly requirements by advocating for rainforest conservation and practicing pollution free production or avoiding environmental degradation.Weakness
Loss of connection due to the weaknesses in the web based system (Bernido).
Threat
Threat of being sued for poor garbage disposal that may lead to environmental degradation, against the legal requirements (SEC).
International licensing requirements may bar the restaurant from making major strategic mergers and combinations. Recommendation
The restaurant should carry out appropriate upgrades on its web based system by employing experts in Information technologyRecommendation
Use safe methods of production and engage in activities that reduce environmental pollution at all costs.Technology
Opportunity
Can capitalize on the use of information technology to increase customer base because most customers in the ...