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Food and Beverage Management Chapter 10 Making Strategic Decisions
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Origins of strategy Vision Mission Policy Goals/aims Strategy Objectives Tactics
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers The three levels of strategy
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Assessing current performance Same three levels used when assessing the performance of the current operation: 1. Operational o includes day-to-day sales and the way the product is provided and promoted 2. Business o the performance of the enterprise in terms of profitability, competitiveness and other business measures 3. Corporate o the strategic direction of the operation and how this is being achieved
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Assessing current performance Quantitative analysis Business environment analysis Qualitative evaluation
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Quantitative analysis Essential part of appraisal Considered over time Evaluation is more important than the data itself
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Quantitative analysis can: Identify trends and progress Enable comparisons with the competition and the industry as a whole Reveal lost profit and growth potential Identify areas needing improvement Highlight and emphasise possible danger areas
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Business environment appraisal Macro environment PESTLE Industry environment Porter’s Five forces
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers The business environment PPolitical EEconomic SSocio-cultural TTechnological LLegal EEcological
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers The micro-environment Adapted from Porter 2004 Porter’s Five Forces
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Qualitative evaluation Making informed evaluation of the business Allowing for external comparison Asking the right questions
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Analysis using the Food Service Cycle
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers The Food Service Cycle Difficulties in one element of the cycle will cause difficulties in the elements of the cycle that follow Difficulties experienced under one element of the cycle will have their causes in preceding elements
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers External comparison With other organisations generally With other similar organisations Against industry norms Through benchmarking
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Assessing organisational capability Resource analysis How well do we do what we do? Existing capacity for change Identifying changes in resources Value chain analysis Examine all stages of the food service cycle
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Strategic analysis and planning Seeks to manage the interface between: The external environment (opportunities and threats) and The internal capabilities (strengths and weaknesses)
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers SWOT matrix
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Using the SWOT analysis Need for constant monitoring Assess for now and the future: What possible external changes might make a current strength into a weakness, or vice versa? How can current strengths be used to explore future opportunities? Are current resource capabilities able to meet future demands?
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Need for a balanced approach Decision making must take account of four perspectives: Developmental – organisational capacity, knowledge and innovation Operational – efficiency External – stakeholder and customer satisfaction Financial – performance and financial management Balanced Scorecard Institute
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Balanced Scorecard Organisations need to know how the Internal Drivers are contributing to the Results Source: Developed from Johnston et al. 2012
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Examples of performance indicators
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Strategy is a means to an end “Would you tell me please which way I ought to go from here?” she asked. “That depends a good deal on where you want to get to,” said the cat. Lewis Carroll, Alice’s Adventures in Wonderland
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Strategy is a means to an end Where do you want to get to? Where are you starting from? Which way ought I to go? ObjectiveCurrent situation Strategy
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Basis of strategy Cost leadership Differentiation Focus based on cost Focus based on differentiation
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Porter’s matrix Adapted from Porter 2004
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Strategy Clock Adapted from Johnson et al. 2008 and 2014 Eight possible strategic routes
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Determining strategic choices Various approaches can assist, including: Growth Share (BCG) Matrix Directional Policy (GE-McKinsey) Matrix Ansoff’s growth matrix
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Ansoff’s growth matrix Adapted from Ansoff 1988
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Life cycle analysis Stages Embryonic – Growth – Mature - Aging Market position Dominant – Strong – Favourable – Tenable – Weak Variants Fad life cycle Extended life cycle
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Strategic means and assessing options Strategic means Internal development Mergers and acquisitions Joint development Evaluation criteria for options Suitability Feasibility Acceptability
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© 2016 Cousins et al: Food and Beverage Management, 4 th edition, Goodfellow Publishers Reality of strategic management Organic not linear Affected by organisation and culture Complex and judgmental Continuous process Combines a variety of approaches and techniques A management job Needs to be flexible to cope with uncertainty
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