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Analysis of BreadTalk Group Limited

Bread is among the most popular staple in the Asian meals culture. In the years, BreadTalk has successfully expanded their affect and popularity to 16 nations with greater than 500 bakeries all around the globe. BreadTalk is known for their ‘see thru’ kitchen idea which allows their chefs a platform to showcase the abilities and capabilities. This additionally allows interplay between customers and staff.

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A comprehensive analysis of the business strategy of BreadTalk Group Limited for the Thailand market revealed that its strategic goals are aligned to the company’s vision and mission statement: Vision Establish BreadTalk because the foremost international, trend-setting lifestyle bakery model | Mission Leading a new life-style culture with new, innovative adjustments and inventive differentiation to craft products with passion and vibrancy | Innovative improvement and design of their merchandise elevated awareness of the brand, BreadTalk, complimented with the use of locations with excessive human traffic are rising the market share of its bakery arm throughout the Thailand market.

Lessons drawn from the analysis have shown that BreadTalk is constantly in search of enchancment and reviewing their strategies to stay abreast.

Being in a country with cultural variations in food preferences, working attitudes and lifestyle, BreadTalk’s adaptation and globalization strategies has confirmed to be efficient. Success is mirrored within the assured future investment promise and processes in place to overcome their strategic implementation points.

Introduction

BreadTalk is aggressively increasing globally and leaves footprints in China, Indonesia and Thailand. With Singapore and China markets dominating the overall income for the bakery arm, a evaluation on the business strategy for the Thailand market carried out.

Strategies and implementation points are identified to increase the market share and income for BreadTalk Thailand using the rational / formal mannequin.

BreadTalk’s company historical past and background is attached in Appendix A.

With a strategic evaluation on the exterior and inside environments utilizing models / theories like PESTEL, Porters’ 5 Forces, evaluation of turbulences and inside strategic aggressive advantage, helpful strengths and weaknesses, opportunities and threats are recognized in this report. Strategic implementation and implementation issues are mentioned further. Successful implementations are helpful lessons for review.

Strategic Analysis

External analysis: General environment

PESTEL model

Political/Legal

Thailand has confronted varied political/government instabilities, such because the Thai coup d’état in 2006, the elections for a new constitution in 2007, a political crisis in 2008, and crackdowns and protests which involved violence from 2009-2010. Although the ruling of the July 2011 elections belonged to the Pheu Thai Party, the political situation was nonetheless shaky. There was a battle between the “red shirts” (supporters of current ruling Pheu Thai Party) and “yellow shirts” (oppositions of the Pheu Thai Party), resulting in continuous tensions. All the bloodshed additionally damaged the economic system, sinking the already struggling client confidence even more.

Besides this matter, Thailand’s additionally having issues with its neighboring country, Malaysia. Both countries’ relationships have soured greatly because of the Pattani separatists’ problem, which involved the battle of independence by the ethnic Malays in Southern Thailand. These incidents have raised concerns amongst overseas traders and producers relating to Thailand’s political stability.

Thailand has strict regulations when it comes to working phrases and situations. A correct visa should be utilized from a Royal Thai Embassy, with some nations needing to obtain an entry visa, which permits a keep of 15 days upon arrival in Thailand. However, Singapore is probably one of the countries that might stay for 30 days with out an entry visa, however should get hold of an entry stamp on their passports. The disadvantage of Thailand’s employment regulation is that it is time consuming, costly and has a tedious quantity of paperwork.

Economic

Following the fixed tremors in the economy in 2008 and late 2011’s Euro disaster, Thailand has suffered duly looking back. With a staggering 41.06% debt of Thailand’s whole GDP January this 12 months and a further 2 trillion baht for the beginning of subsequent yr (‘Good only at borrowing’ jibe haunts Pheu Thai Party, 2012), the country has much to recuperate from. The nation’s forex, Thai baht, has also taken a beating from the financial crisis in 2008 and 2011, falling from a excessive of forty three.6 baht in 2002 to 29.44 baht per 1 USD right now.

However, it is to be noted that Thailand has come a great distance since its third world country days again within the 90s. It has reduced its poverty by a third, from 27% in 1997 to 9.8% in 2002, and even has a health care policy which covers approximately 70% of its residents (Data – Thailand).

Countries surrounding Thailand portray a combined basket of financial system statuses. With Myanmar slowly opening its doors to international traders, and Malaysia running a excessive risk of going into debt (Budget 2013 proof Malaysia falling into debt crisis as income slows, says MP, 2012), Thailand has to weigh its alternatives and costs with nice consideration so as to maximize its potential in this crisis-stricken financial system.

Social/Cultural

Buddhism is the principle faith in Thailand (about 85%) and it significantly influences the Thais’ working angle corresponding to respect and politeness, forgiving and thoughtfulness. Respect can be reflected in the country’s monarchy system with military-dominated hierarchy present in both the society and office (Bi, 2012). In addition to their spiritual beliefs, trendy Thais also show persistence and hospitality at work emphasizing positive outlook. Thais prefer to work in a bunch, with ample time for completion in social setting; isolating them will result in stress and discomfort. They have nice respect for age and authority, preferring obedience and tolerance to battle (Gross, 2001).

Thai cooking is beneath the influence from the Chinese from southern China, Indians close by and Malays from the south; the principle dietary staple is rice. Due to the social nature and friendliness of Thai folks, dishes are shared and enjoyed collectively. They like to eat in teams and consuming alone is considered dangerous luck. Thais are known to take 7 meals a day; in addition to breakfast, lunch and dinner, they ‘snack’ a lot, savouring snacks along roadside or marketplaces anytime. Bread is becoming in style due its convenience. Baked products expect an annual progress of 5-6% (Jitpleecheep, 2012).

Technology

According to Internet World Stats, Thailand is ranked ninth in 2011 amongst international locations in Asia, when it comes to number of Internet customers. Currently the population of Thailand is at 66.7 million; the country has an Internet penetration rate of approximately 31%, which amounts to 20.7 million in 2011 (Singapore Management University, 2012). There is a rising share of advertising spend with extra giant firms diverting a proportion of their advertising budgets to internet marketing (Appendix B).

Amongst the Asia-Pacific countries, businesses in Thailand are relatively energetic on social media channels (Kemp, 2012). As enterprises faucet on social media for their business, they play on the ‘personal touch’ factor that social media is ready to achieve. Social media inspires and affect the behavior of Internet customers, such as purchasing a product, by stimulating and attracting them to participate in online activities (New Media Trend Watch, 2012). This participation makes the purchasing process extra personalized, therefore will increase gross sales.

Thus, if BreadTalk intend to extend their sales in the F&B trade in Thailand, they could make use of the developing social media platforms to help in publicising the model and its products (MVF GLOBAL, 2012). In this case, it might be more practical they usually can reach to a wider viewers too, bringing BreadTalk to higher heights.

Environment

The Thai Government has been specializing in the social and economic improvement for the previous 35 years. Nevertheless, over the previous decade Thailand has been increasingly threatened by the problems of commercial waste, hazardous wastes, natural sources degradation and water pollution (Thailand Info : Economy, 2008).

Thailand has been struggling the menace of floods in the current years. This has triggered a dip in their manufacturing of rice-their staple and of their tourism industry. During the times of floods, there was a shortage of meals provides. According to the Ministry of Natural Resources and Environment of Thailand (MNRE), since 1992 the Government has made protecting the surroundings one of its top priorities.

Thailand can be described as a tropical and humid country throughout the year. They declare to have solely two seasons, the wet and dry. The summer season extends from March to June with a temperature of 320 C to 360 C and monsoon extends from July to October with temperatures averaging around 290 C (The Global Climate Change Regime, 2012).

This climate is suitable for BreadTalk. The means of fermentation and baking of assorted kinds of breads wants a tropical surroundings. Extreme weathers would change the uniformity of the ‘raising process’ for the bread and its fermentation course of.

Threat of recent entrants (HIGH)

The threat of new entrants is high as barriers of entry are low due to the little laws from the federal government, the low capital outlay as compared to other industries, low Research and Development costs, and it is likely a highly worthwhile market. Also, because meals has at all times been well-liked with people, and persons are all the time looking for something new and recent, many meals joints have been opening, resulting in excessive quantity of entry candidates. What attracts consumers is the variety of food being offered, therefore BreadTalk can contemplate widening their variety of breads, or by developing with new flavors seasonally in order to remain competitive with the model new entrants.

Bargaining power of consumers (HIGH)

Customers have a typically strong bargaining power as a result of excessive competition in the Food & Beverage (F&B) industry. Should customers not be happy with BreadTalk’s provision of products and companies, they have the facility to boycott and purchase from a different provider, causing huge losses to the company.

BreadTalk has to continually update itself on customers’ tastes and preferences to better cater to their needs. It must also focus on listening to what consumers should say, to be able to meet consumers’ expectations.

Bargaining energy of supplier (LOW)

The general bargaining energy of suppliers for the F&B trade is usually low due to the related high quality of the merchandise. Bulk purchases lead to economies of scale, additional convey down the costs of the provides. Suppliers of these F&B elements are in abundance; many out there that result in worth competition. However, the bargaining energy of the suppliers could escalate as a outcome of climatic affect that will trigger shortages in the supplies; the supplier could then choose to work with firms who’re keen to pay more. BreadTalk has its advantage over the suppliers, because the elements and packaging materials are normal goods which may be out there from many suppliers.

Threat of substitutes (HIGH)

The Food and Beverage market has an enormous industry span and goes a long way back into history, due to this fact the risk of substitutes for meals is definitely very excessive (Aswe Travel, 2011). The meals vendors must take notice of mutual substitution. Congruently for bread-wise, there is no want for customers to devour them, particularly in Thailand the place its distinctive meals culture provides numerous alternatives like rice and noodles that can fulfill the same objective altogether (Aswe Travel, 2011). Thus, there is a sure stage of threat for BreadTalk’s growth and they should deal with into the eating habits of the population, so as to win them over.

Overall, there’s a high threat of substitutes in Thailand for BreadTalk.

Competitive rivalry – price warfare, elasticity throughout the bread industry (HIGH)

The Food and Beverage trade usually experiences intense competitors. The bakery market in Thailand is more and more growing since bread may be favored as substitute for rice. In the meantime, competitors might need to get benefit of this growing pattern.

With rising urbanization in Thailand, now comprising of 33% of the total population have been observed to move away from traditional open air markets to retail stores (Exporter Guide THAILAND FOOD & BEVERAGE Market Profile, 2011). The opponents in this industry for BreadTalk can be roughly categorized into Café’s & Coffee retailers, in-store outlets in eating places and hotels and open-air wet/flea markets. Recently over the previous 5 years, there’s an emergence of regional café come bakery idea (Exporter Guide THAILAND FOOD & BEVERAGE Market Profile, 2011).

The main competitors of BreadTalk in Thailand are Ka-nom, U-Bake, Pee Pee Bakery and The Human Bakery.

An evaluation of the Porters’ 5 Forces mirrored that regardless of the general competition for BreadTalk throughout the business being strong, BreadTalk remains to be in a place to sustain and achieve above common profitability because of the following:

BreadTalk is positioned at the “Moderately Complex Environment” as a end result of wide range of products and competitive substitutes out there but low interconnectedness among the merchandise, markets and competitors; the bakery market in Thailand is comparatively small (Appendix C).

Dynamism

F&B trade in Thailand is generally low dynamism and is alleged to be in a “static environment’; the intensity and frequency of change is minimal and not drastic for this industry (Appendix D).

Predictability

Besides the normal enterprise cycle, other influences similar to natural disaster eg flood and drought brought on the environment to be unpredictable. Despite this influence, tourism remains to be selecting up (ranking 39 in 2009 and 42 in 2008 (Blanke & Chiesa, 2009)) and growth of private funding is wholesome (East Asia & Pacific Economic Update – Navigating Turbulence, Sustaining Growth, 2011). Internal evaluation: BreadTalk Strategic Competitive Advantage Consistent with the company business technique, BreadTalk continues to hunt competitive advantages (Loh, 2011) primarily based on their distinctive:

BreadTalk is consistently pushing out new merchandise and upgrading of retail space to enhance customers’ experience. Their innovative achievement is strongly supported from top administration to front-liners, starting from strategic planning by the top administration, help from workers and feedback from prospects, high quality management baking course of and release of latest products regularly.

SWOT Analysis

With the above analysis on the exterior and inside environment, the following SWOT is identified and a abstract attached in Appendix E:

Strengths

BreadTalk has the capability of making ready the raw material (dough) for all the outlets making certain strict high quality management and a staff of progressive designer caring for new product design and customer experience. Its distinctive branding and concept appeal to prospects giving them new snacking experience at convenient locations.

Weaknesses

There is proscribed gross sales and marketing effort in place for BreadTalk leading to low brand consciousness and no loyal customer base. Allocating 20% adaptation to native food culture will not be sufficient for the Thailand.

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Opportunities

Increase in tourism enterprise boost the growth of F&B sector and Thailand being ranked no. thirteen out of 133 international locations who are like foreign visitors, is adjusting to accommodate the foreign visitors’ likes and dislikes (Blanke & Chiesa, 2009).

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