Swot Analysis of Breadtalk Group Limited Essay

SWOT Analysis of BreadTalk Group Limited 1 Purpose Our brief analysis of BreadTalk Group Limited addresses the overview of their market position strengths, recognizing their weaknesses, possible opportunities and potential future threats. This gives the group and their potential investors an insight of their growth and a chance to counter-react to obstacles heading their way. 2 Background BreadTalk which is best known for its signature floss buns, started out in 2000 as a local bakery chain. In less than 10 years, it has evolved into a distinctive F&B brand with renowned bakery, restaurant and food court in Asia Pacific.

In terms of business sustainability, BreadTalk constantly develops innovative ideas to surprise their customers. Through franchising, the group has established its operations across the region with 6000 employees. The group has reached recorded revenue of SGD$302. 9 million in 7 short years, ended December 2010, an increase of 22. 9% over in 2009, since being listed on SGX in 2003. The group’s operating profit was SGD$16. 6 million in fiscal 2010, an increase of 1. 9% over 2009. Its net profit was SGD$10 million in fiscal 2010, a decrease of 7. % compared to 2009. (CIMB, OCBC report, 2012) 3 Strengths 3. 1 Experienced management George Quek, chairman of the BreadTalk Group Limited listed the company in SGX in 2003, three short years after the group inaugurated the business in 2000. He won the Ernst & Young “Entrepreneur of the Year 2006” and “Entrepreneur of the Year 2002” by constantly positions BreadTalk as an inspiring company that delights consumers. (BreadTalk Group. 2012) 3. 2 Strong brand equity and unique concept BreadTalk is the most revolutionary bakeries in Singapore.

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In 2002, the group won the “Singapore Promising Brand Award 2002” and was also voted Singapore’s Most Popular Brand in a joint poll by the ASME and SPH. (CIMB report, 2009) The company is one of the first to deviate from the traditional bakery standards byintroducing see through glass windows to display its bread making process and kitchen. These garner wide recognition for its striking and noticeable layout. 3. 3 Innovative and wide range of products BreadTalk offers a wide variety of products at retail outlets to ensure customer satisfaction.

With over 150 varieties of breads, buns, pastries and cakes, their innovative research and development team constantly introduces new products, approximately 10 items every four months, to cater to customers’ changing tastes. 3. 4 Brand development and segment diversification In 2003, the group’s expansion into various diversifications: Din Tai Fung (restaurants), Food Republic (Food Courts), Toast Box, RamenPlay, The Icing Room, The Station Kitchen (St. James Power Station) and Carl’s Jr (China), proved to be successful with their increase in revenue significantly. BreadTalk Group. 2012) 3. 5 Strategic retail locations BreadTalk meticulously chooses its store location where it is high in human traffic with easy access and high visibility. Most of their stores can be found near Mass Rapid Transit and Light Rail stations, while others near popular shopping mall or supermarkets. 4 Weaknesses 4. 1 Competition from Direct and Indirect Competitors BreadTalk direct competitors are wider as there are many novice bakeries in the heartlands with cheaper product alternative offer to consumers.

They include bakeries like Four Seasons and Crystal Jade Breads as they have similar concepts and products. And their indirect competitors have non-similar but interesting and particular products, which have an increasing number of consumer interests in the market. They include specialized bakeries such as Donut Factory and Twelve Cupcakes. 4. 2 Low barriers to entry in the F&B industry Entry to F&B industries are low in barriers or almost none, leaving the doors of the industries wide open for any establishment with enough capital and resources to enter and vie for the same piece of pie.

This results in an increase of competition. 5 Opportunities 5. 1 Expansion and growth BreadTalk has gain strong foothold and constant growth in China since 2003. And with other parts of Asia with potential growth has been established, this allow the group to look into potential market in Europe and United States. 5. 2 Premium segment target Bread Talk modifies its original product line to cater high end and more affluent consumer segment by opening an outlet in ION which is a prime area shopping belt in Orchard Road, competing with other competitors in the premium segment. Threats 6. 1 Product/Brand Concept Replication BreadTalk obvious success business model has been replicated in country like China, where there are similar bakeries with similar branding like BreadTop, which will dilute the group branding and image. 6. 2 Rising cost in food, labor and Rental Food prices expected to rise in end of 2012 (5%, usual 3. 5%), projections of 6- 8% increases on year-on year are expected. (The Slovak Spectator, 2012). Hence, the raw materials like flour, butter, sugar and fillings for the food items will be affected.

China being one of well-known country for her low labor cost in the world has almost doubled in the past five years going from less than 25,000 Yuan (SGD$4,875) of 2007 to more than 40,000 Yuan (SGD$7,800) a year in 2011, as reported by Ernst & Young LLP (Beijing & Shanghai China Daily, 2012). Hence, operation in China may see a slow expansion in coming years. Rental in Singapore has always been high as the population surged 18 percent in five years. (Bloomberg News, 2012) This prevent the company from procuring prime and high human traffic areas or even sustaining their existing outlets.

All of the above rise in cost will inevitably hurt BreadTalk margin or their customer in the near future. 6. 3 Lack of Good Foreign Partners BreadTalk expands its business mainly through franchising and part of the group overseas expansion plans requires good foreign partners, who understand their area, market share and political stage, which allows the group sustainability and foothold in the various country of interest. 7 Conclusion Our team has highlighted various key issues that BreadTalk are facing.

These important implications can affected their expansion strategy and have adverse effects on their short and long term plans and performances. We conclude that important decisions have to be made at the business and corporate level which will eventually amend their operation locally and abroad. Careful and decisive considerations are needed to enhance their core competencies and their sustainable level. References BreadTalk Group. 2012. BreadTalk Group Limited. http://breadtalk. listedcompany. com. Din Tai Fung. 2012. Din Tai Fung Singapore. http://www. dintaifung. com. sg/about. hp. BreadTalk Group. 2012. BreadTalk Group Limited. http://www. breadtalk. com/board-of-directors. html. Bangawan Solo. 2012. Bangawan Solo Singapore. http://www. bengawansolo. com. sg/category. aspx. BreadTalk Singapore. 2012. BreadTalk Singapore. http://www. breadtalk. com. sg/products_bread. php. Amanda Feng, 2011. “Groundbreaking for S$64m BreadTalk HQ in Paya Lebar”. August 31. http://www. channelnewsasia. com/stories/singaporebusinessnews/view/1150334/1/. html The Slovak Spectator, 2012. ” Food prices expected to rise in autumn or winter”. September 25. http://spectator. sme. k/articles/view/47682/10/food_prices_expected_to_rise_in_autumn_or_winter. html Wei Tian, Shi Jing, 2012. Beijing and Shanghai (China Daily). “Higher productivity to counter rising labor costs “. September 26. http://www. chinadaily. com. cn/cndy/2012-09/26/content_15783014. htm Angus Whitley, Jonathan Burgos and Joyce Koh, 2012. Bloomberg News “Biggest Southeast Asia Property Deal Looming With F&N: Real M&A “. September 10. http://www. sfgate. com/business/bloomberg/article/Biggest-Southeast-Asia-Property-Deal-Looming-With-3853143. php Euromonitor International. 2004. Room for growth in the Chinese bread market.

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