Strategic Management report for Breadtalk

Introduction

Founded in July 2000, Breadtalk Ltd started off as a bakery that is based in Singapore and was listed in the Singapore Stock Exchange three years later in 2003. Breadtalk Ltd aims to endeavor for modernism and creating idiosyncratic flavors to the civic and a dream of being a global brand name. With these goals at hand, Breadtalk Ltd began to initiate a new food tradition that allows it to have a unique aggressive advantage, which has led to the growth of the bakery business, to food atrium and restaurant outlets. To date, they have more than 300 bakery outlets across 13 countries and territories, which include franchises and 25 retail bakery outlets in Singapore. In addition, it also has 33 food courts and 8 restaurants which are supported by over 5000 staff worldwide (Bamburg, 2006)

SWOT ANALYSIS

The Swot analysis refers to strength, weaknesses, opportunities and threats, and will determine the challenges in the external environment which the firm has less control and strengths that need to address by the company.

Strengths

Breadtalk is able to have some internal strengths in which are beneficial to the company that includes: Strong “Breadtalk.” brand name, ability to obtain economies of scale, strong human resource, strong R&D team to add innovation to product offerings and strong franchise relationships.

Weaknesses

Breadtalk faces some minor weaknesses like, over-reliance on the bakery sector, over-reliance on the Singapore region; their product offerings are easily imitated, there is limited control of flour since it is obtained from third party sources (Coyle, 2012). In addition, the franchise division requires high cost involvement, and a constant need for the renewal of the franchise license to be franchising other brands. This is not a long term solution in terms of company expansion.

Opportunities

Breadtalk Ltd oppose its main weaknesses by expanding and merge its market in china, Asian and other Vietnam countries with its low-priced high volume breads and affordability.

Threats
Existing bread related firms and bakery shops will affect the revenue of Breadtalk.

PESTEL ANALYSIS

Pestel analysis is an important tool to help Breadtalk Ltd to assist monitor and detect all weak signals to recognize the fractures to shape the environment or discontinuities.

Political /Legal factors

Political factor constitutes all legal fundamentals like taxation, legislation, deregulation philosophies and labor training (Anthony, 2008). Increasing trade barriers has created an opportunity and challenge to Breadtalk as it can penetrate the market by emerging companies in political stable countries to explore the new market especially where bread could be luxury, and at the same time Breadtalk will have to challenge all types of sources to source for low cost high quality from world over.

Economic factors

The growth of a financial structure will accrue advantage to industries, but its cause will differ according to which factors that are affected the most. (Anthony, 2008). Price fluctuations of commodity and raw material and rise in world fuel prices cause the rise of purchasing costs for Breadtalk and the extra cost has to pass over the consumers by increasing the price of their products.

Social factors

Social factors include traditions, lifestyles, values, beliefs, tastes, attitudes and workforce diversity and will greatly influence the consumer spending patterns within the environment or a country. Breadtalk penetrates into the markets of other Asian continent countries, societal factors come into consideration. Indian and Chinese customers have different culture in lifestyle, and have different opinions and needs on the current products offered.

Technological factors

Technological factors include product innovation, technologies in communication and application of knowledge. The rapid change in technology has allowed new entrants to enter the market at a low cost base. Current processes and equipment with many infrastructural strategies can be utilized by Breadtalk to ensure the cost of labor and manufacture and orders to process faster due to globalization and shifts in technical factors.

Environment factors

At Breadtalk, they know that they need to blend into any type of environment in order to be successful. They make use of resources that the environment can provide, and delivered the desired goods in return. Sometime the environment may pose a threat in which may challenge Breadtalk or may also create fresh opportunities.

PORTER 5 ANALYSIS

Porter five forces analysis was used to study the long run projections for review. .Since it generates 45% of its revenue from the bakery industry and 49% from Singapore, heavy reliance on a single division is dangerous because the risk is heavily contained in a single segment. On the other hand, in the current time, Breadtalk tries to expand this by increasing profitability in the industry of baking.

Intensity of rivalry among competitors (High)

The bakery business in general is driven by cut-throat competition from companies producing similar products. Breadtalk has undeviating competitors ranging from large bakery contract brands to retail bakery outlets. These competitors offer analogous products but at a highly competitive prices. Moreover, prices offered by individual bakery outlets located at neighborhoods are usually much lower than larger chains of bakeries (Cassiman and Colombo, 2004).

Threat of new entrants (High)

Low entry barriers resulted in a high threat of new entrants in business; a large segment still retails similar products and is able to emulate each other’s products quickly.

Threat of substitutes (High)

Products substitutes are usually a hazard in the bakery industry as their prices can be reasonably go down, and customers face low switch of expenditure for gaining utility of the same needs and wants. Substitutes like munchies and junk food can be an imminent threat. Substitutes may range from snack joints in the territory of the business.

Suppliers (Low)

Suppliers normally have low bargaining power in the industry as there are a number of them still in existence. The suppliers are not able to blotch up their goods radically as most of the customers more often than not, acquire in huge quantities. Furthermore, due to the fact that unprocessed resources like flour and wheat don’t vary largely in excellence and in capacity, across suppliers, this advances barriers supplying bargaining power of the suppliers.

Customers (High)

Customers are at liberty to enjoy huge bargaining power, as they suffer low switching costs in the bakery industry, and in addition, the demand for food is highly price elastic, which means that most of the consumers will be price sensitive to any price adjustments and they wouldn’t be hesitant to vary their tastes and preferences accordingly.

 INTERNAL ENVIRONMENT ANALYSIS

 Resources

This analysis seeks to review and summarize Breadtalk’s tangible and intangible resources at the end of the 2012 financial year (Halibozek, 2005).

Tangible resources (assets)
Breadtalk’s tangible resources (fixed assets) are land, buildings and equipment. The currents assets are current assets and inventories (raw-materials, semi-finished goods, consumables and base inventories (dining utensils and cutlery).

Intangible resources (assets)

Breadtalk’s intangible resources are trademarks, copyrights, and brand.

Breadtalk Ltd capabilities

Breadtalk’s future aspiration plan by 2015, is to double its revenue to $1billion and expand its outlets to 2000 by the year 2017. The targeted expansion market areas include U.S, Thailand, Japan, Korea, Singapore, India, Cambodia and Vietnam. The company is capable and has the potential because its brand name is recognized worldwide. In order to increase production, the company has pumped $10 million in mechanization and computerization. Breadtalk also built a ten storey building designed like a pastry structure and a central kitchen in its head quarters which has a research lab and training colleges.

CONCLUSION

Strategic management and organization, is a prerequisite to every firm or company, and it’s a collective responsibility of every employee from management to subordinate to play an active role in ensuring that the annual targets are met, this is important in determining the progress of organization on the basis of upward and downward trend in total revenue annually. Every organization uses strategic management concepts and method to enjoy elevated levels of performance.

RECOMMENDATION

The recommendations made by Breadtalk will be used as a tool for coping with the addressed challenges in the process of diversification plan. The company should implement a slower diversification strategy in order to have a good understanding of the customers and competitors’ strengths and weaknesses. By doing so, Breadtalk will be able to tackle the changes more effectively and precisely. Breadtalk can also espouse a branding strategy which will be globalize to ensure reliability and manage the complexities of different consumer tastes and preferences in different markets globally.