1.0 Introduction
Breadtalk Ltd, founded in July 2000, is a bakery based in Singapore. It was listed on the Singapore Stock Exchange in 2003 and aims to be a global brand known for its unique flavors and modern approach. With these goals, Breadtalk Ltd has expanded beyond bakery outlets to include food atriums and restaurants. Currently, they have over 300 bakery outlets in 13 countries and territories, as well as 25 retail bakery outlets in Singapore. They also operate 33 food courts and 8 restaurants, employing over 5000 staff worldwide (Bamburg, 2006).
2.0 SWOT ANALYSIS
The Swot analysis, also known as strength, weaknesses, opportunities and threats, is used to identify the challenges in the external environment that the company has less control over, as well as the strengths that need to be addressed. In this regard, we will focus on the strengths (2.1).
Breadtalk possesses several internal strengths that benefit the company, such as a strong brand name, the ability to achieve economies of scale, a competent human resource team, a strong research and development team for adding innovation to its products, and solid franchise relationships.
Breadtalk has some minor weaknesses including an over-reliance on the bakery sector and the Singapore region. Their product offerings are easily imitated and they have limited control over their flour supply as it is obtained from third party sources (Coyle, 2012). Additionally, their franchise division requires a high level of cost involvement and constantly renewing the franchise license to franchise other brands is not a long term solution for company expansion. However, there are also opportunities for Breadtalk.
Breadtalk Ltd is addressing its main weaknesses by expanding and merging its market in China, Asian, and other Vietnam countries. This is achieved through offering low-priced high volume breads that are affordable. However, there are threats to consider. Existing bread-related firms and bakery shops may affect the revenue of Breadtalk. To help monitor and detect any weak signals and recognize potential fractures or discontinuities in the environment, Pestel analysis is used as an important tool by Breadtalk Ltd. This includes analyzing political/legal factors.
Political factors encompass various legal aspects such as taxation, legislation, deregulation philosophies, and labor training (Anthony, 2008). The rise in trade barriers presents both opportunities and challenges for Breadtalk. It can enter new markets through emerging companies in politically stable countries, specifically in areas where bread is considered a luxury item. However, Breadtalk will also need to face the task of sourcing low-cost, high-quality ingredients from around the world. Additionally, the economic factors affecting Breadtalk will be discussed further.
The rise of a financial system will have positive effects on industries, although the reasons for this will differ depending on which factors are impacted the most (Anthony, 2008). Breadtalk faces higher purchasing costs due to fluctuations in commodity and raw material prices, along with an increase in global fuel prices. To compensate for these added expenses, they must raise the prices of their products. 3.3 Social factors
Social factors, such as traditions, lifestyles, values, beliefs, tastes, attitudes, and workforce diversity, play a significant role in influencing consumer spending patterns in a country or environment. When Breadtalk expands into other Asian countries, societal factors become crucial. This is because Indian and Chinese customers have diverse cultural lifestyles and varying opinions and needs regarding the existing products offered by the company. Technological factors also need to be considered, as they have an impact on the business.
Technological factors encompass product innovation, communication technologies, and the application of knowledge. The swift technological advancements have enabled new players to effortlessly enter the market at a low cost base. To maintain a competitive edge, Breadtalk can leverage existing processes, equipment, and infrastructural strategies to streamline labor and manufacturing costs and expedite order processing thanks to globalization and evolving technical factors. 3.5 Environment factors
Breadtalk understands the importance of adapting to different environments to thrive. They utilize available resources and reciprocate with goods. The environment can offer both challenges and opportunities. Porter 5 Analysis plays a role.
Porter’s five forces analysis was employed to examine the future outlook for review. Given that 45% of its revenue originates from the bakery sector and 49% from Singapore, the company faces significant vulnerability due to its heavy dependence on a single division. Nevertheless, Breadtalk is currently focusing on expanding its industry presence and enhancing profitability in the baking sector.
4.1 The level of competition among bakery businesses is high. Breadtalk faces strong competition from various companies that produce similar products. These competitors include large bakery contract brands and retail bakery outlets. They offer similar products at highly competitive prices. Additionally, individual bakery outlets in neighborhoods often offer much lower prices compared to larger bakery chains (Cassiman and Colombo, 2004).
4.2 The risk of new companies entering the bakery industry is high.
The business faces a high threat of new entrants due to low entry barriers. There is a large segment of the market that sells similar products and can easily copy each other’s products. Additionally, there is a high threat of substitutes.
In the bakery industry, substitutes for products can pose a hazard due to their lower prices. This makes it easier for customers to switch their spending to these substitutes in order to satisfy their needs and wants. Examples of substitutes could include munchies and junk food, which can present a significant threat. These substitutes may come in the form of snack joints located within the same area as the business. 4.4 Suppliers (Low)
Suppliers in the industry usually have limited bargaining power due to the abundance of suppliers. Suppliers face challenges in altering their products significantly as customers tend to make bulk purchases. Furthermore, the similarity in quality and quantity of raw materials like flour and wheat among various suppliers further restricts the suppliers’ ability to negotiate. 4.2 Customers (High)
Customers have the freedom to take advantage of significant bargaining power in the bakery industry due to low switching costs. Additionally, the high price elasticity of food means that consumers are sensitive to price changes and will easily adjust their tastes and preferences. Internal environment analysis is rated at 5.0.
5.1 Resources
The objective of this analysis is to assess and consolidate Breadtalk’s tangible and intangible resources as of the end of the 2012 financial year (Halibozek, 2005).
5.2 Tangible resources (assets)
Breadtalk’s tangible resources (fixed assets) include land, buildings, and equipment. The current assets consist of current assets and inventories such as raw materials, semi-finished goods, consumables, and base inventories (dining utensils and cutlery).
5.3 Intangible resources (assets)
Breadtalk possesses intangible assets such as trademarks, copyrights, and its brand.
5.4 Breadtalk Ltd capabilities
Breadtalk aims to achieve its future plan of doubling its revenue to $1 billion and expanding its outlets to 2000 by 2017. This expansion will target markets in the U.S, Thailand, Japan, Korea, Singapore, India, Cambodia, and Vietnam. The company is capable of achieving this due to its globally recognized brand name. To increase production capacity, Breadtalk has invested $10 million in mechanization and computerization. Additionally, the company has constructed a ten-story building with a pastry-like design at its headquarters. This building houses a central kitchen, research lab, and training colleges.
6.0 CONCLUSION
Every firm or company requires strategic management and organization, which is the responsibility of all employees, from management to subordinates, to ensure that annual targets are achieved. This plays a crucial role in assessing the organization’s progress based on the annual total revenue trend. Strategic management concepts and methods are employed by every organization to maximize performance levels.
7.0 RECOMMENDATION
Breadtalk’s recommendations will serve as a way to handle the challenges faced during the diversification plan. It is suggested that the company adopts a gradual diversification strategy to gain a comprehensive understanding of customer and competitor strengths and weaknesses. This approach will enable Breadtalk to effectively and accurately address any changes. Additionally, Breadtalk should consider implementing a global branding strategy to ensure reliability and effectively manage the diverse consumer preferences in different markets worldwide.
References
Anthony, H. (2008). Breaking bread at home and abroad: It’s not just a talk. Retrieved on April 21, 2010
Bamburg, J. (2006). Growing business without selling out. California: Berrett koehler.
Cassiman, B & Colombo, M. (2004). The innovation impact of Breadtalk. Northampton: Edward Elgar Publishers
Coyle, B. (2012). Breadtalk: key business concepts: A concise guide. Singapore Catalogue guide
Halibozek, G. (2005). Business strategy management. New York: American management association
