Broadway Cafe Case Study
I have recently inherited my Grandfather’s coffee shop, The Broadway Café, which is conveniently located in Troy, Michigan near Walsh College. The café offers many different kinds of specialized coffees, teas, and a full service bakery. Since the café opened in 1952 it has been a local hotspot for people near the neighborhood. Unfortunately, my Grandfather was very “old school” so the café is in great need of some renovation. The Café needs faster ways to put in orders, track inventory and sales, and a website to market new ideas. As the new owner, I need to analyze some new ideas and look into opportunities within networks to bring business back to the 21st century.
I will share ways to a competitive advantage and how it incorporates with Michael Porter’s Five Forces model and the Three Generic Strategies. Competitive advantage is a feature of a product or service on which customers place a greater value than they do with similar offerings from competitors. Competitive advantage provides the same product or service either at a lower price or with additional value that can fetch premium prices.
Porters Five Forces Analysis …show more content…
Buyer power plays a big role in how the café will survive.
The ability to affect price is high due to the fact the café has a lot of competition in the area. Buying power is the ability of buyers to affect the price they must pay for an item. Having a variety of competition can help bargaining prices and competition in the market. Having outdated technology in the cafe is hurting the business because it is losing the leverage to decrease buyer power. Having the ability to research other businesses and see what prices they are using can help the café compete with similar cafes in the surrounding area. An online presence would be a better marketing tool than the word of mouth. Online marketing can help introduce the café to outside sources faster, and manipulate switching costs for customers to change to our
products.
Broadway Café has no loyalty programs to offer. Using the internet will be a great way to promote deals on coffee and have an appreciation day for students. What this means is we can hand out cards that lets people by up to 9 items, (coffee, tea, sandwich, drink,) and get the 10th one free. The café will have student appreciation day where the student can show their student I.D and receive a free coffee of their choice. All of these perks can be advertised to customers more quickly on the internet. Having buyer power can help create a faster and more efficient business that can separate the café from the competition.
Supplier Power
The Broadway Café has many products to choose from which can make the supply power low. There are many choices of coffee and soft drink companies out there so the supply base is very large. This helps with determining how sales will be and what prices will change to. The café will start to make unique styles of coffee and find different ways to attract customers by offering special flavors and choices on the menu. This will create high buying power because it might be hard to find a supplier with a good price. Not being able to offer the raw materials price to customers can hurt revenue. In the long run this can create an advantage when it comes to competing against other cafes.
Threat of Substitute Products or Services.
The Broadway Café is not the only café in town, so it is very hard to compete with the threat of substitute products or services. People are accustomed to being around a café that serves coffee and bagels, and that’s it. I want to change that and bring some new flavors of coffee, sandwiches, and soups to the menu. The issue of the threat of substitutes is always a factor which limits the profit potential of a market, but in times of economic change, the threat accelerates sharply but also the opportunity to help lure new customers into your market also exists. The threat of substitutes will always be a factor in this business and customers want the best value for their money. In order for us to give them that we need to do the job and serve the better quality products then the next guy. Offering a wider range of coffees, sandwiches and having meals that are cheaper than the competition will help pull away from the threat. We can also offer free Wi-Fi so customers can enjoy searching the web while they drink their coffee or enjoy a nice sandwich or soup. Customers want cheaper and better deals and if the best deal is sitting at home on the couch, then we lose business. It is a goal to make the customer feel at home so they never want to leave.
Threat of New Entrants
The threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to joining a market. The harder we make it on new competitors to enter the better off the café will be. Offering free Wi-Fi will bring customers in to relax and search the web. Putting daily specials and coffee sales on a website can help create faster service and bring sales up. Finding a way to develop a Kindle system at each table so people don’t have to worry about carrying their books might help reach out to younger crowds and help create book clubs. Offering a loyalty card that will give customers points to use on food, coffee and Kindle use with bring incentive to come back and spend money.
Rivalry among Existing Competitors
It is the nature of competition that firms will strive for advantage over their rivals. As such, rivalry is typically the strongest of the five competitive forces in any given industry. To compete in the market the Café will strive on killing customers with kindness and making sure that I try to remember all my customers just the way my Grandfather used to do. This can bring a warmer feel for the customers and will make them feel at home. Tracking previous orders on an IPhone app will help us understand what customers like and don’t like. This will also give us a better idea to help cater to their needs. All of this is a great way to help stand out from the competition.
The Three Generic Strategies
Management has the opportunity to determine which of the three generic strategies works the best for their business. Porter came up with three business strategies for entering the market, they are as follows; broad cost leadership, broad differentiation, and focused strategy. I think the differentiation strategy would work the best because it allows for gaining competitive advantage. With the creation of new ideas for coffees, and Grandfather’s secret recipe and a variety of teas to offer, the café can gain customer loyalty again.
In conclusion, I believe The Broadway Café will become a competitive shop again and survive in the 21st century. With the use of competitive advantage and Generic Strategies leading the way, our customer loyalty will return and be better than ever.
References
Baltzan, P. (2013). Business Driven Technology. Mcgraw-HIll Irwin.
Park, J. (2011, March 07). Rivarly among exisiting competitiors in the industry. Retrieved from http://www.extension.org/pages/30417/rivalry-among-existing-competitors-in-the-industry#.UlSMtSDD_ug.
Simister, P. (2009). Paul Simister 's Business Coaching Blog. Retrieved from http://businesscoaching.typepad.com/the_business_coaching_blo/2008/11/threat-of-substitutes.html.
I will share ways to a competitive advantage and how it incorporates with Michael Porter’s Five Forces model and the Three Generic Strategies. Competitive advantage is a feature of a product or service on which customers place a greater value than they do with similar offerings from competitors. Competitive advantage provides the same product or service either at a lower price or with additional value that can fetch premium prices.
Porters Five Forces Analysis …show more content…
Buyer power plays a big role in how the café will survive.
The ability to affect price is high due to the fact the café has a lot of competition in the area. Buying power is the ability of buyers to affect the price they must pay for an item. Having a variety of competition can help bargaining prices and competition in the market. Having outdated technology in the cafe is hurting the business because it is losing the leverage to decrease buyer power. Having the ability to research other businesses and see what prices they are using can help the café compete with similar cafes in the surrounding area. An online presence would be a better marketing tool than the word of mouth. Online marketing can help introduce the café to outside sources faster, and manipulate switching costs for customers to change to our
products.
Broadway Café has no loyalty programs to offer. Using the internet will be a great way to promote deals on coffee and have an appreciation day for students. What this means is we can hand out cards that lets people by up to 9 items, (coffee, tea, sandwich, drink,) and get the 10th one free. The café will have student appreciation day where the student can show their student I.D and receive a free coffee of their choice. All of these perks can be advertised to customers more quickly on the internet. Having buyer power can help create a faster and more efficient business that can separate the café from the competition.
Supplier Power
The Broadway Café has many products to choose from which can make the supply power low. There are many choices of coffee and soft drink companies out there so the supply base is very large. This helps with determining how sales will be and what prices will change to. The café will start to make unique styles of coffee and find different ways to attract customers by offering special flavors and choices on the menu. This will create high buying power because it might be hard to find a supplier with a good price. Not being able to offer the raw materials price to customers can hurt revenue. In the long run this can create an advantage when it comes to competing against other cafes.
Threat of Substitute Products or Services.
The Broadway Café is not the only café in town, so it is very hard to compete with the threat of substitute products or services. People are accustomed to being around a café that serves coffee and bagels, and that’s it. I want to change that and bring some new flavors of coffee, sandwiches, and soups to the menu. The issue of the threat of substitutes is always a factor which limits the profit potential of a market, but in times of economic change, the threat accelerates sharply but also the opportunity to help lure new customers into your market also exists. The threat of substitutes will always be a factor in this business and customers want the best value for their money. In order for us to give them that we need to do the job and serve the better quality products then the next guy. Offering a wider range of coffees, sandwiches and having meals that are cheaper than the competition will help pull away from the threat. We can also offer free Wi-Fi so customers can enjoy searching the web while they drink their coffee or enjoy a nice sandwich or soup. Customers want cheaper and better deals and if the best deal is sitting at home on the couch, then we lose business. It is a goal to make the customer feel at home so they never want to leave.
Threat of New Entrants
The threat of new entrants is high when it is easy for new competitors to enter a market and low when there are significant entry barriers to joining a market. The harder we make it on new competitors to enter the better off the café will be. Offering free Wi-Fi will bring customers in to relax and search the web. Putting daily specials and coffee sales on a website can help create faster service and bring sales up. Finding a way to develop a Kindle system at each table so people don’t have to worry about carrying their books might help reach out to younger crowds and help create book clubs. Offering a loyalty card that will give customers points to use on food, coffee and Kindle use with bring incentive to come back and spend money.
Rivalry among Existing Competitors
It is the nature of competition that firms will strive for advantage over their rivals. As such, rivalry is typically the strongest of the five competitive forces in any given industry. To compete in the market the Café will strive on killing customers with kindness and making sure that I try to remember all my customers just the way my Grandfather used to do. This can bring a warmer feel for the customers and will make them feel at home. Tracking previous orders on an IPhone app will help us understand what customers like and don’t like. This will also give us a better idea to help cater to their needs. All of this is a great way to help stand out from the competition.
The Three Generic Strategies
Management has the opportunity to determine which of the three generic strategies works the best for their business. Porter came up with three business strategies for entering the market, they are as follows; broad cost leadership, broad differentiation, and focused strategy. I think the differentiation strategy would work the best because it allows for gaining competitive advantage. With the creation of new ideas for coffees, and Grandfather’s secret recipe and a variety of teas to offer, the café can gain customer loyalty again.
In conclusion, I believe The Broadway Café will become a competitive shop again and survive in the 21st century. With the use of competitive advantage and Generic Strategies leading the way, our customer loyalty will return and be better than ever.
References
Baltzan, P. (2013). Business Driven Technology. Mcgraw-HIll Irwin.
Park, J. (2011, March 07). Rivarly among exisiting competitiors in the industry. Retrieved from http://www.extension.org/pages/30417/rivalry-among-existing-competitors-in-the-industry#.UlSMtSDD_ug.
Simister, P. (2009). Paul Simister 's Business Coaching Blog. Retrieved from http://businesscoaching.typepad.com/the_business_coaching_blo/2008/11/threat-of-substitutes.html.