The Broadway Cafe is a family inherited business which is conveniently located in downtown Sydney. The cafe offers many different kinds of specialised coffees, teas, a full service bakery, and homemade sandwiches, soups, and salads. It was first opened by grandfather in 1952 and it was a local hotspot for many years, until the last five years, the business has been steadily declining.
The cafe still operates the same as it did in 1952, which on one hand; it has a loyal customer base and an established menu, however, on the other hand, the business is outdated. There are neither computers nor technology in the store. All performance takes place manually, from taking orders, tracking inventory, along with customer lists, employee payroll, and marketing coupons, even the family recipes for baked goods and soups are stored in grandfather??™s memory. There is no advertising or marketing plan except word-to-mouth, and more, it does not have a website.
Recently one of the employees has heard a rumor that Starbucks might be opening a new store in this area. In order to bring the cafe into the 21 century, the business needs to gain a competitive advantage though technology. Changes shall be made in order to keep the business running and increase profits.
In order to survive and thrive, an organisation must create a competitive advantage. A competitive advantage is a product or service that an organisation??™s customers place a greater value on than similar offerings from a competitor (Baltzan & Phillips, 2010). Unfortunately, due to competitors often seek ways to duplicate the competitive advantage, they are typically temporary.
In order to improve business and develop competitive advantages, first, we must pay close attention to the competition through environmental scanning. Environmental scanning is the acquisition and analysis of events and trends in the environment external to an organisation (Baltzan & Phillips, 2010). By viewing the website of Starbucks, it appears that they are technologically advanced. They not only provide high-quality product, but also value their customer and employee.
After knowing of the competition, second, we must identify the competitive forces. To combat these competitive forces, Porter developed the Five Forces Model, which is a useful tool to aid understanding competition and its implications for business strategy (Baltzan & Phillips, 2010).
The Broadway cafe??™s buyer power is high, as customers have a wide variety of options to choose from and typically make purchases based on price, not carrier. One way to lower this force is to offer the customer loyalty rewards. A membership card can be given to customer on their purchase for free, specials like buy ten and get one free or coupons for free samples could be offer to members or retuning customers.
The cafes supplier power is low; as there are tremendous suppliers which offering multiple deliveries options to choose from and can constantly search for the best quality at the lowest price with the development of internet B2B services.
The threat of substitute products or services is high in this cafe business. Various competitors exist because the entry barrier of this industry is low and it does not require much experience. To reduce the threats, we would need to provide our customer with a niche experience in the cafe, a friend and family atmosphere, high quality service or a particular dish that could only be served one hundred per day and could not be found elsewhere.
The threat of new entrants is high, as new competitors are continually pouring into the market, including convenient stores and express coffee kiosk. But since the Broadway cafe has been in business in 1952 and has never had a single competitor in the neighborhood, it gains a first-mover advantage. The first-mover advantage occurs when an organisation can significantly impact its market share by being first to market with a competitive advantage (Baltzan & Phillips, 2010). It has a customer loyalty base and as long as it remain its standard, it will not be easy for the customers to give up their regular dining habits.
Rivalry among existing competitor in the cafe industry is high. Just by searching cafe Australia at google.com.au, about 134,000,000 results would come up at your choice. One way to reduce rival power is by using switching costs. Switching costs are costs that can make customers reluctant to switch to another product or service (Baltzan & Phillips, 2010). Creating the services that are significantly different from our competitors, like use the membership reward card to develop a customer profile which indicating their dining habits or purchase habits, which would reduce competition.
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By gathering, analyzing and dispensing information, we could set up a strategic plan to gain competitive advantage and improve the business. Computers and management softwares should be installed in the cafe to provide accurate, effective and efficiency inventory tracking, record keeping, order taking and account checking. Free internet access must be put in place so as to satisfy different age group. A website of Broadway cafe should be built not only to place a proper advertising device, but also gather customer and employee feedback on what should be improved. Customer can also view the latest member special offer on the website; download the coupon for free sample; or checking the points that have collected to see what prize could be redeem. At last, the cafe also plan to offer a reward program to its employees. Monthly special bonuses would be given to the best employee which depending on his/her overall performance.
Baltzan, Paige; Phillips, Amy; Lynch, Kathy and Blakey, Peter (2010) Business Driven information Systems, 1st Australian/New Zealand edition, McGraw-Hill Australia, North Ryde, Sydney, N.S.W.
Cohesion Case (2011), The Broadway Cafe, viewed 12 March, 2011,
Starbucks (2011), viewed 15 March, 2011,