bsca presentation
TRANSCRIPT
Business Strategy
for Competitive Advantage-
U51035 Students: Porter’s generic Strategies – Cost
leadershipGroup 1(Team B)
Presentation FlowIdentify
Cost Leadership
Strategies being used
by CDC
Cost-leadership strategy
How to implement
Measure with the benchmark
Which one doing better
Identify Cost Leadership
Source: Café de Coral Corporate Motto & Mission
Cost-leadership strategiesInput cost
• Labour cost• Raw
materials
Economies of scale
• Scale/Size• Sales volume
Experience
• Labour productivity
• Learning curve& History
Product/ProcessDesign
• Simplifying menu• Streaming the
frontline operation flow
Strategies being used
by CDC
Input cost
Input cost
Labour cost
Raw materials
Input cost--Labour cost
Strategy being used by CDC
• Implement Automation in Production Process and workplace
How to implement
•A. Tai Po Food Processing Center•→The automated machinery makes operation more efficient •→Less manpower needed•B. Outlets •→Vending machine at some outlets•→allow diners to make orders and•→pay for them electronically•→Cut down on cashiers
Effect •Reduce increasing rate of Labor Cost•2012/2013 Café de Coral ↑0.7%, Fairwood ↑1.1%
Measure with the benchmark
○
CDC: average 25%2009~2013
Input cost-- Raw materials
Strategy being used by CDC
• Global Purchasing mix
How to implement
•Raw materials procurement from all over the world •Selects lower cost of raw materials around the world•E.g. Canadian Grain-fed Beef and Australian fish fillet
Effect
•Reducing the raw material cost influenced by RMB appreciation •Global purchasing has been employed since 2012. •RMB↑2.45% (1/2012~1/2013),the raw material cost ↓0.5%•And the cost of food ingredients has decreased since then, from 33.9%
down to 33.4%.
Measure with the benchmark○
Input cost--Which one doing better
○ Benchmarking on input cost in 2012/13
○ Ranking:○ They are similar ~70%
Input cost
Labour cost
Other Inputcost
Economies of scale
Economies of scale
Scale/ Size
Sales volume
Economies of scale--Scale/ Size
Strategy being used by CDC
• Expansion strategy
How to implement
•A. Opening more stores.•→Located at commercial, industrial and residential districts•→Where there were strong demand for quick service restaurants.•→Open 15 stores in 2010-2012•B. To establish new central food processing plants •→To support 300-350 stores in Hong Kong. •→Having a central kitchen = less space would be needed in retail stores•→More space can be spared for serving customers to maximize revenue.
Effect
• ↑ Negotiate discounts• Better cost control• ↑Competitive advantage
Source: Café de Coral Annual report 2010/2011
Measure with the benchmark
2013-2014 Café de Coral Fairwood Tsui Wah
Size 153 103 27
Café de Coral Fairwood Tsui Wah
Support no.of stores
300~350 180 60
Benchmarking on Size in terms of no. of stores in2013-2014
Benchmarking on central kitchen (Support no. of stores)
Economies of scale--Sales volume
Strategy being used by
CDC
• Prudent approach on price increment
How to implement
• Low price strategy • Value meals• Some of our initiatives over the year have led • to money-saving efficiencies that we plan to pass back
to customers• in the form of a new range of value meals: low-cost
standards that will underpin our higher-value offerings.
Effect
• ↑ Customers volume• Small profit but rapid turnover
Source: Café de Coral Interim report 2011
Source: Café de Coral CEO's Report 2013/2014
Measure with the benchmarkBenchmarking on average spending per customer in2013
Economies of scale-- Which one doing better
Experience
Experience
Learning
curve& History
LabourProductivit
y
Experience—Labour Productivity
Strategy being used by CDC
•Mentorship and Knowledge transfer
How to implement
• Has established the "Café de Coral Management Academy"(2000)• Regular training activities for employees• Put team spirit into practice• Review the service attitudes and performance of staff through an objective
"mystery shoppers" program.
Effect
• To strengthen labour skills, enhance labour productivity• Helps enhance the quality of service• Reduce mistakes
Source: CDC CEO’s Report
ExperienceFoundation
First food processing
plant
50th restaurant
Café de Coral
Management
Academy
Building Central food-
processing plant
Over 140 restaurants & 300,000 customer
daily
1968
Year
1979
1988
Now2008
2000
UnitCost
Cumulative volume of production
X
Y
Experience curve
Experience—Experience curve& History
BenchmarkBrand Foundation
Cafe de Coral 1968
Maxim’s 1972
Fairwood 1972
Tsui Wah 1977
Early entrants into a market will have experience late entrants do not yet haveIt is important to gain and hold market share
Measure with the benchmark
Experience—Which one doing better
○
Product/Process Design
Simplifying menu
Streaming the frontline operation flow
Product/ProcessDesign
Product/Process Design-- Simplifying menu
Strategy being used by CDC
How to implement
Since 2013, Café de Coral sets number signs next to the menu
Effect
Make the menu clearTo convince the customers to order and staffs to take order
How to implement
Source form Café de Carol Annual Report 2011
Product/Process Design-- Streaming the frontline operation flow
Strategy being used by CDC
How to implement •Establish an independent zone for packing deliver
Effect•Make the process more efficient •save time cost→ shorten the queuing time•More flexible
Source form Café de Carol Annual Report 2011
Product/Process Design-- Which one doing better
Ranking:CDC is doing better than others
Simplifying menu
Independent zone for packing deliver
Cafe de Coral
Y Y
Fairwood N N
Maxim’ mx N N
Overall performance of CDC
CDC
Input cost Similar to competitors
Economies of scale
1st
Experience 1st
Product/ProcessDesign
Doing better
ROA 2013-14
CDC 12.72%
Fairwood 12.12%
Tsui Wah 10.77%
ROA---An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.
References
Café de Coral. (n.d.). Café de Coral Home page. Retrieved from Café de Coral Web site: http://www.cafedecoralfastfood.com/companyinfo3.php?lang=b5
South China Research Limited. (n.d.). South China Research Limited- Golden age of Hong Kong fast food chains. Retrieved from South China Research Limited Web site: http://www.sctrade.com/data/sctoday/20130731104308Eng-Golden%20Age%20of%20Hong%20Kong%20Fast%20Food%20Chains%20-%20130731.pdf
Standard Chartered. (2013, April 27). Equity research: Fast-food to fine dining. Retrieved from China: Travel& Leisure- Emerging Companies: https://research.standardchartered.com/configuration/ROW%20Documents/Fast-
致富證券有限公司 . (n.d.). 致富證券有限公司 -本地快餐店及茶餐廳分析 . Retrieved from 致富證券有限公司 : http://www.chiefgroup.com.hk/_upload/pdf1_20140320075750_%E5%B0%88%E9%A1%8C%E5%A0%B1%E5%91%8A-%20%E6%9C%AC%E5%9C%B0%E5%BF%AB%E9%A4%90%E5%BA%97%E5%8F%8A%E8%8C%B6%E9%A4%90%E5%BB%B3%E5%88%86%E6%9E%90.pdf