The Broadway Cafe Competitive advantage

Case Overview

The Broadway Cafe was recently inherited from a family member. The cafe is strategically located in downtown, and it offers a wide variety of foods from different kinds of tea, coffee, sandwiches, salads, soups, and different products from the bakery. Once, the cafe was a local hotspot. It was opened in 1952. However, since the café was passed on from its first owner, it has been performing poorly. It seems that the approaches being applied to run the cafe are outdated as they are the ones that the former owner used since the 1950s.as it follows, the store does not have any form of technology including computers. The former owner had an excellent memory and, as a result new all of his customers by first name. It is unfortunate that this information was not recorded anywhere including the recipes, inventory, marketing coupons and the payroll of employees. The cafe probably has been dropping its sales because of the fact that it does not have any website, or any form of effective marketing other than word of mouth, and because it is essentially run in the same way as it was in the 1950s.

This paper, thereby, will show how the cafe can be operated and owned successfully through the use of some beneficial business practices that can be used to increase the profitability of the cafe. Some of these practices include; the use of technology to enhance the competitive advantage of the business, to create an e- business strategy, to establish a collaborative online community, implement a customer’s wireless network, to utilize CRM for the implementation of sales strategies and campaigns for marketing, address challenges resulting from different information and ethical problem. Establishing management activities for projects, and understanding how technology can be useful in running a business.

Competitive Advantage

The Five Forces Model by Michael Porter is an essential tool that can be used by organizations to come up with effective strategies and decisions when entering a new industry segment. These Five Forces can be used to determine the attractiveness or profitability of an industry or company, and they include; buyer power, threat provided by new entrant, threat produced by substitute services or products, supplier power, and rivalry among existing business (Porter, 1979). There are a number of aspects that are making the Broadway Cafe unsuccessful. These are despite the facts that the café has existed since the 1950s and that the business remained a hot spot for an extremely long time. Some challenges that the company has been facing include; sales have been declining, the system used to run the cafe is outdated, things are done manually, systems are not computerized, prices have not been reviewed for years, the business does not offer any reward program to its customers, and there are no hot spot or website connections for the business’s customers. By using the Five Forces Model by Porter, one can analyze the performance of Broadway Cafe.

When it comes to supplier power, the café has been increasing the number of suppliers leading to an increase in cost. The business can reduce the number of suppliers and still maintain quality, and reduce operating costs. To address the challenges brought about by threat of substitute services and products, the cafe will have to change its products such as teas, coffees and soups, and the prices of these foods so as to match with the needs of the changing market (Porter, 1979).

The buyer power of the company has been declining for the last five years. To deal with this challenge, the cafe has to engage in numerous promotions and campaigns so as to attract new customers, as well as, old ones. New entrants are also giving the café a substantial amount of competition. The business has to reinvent itself and offer its market new services and products so as to increase its business. To solve challenges brought about by the rivalry that exists between competitors, the business has to update its systems like computerizing its ordering systems, inventory, and the payroll system to make the operations of the business efficient, and eventually reduce operation costs and increase sales (Porter, 1979).

Of the Three Generic Strategies by Porter, differentiation can be used to rebuild the café and improve its performance and profitability. It is essential to differentiate businesses from other similar businesses since prices of the offered services and foods must reflect competitiveness (Porter, 1979). The customers of the cafe started decreasing because the business practices practiced by the business are outdated. Today, people need to meet, relax and conduct business with wireless devices, services that the café cannot offer for the moment. So as to rebuild the café, the business has to remain competitive while at the same time offering value for its customers.

E-business

Broadway Cafe must take advantage if strategies in e-business for it to remain competitive in the market. B2B is an e-business strategy the café can deploy. This strategy can allow the business to buy supplies and access shipping and delivery data. It will increase the efficiency of the business in the company. An e-business strategy can have other numerous benefits. It can increase the innovativeness of a business, increase its value and provide essential information to existing and potential customers. Conversion is another benefit which can help the cafe track its sales, track payment and employee information, and store data. These are things that can increase the efficiency of a business. The above advantages can also attract new customers and increase sales (Baltzan & Phillips, 2009).

E-business strategies can also allow a business to establish a website that can allow customers to interact online, that can also enable existing and potential customers to access information about the cafe, and allow the cafe to review the feedback of its customers about the service. The business should, therefore, put such metrics on its websites as the services and foods offered, the prices of these foods, the location of the cafe, pictures of the cafe, and other essential features that can attract customers to the business. E-business strategies can also be essential in partnering with suppliers. This is because it will allow the café to stay in touch with its suppliers through Extranet. Through this feature, it will be possible for suppliers to view what orders are required without having to contact the cafe physically. This can save a lot of money and time (Baltzan & Phillips, 2009).

Portals are also other features of e-business that can be used by employees to monitor and manage discussion boards the cafe is planning to implement. This will act as an added advantage which will help the business measure the views and opinions of potential, younger customers. A kiosk will also be useful in the cafe. A kiosk will be established with two or more laptops for use by employees and customers. This is an extremely beneficial e-business strategy as it will differentiate the café from its competitors. The cafe will be current and trendy. It is assumed that many customers and employees will get the word out that the café has become a fashionable, trendy and current spot. This will attract more customers, and increase sales (Baltzan & Phillips, 2009).

Networks, Telecommunications, and Wireless Computing

Broadway cafe can entice and attract the younger customers through the use of mobile phones. They can try offering them coupons for free meals or coffee by use of mobiles. One of the advantages why mobile coupons are more effective than normal coupons is that they have a higher redemption rate as they cannot be forgotten. Their use can, therefore, reduce costs associated with delivery and redemption, and they can also be a good trigger of impulse buying. The café can, hence, benefit immensely from such coupons. There are, however, several risks associated with mobile coupons. The coupons are based on the internet, and their concept is new. As a result, certain restrictions can affect the usability of mobile coupons like privacy policies, protocols and disclosures. Privacy issues might also arise as a result of the wireless technologies the system is based on. Some of these issues include the increased ability for the café to gather information that is personal, the ability to track and find out who visited to the site, and the ability to identify the locations of the customers (ACP, n.d).

There are several advantages the cafe can get from tracking and gathering rates of responses from mobile coupons as such activities can provide the business with information that can be analyzed about the performance of the business and the performance of the cafe. Such analysis could assist a business in correcting mistakes and enforcing positive activities. Tracking a mobile coupon that has been forwarded to another customer can be as beneficial as tracking other mobile coupons. This is because forwarded coupons still increase the customer base of the café (ACP, n.d).

Customer Relationship Management

Customer relations management can be advantageous for Broadway especially because it has implemented new espresso machines that the customers do not seem too familiar with. In addition to this, the café also has four new employees who are not experienced and are causing delays during peak hours. It has been noticed that this frustrates the customers. YouTube can be used to communicate the customers and address their concerns. The manager of the café can attach clips of videos and pictures on YouTube showing customers how the new espresso machines are used. The new employees can also access these videos and use them to sharpen their skills and to serve the customers efficiently without causing unnecessary skills. The manager can also attach a video explaining about the new employees and explain that they will be trained as soon as possible to improve efficiency. Though this feature can be extremely beneficial, it also has a number of cons. Some have to do with education. Technology needs some substantial amount of training and education. If customers do not have these basic tools then they cannot access what you are trying to tell them. Other disadvantages have to do with permissions and privacy. There are several alternatives to YouTube incase the café feels that it is not an effective tool. These include facebook, twitter, blogs and other social networks (Nichols, 2008).

Systems Development

There are various advantages and disadvantages of using an employee to build your business a custom system. One advantage is that they possess the basic information about the operations of the cafe, its customers, and employees. So if there is anyone better to develop the café a system it would be someone who works there. A disadvantage is that the employee might not possess the best skills and education to develop such a technological system. The café can opt to buy a COTS application, outsource custom development, and buy an attendance application. One of the advantages of doing this is that these developments are designed by professionals, and therefore the chances of them being correct and appropriate, and making the café efficient and productive are high. A disadvantage is that they can be awfully expensive for a café that is strained like Broadway. The new system would not be readily accepted especially by the old employees. Change is always hard and it would be beneficial for the older employees to be engaged in training to ensure that they know what benefits the new system can bring, and to make the transition easier through offering them knowledge about what the new system is about (Beynon-Davies, 2009).

References

ACP. (n.d). Internet coupons guidelines and overview from the Association of Coupons professionals (ACP). Retrieved from http://www.couponpros.org/resources/Internet_Coupon_Guidelines_and_overview.pdf

Baltzan, P. & Phillips, A. (2009). Business driven information systems. USA: McGraw Hill Companies Inc.

Beynon-Davies, P. (2009). Business Information Systems. Basingstoke: Palgrave.

Nichols, S. (2008). YouTube as a corporate communications tool. Go Articles. Retrieved from http://goarticles.com/article/YouTube-as-a-corporate-communications-tool/1267054/

Porter, M.E. (1979). How Competitive Forces Shape Strategy. Harvard business Review.