APPLICATION OF EFFECTIVE STRATEGIES - A CASE OF PRET A MANGER
Added on 2022-06-07
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INTEGRATED CASE STUDY (ICS)
(MOD003412)
TOPIC:
CREATING A NEW MARKET THROUGH THE
APPLICATION OF EFFECTIVE STRATEGIES:
ACASE OF PRET A MANGER
BY:
EBENEZER ADU-APPIAH
STUDENT ID: 1519626
(MOD003412)
TOPIC:
CREATING A NEW MARKET THROUGH THE
APPLICATION OF EFFECTIVE STRATEGIES:
ACASE OF PRET A MANGER
BY:
EBENEZER ADU-APPIAH
STUDENT ID: 1519626
TABLE OF CONTENTS
TABLE OF CONTENTS........................................................................................................................ ii
LIST OF FIGURES ................................................................................................................................ v
LIST OF TABLES................................................................................................................................. vi
GLOSSARY OF ACRONYMS............................................................................................................. vi
EXECUTIVE SUMMARY .................................................................................................................... 1
CHAPTER 1: INTRODUCTION ........................................................................................................... 2
BACKGROUND OF THE STUDY ................................................................................................... 2
1.2. MISSION STATEMENT ............................................................................................................ 3
1.3. PRODUCTS AND SERVICES ................................................................................................... 3
1.4. AIMS, QUESTIONS AND OBJECTIVES ................................................................................. 4
1.4.1. AIMS..................................................................................................................................... 4
1.4.2. QUESTIONS ........................................................................................................................ 5
1.4.3. OBJECTIVES ....................................................................................................................... 5
1.5 THE SCOPE OF THE STUDY .................................................................................................... 5
1.6 STRUCTURE OF THE REPORT ................................................................................................ 5
CHAPTER 2: CASE DESCRIPTION .................................................................................................... 8
2.1. INTRODUCTION TO THE CASE STUDY............................................................................... 8
CHAPTER 3: PROBLEM STATEMENT AND PLAN OF ANALYSIS.............................................. 9
3.1. PROBLEM STATEMENT .......................................................................................................... 9
3.1.1. MARKET RESEARCH AND DEVELOPMENT................................................................ 9
3.1.2. DIVERSIFICATION ..........................................................................................................10
3.1.3. CREATING A NEW MARKET.........................................................................................10
3.1.4. ENTERING INTO A NEW MARKET ..............................................................................11
3.2. ANALYTICAL FRAMEWORKS/TOOLS...............................................................................12
3.2.1. RESEARCH AND DEVELOPMENT................................................................................12
3.2.2. DISVERSIFICATION ........................................................................................................14
3.2.3. ANALYTICAL TOOLS FOR CREATING A NEW MARKET .......................................16
3.2.4. ENTERING INTO A NEW MARKET ..............................................................................19
3.3. PLAN OF ANALYSIS .....................................................................................................................22
3.4. SOURCES OF DATA ...............................................................................................................23
3.5. ETHICAL CONSIDERATION .................................................................................................23
TABLE OF CONTENTS........................................................................................................................ ii
LIST OF FIGURES ................................................................................................................................ v
LIST OF TABLES................................................................................................................................. vi
GLOSSARY OF ACRONYMS............................................................................................................. vi
EXECUTIVE SUMMARY .................................................................................................................... 1
CHAPTER 1: INTRODUCTION ........................................................................................................... 2
BACKGROUND OF THE STUDY ................................................................................................... 2
1.2. MISSION STATEMENT ............................................................................................................ 3
1.3. PRODUCTS AND SERVICES ................................................................................................... 3
1.4. AIMS, QUESTIONS AND OBJECTIVES ................................................................................. 4
1.4.1. AIMS..................................................................................................................................... 4
1.4.2. QUESTIONS ........................................................................................................................ 5
1.4.3. OBJECTIVES ....................................................................................................................... 5
1.5 THE SCOPE OF THE STUDY .................................................................................................... 5
1.6 STRUCTURE OF THE REPORT ................................................................................................ 5
CHAPTER 2: CASE DESCRIPTION .................................................................................................... 8
2.1. INTRODUCTION TO THE CASE STUDY............................................................................... 8
CHAPTER 3: PROBLEM STATEMENT AND PLAN OF ANALYSIS.............................................. 9
3.1. PROBLEM STATEMENT .......................................................................................................... 9
3.1.1. MARKET RESEARCH AND DEVELOPMENT................................................................ 9
3.1.2. DIVERSIFICATION ..........................................................................................................10
3.1.3. CREATING A NEW MARKET.........................................................................................10
3.1.4. ENTERING INTO A NEW MARKET ..............................................................................11
3.2. ANALYTICAL FRAMEWORKS/TOOLS...............................................................................12
3.2.1. RESEARCH AND DEVELOPMENT................................................................................12
3.2.2. DISVERSIFICATION ........................................................................................................14
3.2.3. ANALYTICAL TOOLS FOR CREATING A NEW MARKET .......................................16
3.2.4. ENTERING INTO A NEW MARKET ..............................................................................19
3.3. PLAN OF ANALYSIS .....................................................................................................................22
3.4. SOURCES OF DATA ...............................................................................................................23
3.5. ETHICAL CONSIDERATION .................................................................................................23
CHAPTR 4: PAM ANALYSIS AND FINDINGS ...............................................................................24
4.1. RESEARCH AND DEVELOPMENT.......................................................................................24
4.1.1. SEGMENTATION, TARGETING AND POSITIONING ANALYSIS (STP MODEL) ..24
4.1.2. FINDINGS ..........................................................................................................................26
4.2. DIVERSIFICATION .................................................................................................................27
4.2.1 SWOT ANALYSIS..............................................................................................................27
4.2.2. FINDINGS ..........................................................................................................................30
4.2.2. ANSOFF MATRIX ANALYSIS........................................................................................31
4.2.3. FINDINGS ..........................................................................................................................33
4.3. CREATING A NEW MARKET................................................................................................34
4.3.1. 7P’S MARKETING MODEL.............................................................................................34
4.3.1.8. FINDINGS .......................................................................................................................35
4.3.2. BLUE OCEAN STRATEGY ANALYSIS .........................................................................35
4.3.3. FINDINGS ..........................................................................................................................36
4.4. ENTERING INTO A NEW MARKET .....................................................................................37
4.4.1. PORTER’S FIVE FORCE ..................................................................................................37
4.4.2. PESTLE ANALYSIS..........................................................................................................38
4.4.3. FINDINGS ..........................................................................................................................40
CHAPTER 5: RECOMMENDED SOLUTIONS TO THE PROBLEMS............................................40
5.1. PROBLEM 1: MARKET RESEARCH AND DEVELOPMENT.............................................40
5.1.1. RECOMMENDED SOLUTION – MARKET RESEARCH..............................................40
5.1.2. JUSTIFICATION OF SOLUTION.....................................................................................41
5.2. PROBLEM 2: DIVERSIFICATION .........................................................................................41
5.2.1. RECOMMENDED SOLUTION – MERGER AND ACQUISITION (M&A) ..................41
5.2.2. JUSTIFICATION OF SOLUTION.....................................................................................42
5.3. PROBLEM 3: CREATING A NEW MARKET........................................................................42
5.3.1. RECOMMENDED SOLUTION – DIFFERENTIATION AND COST LEADERSHIP ...42
5.3.2. JUSTIFICATION OF SOLUTION.....................................................................................42
5.4. PROBLEM 4: ENTERING INTO A NEW MARKET .............................................................43
5.4.1. RECOMMENDED SOLUTION – FRANCHISING..........................................................43
5.4.2. JUSTIFICATION OF SOLUTION.....................................................................................43
5.5. RESOURCE AVAILABILITY AND CONSTRAINTS APPRAISAL OF PRET A MANGER
..........................................................................................................................................................43
5.6. IMPLICATIONS OF THE RECOMMENDED SOLUTION TO PAM’S STAKEHOLDERS 45
Internal Stakeholders ....................................................................................................................45
External Stakeholders ...................................................................................................................45
4.1. RESEARCH AND DEVELOPMENT.......................................................................................24
4.1.1. SEGMENTATION, TARGETING AND POSITIONING ANALYSIS (STP MODEL) ..24
4.1.2. FINDINGS ..........................................................................................................................26
4.2. DIVERSIFICATION .................................................................................................................27
4.2.1 SWOT ANALYSIS..............................................................................................................27
4.2.2. FINDINGS ..........................................................................................................................30
4.2.2. ANSOFF MATRIX ANALYSIS........................................................................................31
4.2.3. FINDINGS ..........................................................................................................................33
4.3. CREATING A NEW MARKET................................................................................................34
4.3.1. 7P’S MARKETING MODEL.............................................................................................34
4.3.1.8. FINDINGS .......................................................................................................................35
4.3.2. BLUE OCEAN STRATEGY ANALYSIS .........................................................................35
4.3.3. FINDINGS ..........................................................................................................................36
4.4. ENTERING INTO A NEW MARKET .....................................................................................37
4.4.1. PORTER’S FIVE FORCE ..................................................................................................37
4.4.2. PESTLE ANALYSIS..........................................................................................................38
4.4.3. FINDINGS ..........................................................................................................................40
CHAPTER 5: RECOMMENDED SOLUTIONS TO THE PROBLEMS............................................40
5.1. PROBLEM 1: MARKET RESEARCH AND DEVELOPMENT.............................................40
5.1.1. RECOMMENDED SOLUTION – MARKET RESEARCH..............................................40
5.1.2. JUSTIFICATION OF SOLUTION.....................................................................................41
5.2. PROBLEM 2: DIVERSIFICATION .........................................................................................41
5.2.1. RECOMMENDED SOLUTION – MERGER AND ACQUISITION (M&A) ..................41
5.2.2. JUSTIFICATION OF SOLUTION.....................................................................................42
5.3. PROBLEM 3: CREATING A NEW MARKET........................................................................42
5.3.1. RECOMMENDED SOLUTION – DIFFERENTIATION AND COST LEADERSHIP ...42
5.3.2. JUSTIFICATION OF SOLUTION.....................................................................................42
5.4. PROBLEM 4: ENTERING INTO A NEW MARKET .............................................................43
5.4.1. RECOMMENDED SOLUTION – FRANCHISING..........................................................43
5.4.2. JUSTIFICATION OF SOLUTION.....................................................................................43
5.5. RESOURCE AVAILABILITY AND CONSTRAINTS APPRAISAL OF PRET A MANGER
..........................................................................................................................................................43
5.6. IMPLICATIONS OF THE RECOMMENDED SOLUTION TO PAM’S STAKEHOLDERS 45
Internal Stakeholders ....................................................................................................................45
External Stakeholders ...................................................................................................................45
CHAPTER 6: APPLICATION OF LEARNING TO ALLERGY THERAPEUTICS PLC .................46
6.1. INTRODUCTION .....................................................................................................................46
6.2. COMPANY BACKGROUND ..................................................................................................47
6.3. BUSINESS CHALLENGES OF ALLERGY THERAPEUTICS PLC .....................................47
6.3.1. SPECIALIST MARKETS ..................................................................................................47
6.3.2. REVENUE REDUCTION IN NEW MARKETS...............................................................48
6.3.3. POLITICAL INSTABILITY AND RUGULATORY INTERVENTIONS .......................48
6.3.4. INTENSE COMPETITION ................................................................................................48
6.4. ANALYSIS OF PROBLEMS USING THE RELEVANT ANALYTICAL TOOLS ...............48
6.4.1. SPECIALIST MARKET.....................................................................................................48
6.4.2. REVENUE REDUCTION IN NEW MARKETS AND POLITICAL INSTABILITY AND
REGULATORY INTERVENTIONS...........................................................................................50
6.4.3. INTENSE COMPETITION ................................................................................................51
6.5. TRANSFER OF LEARNING....................................................................................................52
6.5.1. TRANSFER OF RESEARCH AND DEVELOPMENT FROM ALLERGY PLC TO PAM
......................................................................................................................................................52
6.5.2. TRANSFER OF MARKET DEVELOPMENT FROM ALLERGY PLC TO PAM..........52
6.5.3. TRANSFER OF RELATED DIVERSIFICATION FROM PAM TO ALLERGY PLC ...52
6.5.4. TRANSFER OF EMPLOYEE DEVELOPMENT FROM PAM TO ALLERGY PLC .....53
6.5.5. TRANSFER OF BLUE OCEAN STRATEGY FROM PAM TO ALLERGY PLC ..........53
6.6. SOLUTIONS AND RECOMMENDATIONS ..........................................................................53
6.6.1. SOLUTION TO SPECIALIST MARKET .........................................................................53
6.6.2. SOLUTION TO REVENUE REDUCTION IN NEW MARKET......................................53
6.6.3. SOLUTION TO POLITICAL INSTABILITY AND REGULATORY INTERVENTIONS
......................................................................................................................................................53
6.6.4. SOLUTION TO INTENSE COMPETITION.....................................................................53
6.7. CONCLUSION AND RECOMMENDATIONS.......................................................................54
7. REFERENCES .................................................................................................................................54
8. APPENDIX.......................................................................................................................................64
6.1. INTRODUCTION .....................................................................................................................46
6.2. COMPANY BACKGROUND ..................................................................................................47
6.3. BUSINESS CHALLENGES OF ALLERGY THERAPEUTICS PLC .....................................47
6.3.1. SPECIALIST MARKETS ..................................................................................................47
6.3.2. REVENUE REDUCTION IN NEW MARKETS...............................................................48
6.3.3. POLITICAL INSTABILITY AND RUGULATORY INTERVENTIONS .......................48
6.3.4. INTENSE COMPETITION ................................................................................................48
6.4. ANALYSIS OF PROBLEMS USING THE RELEVANT ANALYTICAL TOOLS ...............48
6.4.1. SPECIALIST MARKET.....................................................................................................48
6.4.2. REVENUE REDUCTION IN NEW MARKETS AND POLITICAL INSTABILITY AND
REGULATORY INTERVENTIONS...........................................................................................50
6.4.3. INTENSE COMPETITION ................................................................................................51
6.5. TRANSFER OF LEARNING....................................................................................................52
6.5.1. TRANSFER OF RESEARCH AND DEVELOPMENT FROM ALLERGY PLC TO PAM
......................................................................................................................................................52
6.5.2. TRANSFER OF MARKET DEVELOPMENT FROM ALLERGY PLC TO PAM..........52
6.5.3. TRANSFER OF RELATED DIVERSIFICATION FROM PAM TO ALLERGY PLC ...52
6.5.4. TRANSFER OF EMPLOYEE DEVELOPMENT FROM PAM TO ALLERGY PLC .....53
6.5.5. TRANSFER OF BLUE OCEAN STRATEGY FROM PAM TO ALLERGY PLC ..........53
6.6. SOLUTIONS AND RECOMMENDATIONS ..........................................................................53
6.6.1. SOLUTION TO SPECIALIST MARKET .........................................................................53
6.6.2. SOLUTION TO REVENUE REDUCTION IN NEW MARKET......................................53
6.6.3. SOLUTION TO POLITICAL INSTABILITY AND REGULATORY INTERVENTIONS
......................................................................................................................................................53
6.6.4. SOLUTION TO INTENSE COMPETITION.....................................................................53
6.7. CONCLUSION AND RECOMMENDATIONS.......................................................................54
7. REFERENCES .................................................................................................................................54
8. APPENDIX.......................................................................................................................................64
LIST OF FIGURES
Figure 1: PAM’s Menu Category............................................................................................................ 4
Figure 2: Structure of the case study ...................................................................................................... 7
Figure 3: STP Model.............................................................................................................................13
Figure 4: SWOT Diagram.....................................................................................................................14
Figure 5: Ansoff Matrix Diagram .........................................................................................................15
Figure 6: 7P’s Diagram.........................................................................................................................17
Figure 7: Red and Blue Ocean ..............................................................................................................18
Figure 8: Porter’s Five Forces Model ...................................................................................................20
Figure 9: PESTLE Analysis..................................................................................................................21
Figure 10: Plan of analysis.....................................................................................................................22
Figure 11: Positioning map for PAM....................................................................................................26
Figure 12: Pret’s freshly prepared lunch in the loop.............................................................................27
Figure 13: PAM’s Loyalty Score ..........................................................................................................28
Figure 14: PAM Number of Stores Worldwide ....................................................................................31
Figure 15: Value Based Pricing ............................................................................................................34
Figure 16: Moving from Red Ocean to Blue Ocean .............................................................................36
Figure 1: PAM’s Menu Category............................................................................................................ 4
Figure 2: Structure of the case study ...................................................................................................... 7
Figure 3: STP Model.............................................................................................................................13
Figure 4: SWOT Diagram.....................................................................................................................14
Figure 5: Ansoff Matrix Diagram .........................................................................................................15
Figure 6: 7P’s Diagram.........................................................................................................................17
Figure 7: Red and Blue Ocean ..............................................................................................................18
Figure 8: Porter’s Five Forces Model ...................................................................................................20
Figure 9: PESTLE Analysis..................................................................................................................21
Figure 10: Plan of analysis.....................................................................................................................22
Figure 11: Positioning map for PAM....................................................................................................26
Figure 12: Pret’s freshly prepared lunch in the loop.............................................................................27
Figure 13: PAM’s Loyalty Score ..........................................................................................................28
Figure 14: PAM Number of Stores Worldwide ....................................................................................31
Figure 15: Value Based Pricing ............................................................................................................34
Figure 16: Moving from Red Ocean to Blue Ocean .............................................................................36
LIST OF TABLES
Table 1: Identified Problems and associate analytical tools ....................................................12
Table 2: SWOT Analysis Findings ..........................................................................................30
Table 3: Porter’s Five Forces Analysis....................................................................................37
Table 4: Resource Availability and Constraints ......................................................................43
GLOSSARY OF ACRONYMS
ABBREVIATION MEANING
PAM Pret A Manger
R&D Research and Development
M&S Marks and Spencer
UK United Kingdom
US/USA United States of America
EU European Union
Table 1: Identified Problems and associate analytical tools ....................................................12
Table 2: SWOT Analysis Findings ..........................................................................................30
Table 3: Porter’s Five Forces Analysis....................................................................................37
Table 4: Resource Availability and Constraints ......................................................................43
GLOSSARY OF ACRONYMS
ABBREVIATION MEANING
PAM Pret A Manger
R&D Research and Development
M&S Marks and Spencer
UK United Kingdom
US/USA United States of America
EU European Union
1
EXECUTIVE SUMMARY
The motive of this case study was to analyse how Pret A Manger can create a new market
through the application of effective strategies. Generally, the report was based on the work of
Frei, Goldberg and Van Sice (2012).
Pret A Manger (PAM) was established in 1986 by two college friends; Julian Metcalfe and
Sinclair Beecham. The company has developed since then to become one of patronised fast
food outlets on the streets of London and UK as a whole, though, it has few branches beyond
the local market. The company has its headquarters located in London and compete only in
the fast food industry. It offers fast food products such as wraps, baguettes, soups, salads,
sushi, fruits, coffee, cold drinks, sweet treats and sandwiches in both breakfast and lunch
category.
The company has gradually increased its sales performance (as shown in appendix 1 and 2)
in the past years with the mission of providing quality and healthy food products and services
to its consumers. Regardless of this, PAM faces a lot of challenges in the quest to cross
boundaries and operate in the global market. Lack of market research and development,
diversification, creating a new market and how to enter into a new market are some of the
challenges it faces.
These challenges were critically analysed in order to suggest appropriate recommendations to
assist PAM to address the problems effectively. PAM’s lack of research and development
problem was analysed using STP model. The company’s ability to diversify were also
analysed using SWOT and Ansoff matrix. PAM’s potential to create a new market was
analysed by the use of 7P’S and Blue Ocean strategy. Finally, Porter’s Five Forces were used
to examine the capabilities for PAM to enter into a new market.
Findings from the analysis base on the use of appropriate analytical tools stated above, it was
revealed that, PAM does not scan its external environment by conducting the necessary
research to develop products and services according to customers’ preference in different
markets. Secondly, its product line is the only source of income, which means the company
does not spread risk of industrial failure by employing unrelated diversification. Thirdly, the
blue ocean PAM created in its early stages to make competition irrelevant has been diluted by
EAT (a direct competitor), Subway, M&S, Starbucks and Greggs. Finally, the company has
to sustain growth by going beyond its current boundaries of operations. Therefore, it has to
employ an effective global strategy to assist its entering into the international scene.
EXECUTIVE SUMMARY
The motive of this case study was to analyse how Pret A Manger can create a new market
through the application of effective strategies. Generally, the report was based on the work of
Frei, Goldberg and Van Sice (2012).
Pret A Manger (PAM) was established in 1986 by two college friends; Julian Metcalfe and
Sinclair Beecham. The company has developed since then to become one of patronised fast
food outlets on the streets of London and UK as a whole, though, it has few branches beyond
the local market. The company has its headquarters located in London and compete only in
the fast food industry. It offers fast food products such as wraps, baguettes, soups, salads,
sushi, fruits, coffee, cold drinks, sweet treats and sandwiches in both breakfast and lunch
category.
The company has gradually increased its sales performance (as shown in appendix 1 and 2)
in the past years with the mission of providing quality and healthy food products and services
to its consumers. Regardless of this, PAM faces a lot of challenges in the quest to cross
boundaries and operate in the global market. Lack of market research and development,
diversification, creating a new market and how to enter into a new market are some of the
challenges it faces.
These challenges were critically analysed in order to suggest appropriate recommendations to
assist PAM to address the problems effectively. PAM’s lack of research and development
problem was analysed using STP model. The company’s ability to diversify were also
analysed using SWOT and Ansoff matrix. PAM’s potential to create a new market was
analysed by the use of 7P’S and Blue Ocean strategy. Finally, Porter’s Five Forces were used
to examine the capabilities for PAM to enter into a new market.
Findings from the analysis base on the use of appropriate analytical tools stated above, it was
revealed that, PAM does not scan its external environment by conducting the necessary
research to develop products and services according to customers’ preference in different
markets. Secondly, its product line is the only source of income, which means the company
does not spread risk of industrial failure by employing unrelated diversification. Thirdly, the
blue ocean PAM created in its early stages to make competition irrelevant has been diluted by
EAT (a direct competitor), Subway, M&S, Starbucks and Greggs. Finally, the company has
to sustain growth by going beyond its current boundaries of operations. Therefore, it has to
employ an effective global strategy to assist its entering into the international scene.
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