Custom research paper on Sh-Boom’s a Limited Liability Company registered in New York

Porter’s 5 Forces
The competitive position of the restaurants is extremely important for successful entering the market. In this regard, Porter’s 5 forces help to define the competitive position of Sh-oom’s and to elaborate effective competitive strategy taking into consideration such forces as1) the entry of new competitors, 2) the threat of substitutes, 3) the bargaining power of buyers, 4) the bargaining power of suppliers, and 5) the rivalry among existing competitors. The combination of these competitive forces will define the competitive position of the restaurant in the market and its competitive strategy.

It is well understood that the five forces determine industry profitability since they influence prices, costs, and investments – elements of return on investment. The strength of each of the five competitive forces is a function of industry structure.

Each of the five forces relating to the full-service restaurant is detailed below.

Bargaining Power of Suppliers
As mentioned earlier in the microanalysis section, increases in supplier costs can cause a huge impact in operational costs; also, any delays in supply can majorly impact delivery and thus customer convenience.

The criticality of suppliers depends on the factors as mentioned: unique product supply, association value (in case the supplier is a big name brand, in which case the supplier rules), group business referrals, potential to supply competitors, service quality, inventory management, financial strength, and independent supply capability.

Threats of New Entrants
The threat of new entrants depend on several factors, such as start-up costs, switching costs, production costs, access to inputs and subsidies, establishing name recognition and getting footfalls, and profitability.

The full-service restaurant industry does not have many major entry barriers in terms of setting up business. Start-up costs can be managed if there is business. Switching costs are not too high. Production costs can be managed since this is a premium service. The access to inputs and subsidies is something that will need a check at the local level. Since there are so many operating restaurants in this area, it seems that this should not be a problem. The major entry barriers seem to be the feasibility of business (footfalls and profitability) given the low off-take and slump in the economy. As the economy grows, and as business increases, new players will either set up or acquire existing ones.

Bargaining Power of Buyers
Customers have become extremely discerning today. The number of frequencies for visiting might have reduced; however, as per the macro analysis report, it is evident that each transaction value is still promising. Sh-Boom’s will have to be extremely alert and display competence over product – food quality, presentation, value for money, location, convenience, queue time, promotions, variety, and, above all, the ability to delight customers and generate loyalty.

Threats of Substitutes
From a connoisseur’s daily diary, “There can be no substitute for good food”; however, this poetic outburst needs to sink in with discretion in the mind of a businessman. Substitutes will address the same customer need in a different manner. Quick-service restaurants, takeaways, catering companies, cafes, and bakeries fulfill the standalone need for a meal; however, a full-service restaurant and night club has an edge in terms of the experience, ambiance, variety, service, and the overall good time that it provides for the family.

Rivalry among Existing Firms
As evident from the competition benchmarking analysis, there are about 21 food outlets within the same geography, however only 3 to 4 of them extend the full-service facility. Sh-Boom’s will need to match up with its competitors in terms of parking, services, value for money, and food quality, and additionally work to establish loyalty and a good brand image.

Sh-Boom’s should also follow good corporate governance and human resource practices. Small initiatives toward the community as well as offering year-round and varied menus are a couple more pointers toward gaining an edge over the competition. The total customer experience at Sh-Boom’s will include product performance and all interactions with the company (employees and processes), since high-quality interactions with people and systems drive customer loyalty. Using committed employees with competence and confidence through employee engagement will help to increase customer loyalty through quality, service, and cleanliness. This would then increase customer visits due to loyalty, which in turn will increase sales and profits, which all are good for Sh-Boom’s business to grow.

Porter’s Diamond Model
Michael Porter introduced a model that analyzes why some nations are more competitive than others and why some industries within nations are more competitive than others. This model of determining factors of National Advantage has become known as Porter’s Diamond Model.

While the Diamond Model is a larger concept applicable to nations and geographies, a parallel needs to be drawn with Sh-Boom’s geographic market in order to analyze relevant context. With this in mind, the four factors that support or hinder organizations from building advantages are analyzed below.

Factor Conditions
A reference to the local government as well as industry (Greater Massena Chamber of Commerce) gives an indication that both these bodies are trying to offer favorable conditions for development of business and community at large. The Massena Town Planning projections also convey beautification of the area, which promises a trickledown effect on the economy of the region.

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Looking at the above data as well as social and demographic data for Massena (Census 2000), the following inferences can be drawn:

• Massena has an above average number of bachelors
• Unemployment is high
• Many people are below the poverty line
• The level of education is good
• Almost two thirds of the population is stable in the same home for the past 5 years
• Median income is $33,037
• The percentage of the workforce in the service industry is about 20%, which is quite decent.
• The accommodations and food industry has 6% male representation and 9% female representation, which is a decent proportion

This gives an impression that the region is poised for a sufficient supply of manpower given that the authorities venture in to suitable training programs along with support from the industry. Also given the way things are developing, it seems that local government is also interested in developing this zone for visitors as well as locals.

Demand Conditions
There are a good percentage of married people (56%) in the region. Forty-five percent of the population earns well above $35,000. Almost 30% of the population earns above $50,000. Twenty-five percent of the workforce is in management/professional categories. Also, the cost of living is lower than New York in general.

Firm Strategy, Structure, and Rivalry
Sh-Boom’s will operate under an LLC with a mission to deliver the best food at the best price with the highest service level. This is Sh-Boom’s core value and the heart of the Sh-Boom’s business model. The Company’s vision is to become the highest praised restaurant in St. Lawrence County (Northern New York), recognized for great entertainment, great prices, and great food. Sh-Boom’s will use the best ingredients, with excellent production/processes, and it will go out of its way to ensure that each customer knows that he or she is greatly appreciated while supplying him or her with variety and distinctiveness.

Related and Supporting Industries
The Company’s milk, beef, greens, and vegetable products will be produced locally. For other products, there does not seem to be enough related and supporting industries within the region to give support; thus, sourcing goods and other resources may seem to be minimal.

Role of Government
The role of government is quite critical in the success of this industry in general.

On one hand, government can catalyze the development of the region by offering various sops for start of business, developing and beautifying the surrounding thus making it more suitable for tourism, offering a blockage free business growth for entrepreneurs, and setting up training centers in association with local industries to boost employment and thus improving the quality of living for the overall economy.

On the other hand, the government can also impede business by issuing new regulations, norms, and mandates. A high crime rate, high cost of living, and non-cooperation with entrepreneurship can surely dampen the economy.

Chance
There are quite a few things left to chance, namely government orientation, customer loyalty, general economic environment, internal and international markets, policies, and new mandates.

VRIO
The resource and capabilities of Sh-Boom’s restaurant and night club can be listed and categorized in the VRIO framework as follows:

Resources and Capabilities VALUABLE RARE COSTLY TO IMITATE EXPLOITED
Owner Relationships YES YES YES YES
Product Mix YES NO NO YES
Employee/Work Force YES YES YES YES
Location YES NO NO YES
Service/Quality YES YES YES YES

From the above, it can be concluded that owner relationships, workforce, and service quality are three distinct resources of Sh-Boom’s. This can help Sh-Boom’s achieve sustained competitive advantage. The other factors, namely location and product mix, can help achieve comparative parity or, at least, give Sh-Boom’s a temporary advantage. Sh-Boom’s restaurant and night club should thus capitalize on its distinct competencies, while constantly innovating on product mix to find its way to success.
SWOT and TOWS Matrix

SWOT Analysis

Strengths

 The owners and managers are natives to the area and thus have strong ties with the community. Also, people know about them and their experience in the industry. Given that the geography has a stable base of people, this factor is definitely a great strength.

 The owners also have strong relationships with vendors that offer high-quality ingredients and fast and frequent delivery schedules.

 The owners have been able to create a good team that is trained and appropriate to serve the area customer.

 The restaurant is located at a geographically convenient distance for customers to come in and have a great dinner after shopping or seeing an afternoon movie at the nearby shopping mall. The restaurant has more than ample parking for its customers.

 Also, standards for preparation and processes are followed per law, and the cooking uses high standards good quality local products and raw materials.

 The restaurant also participates in many promotional campaigns offering discounts to bring back customers.

Weaknesses

 The cash flow is limited to the owner’s resources as of now, until funding is received. The restaurant is new and has yet to get the desired footholds. The restaurant will have the disadvantage of a start-up business at a time when only a couple of restaurants out of 21 benchmarked establishments are making a profit. Also, while manpower and the team size can be a formidable strength, churn and untrained manpower can be a huge weakness within the organization.

Opportunities

 Even though the market is in a slump, there are a few opportunities that are visible from the environment scan as well the diamond model analysis.

 Also, there are only a few good restaurants in the segment that Sh-Boom’s is planning to venture. The service levels, quality of food, ambiance, parking, convenience, service availability, and other comparable factors of competitors are good or average. All theme-based restaurants have so far not succeeded. This leaves scope for Sh-Boom’s to create a best practice case and gain a good market share.

 Also, the real estate rates are not as high as New York. The salaries are also not as high as New York, which means that the operational costs can be kept under control.

 There is limited competition in the banquet/catering segment, thus leaving the ground open for Sh-Boom’s to explore in case it wants to venture into the same.
Threats

 The overall market condition is a threat to business. Also, given that only a few restaurants are running successfully is another threat.

 The surge of inflation and the rising prices can be a big threat to the restaurant business.

 Also, government regulations, manpower related issues, and public health norms can be considered threats in different situations as described in various aspects of above analysis.

TOWS Matrix
TOWS
Matrix
OPPORTUNITY

1. People willing to spend as economy improves
2. Competition moderates
3. New business opportunity
4. Continental cuisine not successful so far
5. Few 24×7 outlets close by
6. Government industry bodies willing to create an investment environment
7. Customers not completely satisfied with facilities provided by competition
THREAT

1. Economic conditions
2. Political stance
3. Customer preferences
4. Work force attrition
5. Operational costs
6. Low or no entry barriers

STRENGTHS

1. Owner relationship
2. Product mix
3. Employees/workforce
4. Location
5. Service/quality S101 – Create a good brand and a good product. Invite customers for a preference/wish list.
S2O1, S2O2 – Fill in the demand gaps with innovative products and services.
S3O6 – Create training as one of the revenue generators, with support from government and industry.
S4O7, S5O7 – Offer innovative services. S1T2 – Leverage good relationships to proactively identify movements in policies, laws, and mandates. Also leverage relationships to identify sources of funds or new incentive opportunities.
S1T3 – Utilize a strong staff-customer relationship to communicate with customers and define their tastes, preferences, and service expectations.
S1T4 – Keep workforce happy and retain employees with best practices and good work environment.
S2T3, S3T3, S4T3, S5T3 – Use four of these strengths to extend best quality product and service to customer to create a good brand.

WEAKNESS

1. Finance
2. New Starter W1O6 – Apply for and leverage any and all incentives and programs offered by the government or industry associations. (Utilize all business practices necessary to abide by the requirements of finance and tax programs.) Follow a strong business plan that assures all critical gaps within the development programs are addressed.
W2O3 – Convert weakness into strength by operating with low overheads and offering specific but excellent products to start with. W1T1 – Proceed with a conservative approach on unnecessary expenses.
W1T1 – Check if government body/industry body can help out.
W2T3 – Take into account customers preferences in the development of new menu items and service options
W2T4 – Follow innovative HR practices for employee retention and growth. Also follow healthy corporate governance norms to win internal respect and loyalty.