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They are in this business since last 30 years
Agrawal Brothers developed Brand name HONEST
Their motto is to satisfy customer as far as Taste, Quality & Services
20 Branches all over the Gujarat
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STAFF MEMBERS
Total staff members consists of 35 persons.Further bifurcation of staff members is given below:
Cooks : 7-8 no.s
Worker : 10 no.s
Helper/ cleaner : 15 no.s
Captain : 2-3 no.s
Total seating capacity at Panchvati branch is of 250 persons
EXPENSES
Total salary expenses per month paid to the employees is about Rs. 90,000.
Total expenses paid as electricity bill is about Rs. 1 lacs.
Total expenses on raw material everyday is about Rs. 12,000-15,000.
Total waste of everyday converted in the monetary terms comes out to be Rs. 2000-3000.
Meal for employees are prepared separately everyday, which includes breakfast, lunch, dinner and evening
tea.
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BARGAINING POWER of SUPPLIERS
1. Number of Suppliers Moderate
- Significant number of real estate companies for a given
locality
- Few reliable ICT providers to manage property
- Small no. of quality training providers and skilled
employees
2. Availability of substitutes High- Substitutes for property (real estate agents), designers,
employees etc are available
3. Switching cost High- Hotels have higher bargaining power and can easily
switch between suppliers
4. Suppliers's threat of forward integration High
- Suppliers are highly unlikely to forward integrate into
the hotel business
5. Industry's threat of backward integration High
- Hotels could backward integrate to own their own real
estate company
- They could have their own training wing
6. Contribution to quality High
- Property development and real estate companies add
to the quality
- So does skilled labour and quality training
7. Contribution to cost Moderate
- Most suppliers are much smaller companies compared
to hotel companies
- Hence hotel companies have a much higher bargaining
power
- Supplier contribution to cost is low
8. Industry's importance to supplier High
- The few powerful players in the hotel industry are
indispensable to their suppliers
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BARGAINING POWER OF BUYERS
1. Number of Buyers High
- Buyers are numerous and small in size.
- Losing one customer in not going to make a difference. -
Their bargaining power is low.
2. Availability of substitutes: Medium
- Multiple substitutes for a given hotel or brand is available
- Alternate means of accommodation such as camping, RV
etc is not popular in India
- Informal accommodation with friends and family is a viable
alternative
- Corporate guest houses for the business traveler
3. Switching cost: Low- Switching costs are negligible
- Buyers are price sensitive except in the premium segment
4. Buyer's threat of backward integration: High- Customers are will not construct a hotel or buy a place of
residence for each place they visit
5. Industry's threat of forward integration: Low - Low chances or forward integration
6. Contribution to quality: High- Additional facilities such as spas, gyms etc. are used my
hotels to improve the quality of customer's stay
7. Contribution to cost: Low- Brand image is very important in this industry and leads toextra cost
- Additional amenities, training of staff, location rent (like
close to airport) etc.
8. Buyer's profitability: High
- Low buyers profitability
- In the mid-segment, there are numerous buyers, of very
small profitability
- In the premium segment, buyers are very affluent, and
they have greater bargaining power compared to the mid-segment
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BARRIERS TO ENTRY
1. Economies of scale High
- High economies of scale
- Very important to operate a chain of hotels in
multiple locations, especially for the premium
segment
- This reduces the dependence on tourism trends
at any given location
2. Product differentiation High
- Highly differentiated
- Brand names and values are very important in
attracting and retaining customers
3. Brand identity High - Branding is very important4. Switching costs Low - Low switching costs
5. Capital requirement High
- Capital intensive
- Staff, decor, infrastructure etc. are very
expensive
6. Access to technology Moderate- ICT is very is very important for property
management etc.
7. Access to raw material High- Labor, land and other essentials are easy to
obtain
8. Government protection Moderate
- The tourism industry receives government
support
- Eg: Incredible India
9. Exit Barriers Low -High exit barriers-Specialized assets for the industry
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THREAT OF SUBSTITUTES
Availability of close substitutes Medium
- Close substitutes such as informal
accommodation with friends and
family- Alternate forms of leisure
accommodation such as camping and
RVs
- Corporate guesthouses for business
travelers
Switching costs Low - Negligible for informalaccommodation
Substitute's price value Low- Very high for informal
accommodation
- Moderate for other leisure
accommodation
Profitability of the producers of
substitutes High- Producers aren't as profitable
- Large hotel chains have greater
bargaining power
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COMPETITIVE POWER OF RIVALRY PLAYERS
Factors Comment Remarks
No. of competitors Small High Small number of large operators
Industry growth Moderate Moderate Annual growth rate of 13%
Mature industry
Fixed cost High Low Highly capital intensive
Differentiation High High Strong brand image commands a very high price
premium
Switching cost Low Low Low cost switching to similar brands
Openness of terms of
sale
Open High Price break up into cost, taxes etc. are known
Excess capacity Large Low Only 69% rooms are occupied Tourism industry is seeing strong growth
Strategic stakes Large Low Although large hotel companies have diversified
they still have a majority stake in the hotel industry
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SWOT ANALYSIS
StrengthsHonest prices are cheaper than your
competitors.
Service style is also good
They have a take away option for your
customers
They have a brand image
WeaknessesPoor disabled facilities
Limited fund available
Offer a product which is available
on the market
Dont advertise your restaurant
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Opportunities
Opening new branch in new city
Buy raw material direct from manufacturer
Arrange average price so everyone can afford
Threats
New competitors are enter in your area
A main competitor has lowered their prices
and started a price war with you
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Balanced ScorecardWhat is a Balanced Scorecard?
The Balanced Scorecard (BSC) is a performance measurement tool that originated in the
business world.
Performance measurement is a way to track performance over time to assess if goals are
being met.
The BSC was introduced by Robert Kaplan, a Harvard Business School professor, and David
Norton, the founder and president of Balanced Scorecard Collaborative, Inc., in the early
1990s as a new way to measure business performance.
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Objectives Measures
(what honest must do from each perspective to achieve its overall
mission)
(how honest will know how its doing in achieving its objectives
and in
turn, its overall mission)
Finance Perspective
What is the primary objective of our overall mission?
To sell and serve the food items, more to the costumer.
Be a cost leader in the market.
Increase profitability every year by 19% by 2013
Earn more by providing outlet
Providing discount on occasion
Expanding the menu
How will we know how were doing in achieving that objective?
Expand the outlet.
Unit cost.
Returned on capital employed
Franchise
Festival
Varieties.
Customer Perspective
In order to sell the most food items what must we be doing from
our customers perspective?
Providing Great Service
Maximum satisfaction.
By providing best Taste, good quality
How will we know if were providing great service?
Excellent results on a customer survey
By revisiting of customer
Feed back
Internal Process Perspective
At what do we need to excel to deliver great service?
Quick food delivery
Communication between staff
How will we know how if were delivering food quickly?
Amount of time from order to delivery
Behavior of employees
Internal Learning & Growth Perspective
How do we excel at quick food delivery?
Training employees Preparing for special occasion
How will we know if were trained and ready?
Number of employees attending and passing training classes
Regarding festivals, outside events.
Balanced scorecard on Honest restaurant
C S S O O S S A A
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CRISIS OF HONEST RESTAURANT
PROBLEMS RELATED TO WASTE
Waste generated from Restaurant can be categorized into:
Degradable waste
Non degradable waste
Degradable waste can be in the form of:
Peels and waste portion of a vegetable
Left over residue by consumers/customers
Leftover food from the restaurantNon Degradable waste can be in the form of:
Packaging (Milk packets, bread packets)
Tin/ boxes of oil
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DISPOSAL OF WASTE
For the disposal of degradable waste, each branch of Honest has the separate
contractual agreement with Municipal Corporation.
The waste is collected by the Municipal Corporation.
Some part of the Non degradable waste such as empty packets of milk, breads,
and other polythene packets are also collected by Municipal Corporation.
The contractual rate varies from branch to branch as per the waste generated and
ranges between Rs. 3000 to Rs. 4500 per month.
The other part of the Non Degradable waste i.e. tins, boxes etc. are sold and by
mean of which restaurants also get some earnings.
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SOCIAL ASPECT
Every year, the Honest restaurant gets the contract for serving at KANKARIACARNIVAL
by the Government.
It provides the food packet to the every participant in the Carnival.
Food for the packets is prepared on the Carnival site, under the inspection of Government
officers.
Kitchen at the Carnival site works continuously 24 hrs for 6 days of the Carnival.
It sells the packet to the Government at the production price i.e. NO PROFIT condition.
Total turnover at Kankaria Carnival ranges from Rs. 5 lacs to 6 lacs.
Apart from this, many times in a year restaurant provides the food in the Government
meetings at NO PROFIT condition.
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SUGGESTIONS
Honest restaurant can improve its waste management process by purchasing a wastecollection van.
This will collect all the waste from the honest chains.
They can segregate the waste like plastic cups; spoons etc and sell it in the market.
From this segregation the can earn the minimal revenue and cover up their cost of wastecollection van
As they follow the safety measures in their kitchen, they can also follow the measures forthe waste management.
The can give the training to their employees for proper waste management and know theimportance of hygiene factors related to this.
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