Báo cáo, phân tích, gợi ý chiến lược quản trị cho hệ thống chuỗi urban station

Page |1 ASSIGNMENT COVER SHEET UNIVERSITY OF SUNDERLAND BA (HONS) BUSINESS MANAGEMENT Student ID: 149165417/1 Student Name: TRAN PHUONG PHI Module Code: SIM336 Module Name / Title: Strategic Management Centre / College: UTE Ho Chi Minh City, Viet Nam Due Date: 16 January, 2016 Hand in Date: 16 January, 2016 Assignment Title: STRATEGIC MANAGEMENT Students Signature: (you must sign this declaring that it is all your own work and all sources of information have been referenced) Page |2 Table of Contents Page |3 Introduction Since the first shop opened in 2011, Urban Station has developed and expanded their business until now, there are more than 30 coffee shops cater for coffee consumer demand of customers, especially young customers in the main markets of Vietnam as Ho Chi Minh City, Hanoi, Da Nang, Dong Nai, Vung Tau, etc Although the product price only between 15,000 to 40,000 VND, the quantity of products are also not innovated much in recent years However, Urban Station can still exist alongside the large competitors in the market like Highland Coffee, Trung Nguyen, etc from overseas rivals like Starbucks, Gloria Jeans, The Coffee Bean, etc By applying appropriate and necessary tools, this report will give readers clearly view of strengths, weaknesses, opportunities, theats, and risks and existing values of Urban Station, from there, I would make the recommendation to develop and overcome the shortcomings of Urban Station Page |4 PESTLE Analysis PESTLE analysis is used as a tool in order to track the business which the corporation is operating or is planning to launch a new objective PESTLE is expanded from Political, Economic, Sicial, Technological, Legal and Environmental External environment has impact on the growth of a firm It brought not only opportunities but also challenges to Urban Station and therefore it is important for managers to examine to give visionable decisions PESTEL Analysis below will conduct external factors that have impact on the development of Urban Station (PESTLE Analysis, 2016) Political In overall, corporations which doing their business will be influenced by the government in that country For Urban Station, Vietnamese Government will directly affects to their business operation Policies, Tax rate, etc will affect apart on Urban Station's business For example, according to General Department of Taxation, from 2016, the State has preferential policies that free tax, and 50% tax exemption for private enterprises to expand business models and develop production (General Department of Taxation, 2016) With such preferential policies, Urban Station can think about boosting the development of its business model, not just a takeaway cafe chain, Urban Station can also develop products carry the own brand of coffee Urban Station Economic The changes in recent years have in part contributed to a coffee crisis that affects more than 50 coffee producing countries, several of which are dependent on coffee as their main source of export revenues As a result, Vietnamese economy underwent some difficulties although it was modest Some regional economic shocked when coffee revenues dropped significantly combined with increased government expenditure However, it does not affect much to Urban Station, as we clearly can see that Urban Station still keep expand their business to more than 30 coffee shops in Vietnam Market According to Mr Nam (cofounder of Urban Station), there are some propounds to sell the franchise from partners in Combodia and Malaysia The reason to explain the success of Urban Station is that firstly Vietnamese economic scale was small, meaning that it was affected by crisis modestly It was an advantage for not only state company but also private enterprises, especially Urban Station Secondly, Urban Station with the difference from competitor such as service and price, Trung Nguyen had firmly position in the market Thirdly, coffee was very in favour of Page |5 customers when it was consider the most favourite drink As analysis above, Urban Station could overcome obtacles and less suffered from crisis (FBNC Vietnam, 2015) Social/ Cultural According to General Statistics Office of Viet Nam, in 2014, there are more than 90 millions of population in Vietnam within 69.4% of population are at the age between 15 to 64 years old This means that the number of potential customers for Urban Station are very high because people who are from 15-64 years old usually have stable income and they also have higher demand of coffee and drinks than other age groups (General Statistics Office of Viet Nam, 2016) In Vietnam, for many years, we are very familiar with images of coffee in the morning and in the evening Coffee has become an integral part in the lives of Vietnamese, which known as the coffee culture It also means that Vietnamese usually spend their time at the coffee shops to study, work or relax etc Urban Station has their chance to serve more cups of coffee to their customers for instance, usually, Urban Station open at a.m and close at 10 p.m, they could make some differences with other competitors by open earlier in order to get more customers or in the weekend which people not go to work on Saturday and Sunday, Urban Station can apply "midnight coffee" which open 24/24 on Friday and Saturday Technological The business activities in an Italian cafe as Urban Station requires not too many devices Typically, a store just need a small coffee grinder, a coffee maker combined with foaming milk to produce the tasty espresso and cappuccino, and one or two blenders to make soda or water lines fruit blender The taste of a cup of coffee is determined by the formula of the preparation, the devices support only a small contribution to make a perfect cup of coffee but these devices are indispensable The maintenance of the equipment should be performed monthly at Urban Station, because to serve more than 100 cups of coffee each day, the degradation is very quickly Legal As a Food & Beverage business in Vietnam, Urban Station must follow some regulations and policies set by the Government of Vietnam in order to operate their business in the market such as law of food safety 55/2010/QH12 (Ministry of Justice, 2016), labor law 05/2015/NĐ-CP (Ministry of Justice, 2016), etc Page |6 Environmental As we known that, Vietnam is the second large country (after Brazil) which export coffee in the world (Vietnam Trade Promotion Agency, 2016) This is an advantage for Urban Station to get cheaper coffee beans Because Vietnam is a tropical climate country, so the demand is very high to use ice drinks in hot weather and hot drinks in cold weather This creates advantages for Urban Station to have chances to diversify their beverage products to serve more customers and increase profits Porter’s forces The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation This is useful, because it helps Urban Station understand both the strength of its current competitive position, and the strength of a position Urban Station is considering moving into With a clear understanding of where power lies, Urban Station can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps This makes it an important part of Urban Station's planning toolkit The Porter’s Five Forces include: Supplier Power With each different kind of material in Urban Station will be a different supplier The number of suppliers for each raw material is also different Therefore, with each different Page |7 type of material, Urban Station will have strong or weak power For example, for the material is ice, the market has a lot of ice supplier, besides, the ice was supplied to Urban Station must be clean to ensure the customers' health If current ice supplier for Urban Station arising any problems, Urban Station can choose a different supplier immediately, switching costs are not too big for the material is ice because a bag of ice just under 50 thousand VND in the range, in this case the power of ice supplier is low A different example is with the milk, in Vietnam, Vinamilk is a big supplier of milk which supply a lot of milk for a lot of food and beverage businesses, and the quality of Vinamilk's products is good and common used for make drinks If Urban Station chooses a lower quality suppliers because of cheaper price, they will make their products' quality lower and loose the competitors so that, Urban Station does not have many choice of milk material, in this case, the power supplier of Vinamilk is high Buyer Power Compared to competitors in the market, with a alike drink, same flavor, equivalent services, etc the determinants of the buyer power is the price, for example, with prices ranged from 15,000 to 40,000 VND for a product at Urban Station and with the price over 35,000 VND for a product at Effoc Urban Station will become the first choice of customers Besides, for example, in Ho Chi Minh City, there are more than 20 Urban Station coffee shops so that it will shorten the distance from customers' places to the nearest Urban Station coffee shop With more than 90 million people in the country (more than 60% of people at the age 15-64) Urban Station has a lot of customers However, if Urban Station has their benefits of lower price which they loose the good customer services, it will be a lost of image and profits of Urban Station In this case, the buyer power, is at middle, not too high and not too low Competitive rivalry In recent years, people found that the benefits of the takeaway coffee model and the type of Italian coffee, there are many competitors appeared in the market such as Effoc, Passio, Thuc cafe, Heritage Coffee, etc Those competitors they provided many more services than Urban Station, for example, 24/7 is applied by Thuc cafe and Heritage Coffee which they open all day in the week but Urban Station does not have this In addition, the menu of those competitors have more drinks and they have their own drinks to make difference such as Effoc Coffee, or Passio Coffee which Urban Station only has black coffee and coffee with milk By those, the competitive rivalry of Urban Station is low Page |8 Threat of substitution The beverage business of Urban Station is very easy to substitute, besides the tangible products are drinks sold, are the intangible services It means that, the main differences cannot be seen in every single cup of drinks at Urban Station or their competitors if they use same formula, same products, same prices, same quality, etc which is differentiated by the services provided to the customers For example, a customer comes to Urban Station and she ordered black coffee with no sugar, the second time, she also ordered that black coffee with no sugar and the third time she came, the employees at Urban Station remembered and happy to ask if she order the same drink That action of employees at Urban Station will make the customers feel friendly when they come to Urban Station, they feel they are respected here and they will come here with their friends next day In this case, Urban Station is very good at making their customers feel comfortable whenever they come, so, the threat of substitution at Urban Station is low Threat of new entry Threat of new entry n this kind of beverage business is very high, especially takeaway coffee and Italian coffee, if anyone looks as if they can make sustained profit, new competitors can come into the industry easily and reduce the profit of Urban Station As we can see, in recent years, the takeaway coffee and Italian coffee shops appear a lot in Ho Chi Minh City market such as Passio, Effoc, Bene Coffee, Gloria Jeans, Coffee Bean and Tea Leaf, Starbuck, etc SWOT Analysis SWOT stands for: Strengths Weaknesses, Opportunities and Threats SWOT is a common business tool that both show the internal and external factors of the business By using the data of the business, SWOT is able to identify what strenghts and weakenesses (internal) the business has SWOT also helps the business to find out the opportunities that may arise as well the threats (external) business is likely to face (Makos, 2015) For Urban Station, I am going to analyze their SWOT following: Strengths - Clean ingredients: all of ingredients are kept clean in box, Urban Station uses milk from Lothamilk and Vinamilk (2 big brands in Vietnam) Syrups - which are used to make drinks are from Monin brand Focus on Italian Coffee: nowadays, customers have more demand of Italian coffee, especially young consumers because the taste of those Page |9 coffee is diversify, coffee can be mixed with cream, chocolate, fruits, etc Besides, soda is mixed with many kind of syrups so that customers could - have their own flexible choice Good decorations: Urban Station coffee shops are decorated base on view - of London’s telephone box, it brings a feeling of closeness, proactive Comfortable space: Chairs and tables are comfortable which customers can stay here for hours to work, chatting with friends, relax or study - Employees are friendly and very kind with customers Promotion: Urban Station has their loyalty member cards for customers who usually come to the coffee shops, with this card they can have 10% to 15% discount on their bills On holidays, such as Valentine, Halloween, Christmas, etc Urban Station also has events for their customers For example, on Valentine, couples who come to Urban Station will have - small gifts and 20% discount on their bills Price: with the price between 15,000 to 40,000 VND, it is reasonable for customers, especially students and teenagers to come to Urban Station and get their favorite drink Weaknesses - Simple menu: Drinks at Urban Station has not changed in years, they only have new drinks on holidays event Name of drinks are also same with - other competitors Size: In overall, Urban Station only concentrates on Ho Chi Minh City Market (22 shops), Ha Noi (4 shops), Da Lat, Da Nang, Dong Nai (1 shop - of each) Finance: the financial situation of Urban Station is still low compare with other competitors such as Passio, Effoc, etc Opportunities - Nowadays, people have more demand of takeaway coffee and Italian coffee style, this is a good opportunity for Urban Station to develop their - business Besides the demand of customer is higher day by day, the opportunity to gain more potential customers is higher too P a g e | 10 Threats - As a new and good market to develop coffee business, Urban Station will - meet more and more competitors Under the pressure of big competitors such as Starbuck, Trung Nguyen, Highland Coffee, etc To make differences is hard for Urban Station Competitive advantage Competitive advantages give businesses an edge over its competitors and an ability to create greater value The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage There are two main types of competitive advantages: cost advantage and differential advantage Cost advantage, is a firm's ability to produce a good or service at a lower cost than its competitors, which gives the firm the ability sell its goods or services at a lower price than its competition or to generate a larger margin on sales A differential advantage is created when a firm's products or services differ from its competitors and are seen as better than a competitor's products by customers (quickmba.com, 2016) Different advantage According to Mr Nam (Co-Founder of Urban Station), Urban Station stores, some will be managed directly by the leaders of Urban Station, and some stores will be managed by franchise partners However, the leader of Urban Station will be directly responsible for the quality of products That means that when clients come with Urban Station will ensure the quality of beverages, with each store will be decorated a different way to help customers find a space of their own favorites but Urban Station still keep their own decoration of a red phone post in London Cost advantage Know their position in the market, so the leaders of Urban Station chose to reduce product costs, but with equivalent quality to compete with other rivals For example, price of a soda drink at Urban Station is only 24,000 VND but it is up to 35,000 at the Coffee House with the same taste and quality With the low price between 15,000 to 40,000 VND, Urban Station can reach to customers in many different ages, profit is important but Urban Station earn the profit by gain more stable loyalty from their customers P a g e | 11 Reccomendation The succes of Urban Station case is not denied In only years, Urban Station from the first small takeaway coffee shop became popular over Vietnam market Now, Urban Station has more than 30 coffee shops in Vietnam However, there are some difficults which Urban Station needs to consider in order to develop and compete with other competitors Urban Station is still small and young In a competitive market with many competitors have greater financial resources and experience from abroad more, then the Urban Station can sustain and survive is very difficult As a pioneer of takeaway coffee and Italian coffee in Ho Chi Minh City, Urban Station has their advantage of quantity of customers In years, Urban Station has their loyal customers who willing to deny trying new brands Customers come to Urban Station because not only the low price but also because of the comfortable which Urban Station brings to the customers by friendly services, promotion, space, etc With those benefits Urban Station should aim to stable their business by focus more on developing services From that, Urban Station can decrease competitive pressure from other competitors After, Urban Station could think about expanding and making their menu different, make their own coffee style Conclusion This report has analyzed the business of Urban Station by applying the PESTLE Analysis, Porter’s Forces, Competitive Advantage analyis and analyzed the SWOT as well as recommended Urban Station to overcome their weaknesses and take advantages from their exist benefits Through the report, the reader is able to see an overall view of takeaway coffee and Italian coffee shops which are new to Vietnam market which is a potential market for orversea rival to expand their business P a g e | 12 References FBNC Vietnam, 2015 FBNC - Dinh Nhat Nam - Co-Founder of Urban Station [Online] Available at: https://www.youtube.com/watch?v=CwIty7LncCc [Accessed 10 Jan 2016] General Department of Taxation, 2016 Gdt.gov.vn [Online] Available at: http://www.gdt.gov.vn/wps/portal/! ut/p/z1/tVLLbsIwEPyVcsjR8jo2eRxDikgggFDVQHyJ8oCQljihtdLH1NArzStED54tdrxzKw1mOMN5iJpyyKRZS2SgojbsTuauaGsxAA7KEO_nwcPgaOAUsCOMQc80zIRu5xVOTyIauF3AqpwXsSq_5c20SkidCgTff55Y5lpkY6E AMB0QB2GdNzc4hMQlPECMmQDRZFTAdmUzPNDWZ1Qk1W5 [Accessed 10 Jan 2016] General Statistics Office of Viet Nam, 2016 gso.gov.vn [Online] Available at: https://www.gso.gov.vn/default.aspx?tabid=382&idmid=2&ItemID=15148 [Accessed 10 Jan 2016] Makos, 2015 PESTLEANALYSIS [Online] Available at: http://pestleanalysis.com/how-to-do-a-swot-analysis/ [Accessed 10 January 2016] Ministry of Justice, 2016 moj.gov.vn [Online] Available at: http://moj.gov.vn/vbpq/Lists/Vn%20bn%20php%20lut/View_Detail.aspx?ItemID=25606 [Accessed 11 Jan 2016] Ministry of Justice, 2016 moj.gov.vn [Online] Available at: http://moj.gov.vn/vbpq/Lists/Vn%20bn%20php%20lut/View_Detail.aspx?ItemID=30123 [Accessed 11 Jan 2016] PESTLE Analysis, 2016 What is PESTLE Analysis? A Tool for Business Analysis [Online] Available at: http://pestleanalysis.com/what-is-pestle-analysis/ [Accessed 10 Jan 2016] quickmba.com, 2016 Competitive Advantage [Online] Available at: http://www.quickmba.com/strategy/competitive-advantage/ [Accessed 11 Jan 2016] Vietnam Trade Promotion Agency, 2016 viettrade.gov.vn [Online] Available at: http://www.vietrade.gov.vn/en/index.php?option=com_content&id=953&Itemid=240 [Accessed 11 Jan 2016] [...]... | 11 Reccomendation The succes of Urban Station case is not denied In only 4 years, Urban Station from the first small takeaway coffee shop became popular over Vietnam market Now, Urban Station has more than 30 coffee shops in Vietnam However, there are some difficults which Urban Station needs to consider in order to develop and compete with other competitors Urban Station is still small and young... then the Urban Station can sustain and survive is very difficult As a pioneer of takeaway coffee and Italian coffee in Ho Chi Minh City, Urban Station has their advantage of quantity of customers In 4 years, Urban Station has their loyal customers who willing to deny trying new brands Customers come to Urban Station because not only the low price but also because of the comfortable which Urban Station. .. promotion, space, etc With those benefits Urban Station should aim to stable their business by focus more on developing services From that, Urban Station can decrease competitive pressure from other competitors After, Urban Station could think about expanding and making their menu different, make their own coffee style Conclusion This report has analyzed the business of Urban Station by applying the PESTLE Analysis,... recommended Urban Station to overcome their weaknesses and take advantages from their exist benefits Through the report, the reader is able to see an overall view of takeaway coffee and Italian coffee shops which are new to Vietnam market which is a potential market for orversea rival to expand their business P a g e | 12 References FBNC Vietnam, 2015 FBNC - Dinh Nhat Nam - Co-Founder of Urban Station ... of Urban Station) , Urban Station stores, some will be managed directly by the leaders of Urban Station, and some stores will be managed by franchise partners However, the leader of Urban Station. .. the ice was supplied to Urban Station must be clean to ensure the customers' health If current ice supplier for Urban Station arising any problems, Urban Station can choose a different supplier... policies, Urban Station can think about boosting the development of its business model, not just a takeaway cafe chain, Urban Station can also develop products carry the own brand of coffee Urban Station