Time Out Café's Defensive Strategies Against New Entrants

The Time Out Café has a strong customer base and well-established brand recognition. It competes with new entrants through its social media presence. The café's bargaining power is weakened by its deals and combo packs, which attract customers while maintaining profitability. To mitigate supplier power, the café can design and produce its own products or take over retail distribution. Substitute products are a threat, but the café differentiates itself through focused strategies like cost leadership and quality management. To gain competitive advantage, the café uses focused differentiation, cost leadership, total quality management, e-business strategy, and sustainability. By understanding the industry's forces, the café can create an effective mindset for focus leadership and quality management.

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Managing people and organizations
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Executive Summary:
The following paper is going to recognize competitive advantage of a business through the
application of Porter’s Five Forces Model. In regards to food and beverage industry the report
tries to illustrate how effectively this would focus on the competitive market. Based on the
SWOT analysis of the company, this would focus on the basic understanding of the forces
that influence the business decisions of a company. The report begins with industry analysis
that moves on to the identification of different categories such as barriers to the new entry,
bargaining power to the customers and so on. In this regard it can be stated that in most of the
cases, the basic understanding has been taken into certain consideration pertaining to the
effective understanding of the cases.

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Table of Contents
Introduction................................................................................................................................3
Industry analysis.........................................................................................................................3
Industry rivalry.......................................................................................................................4
Barriers to entry......................................................................................................................4
Bargaining power of consumers.............................................................................................5
Bargaining power of suppliers...............................................................................................5
Substitute Products.................................................................................................................5
Strategies and Process to Gain Competitive Advantage:...........................................................6
Focused Differentiation Strategy:..........................................................................................6
Focused cost Leadership Strategy:.........................................................................................7
Cost Leadership Energy:........................................................................................................7
Total Quality Management:...................................................................................................7
E-Business strategy:...............................................................................................................8
Sustainability:.........................................................................................................................8
Conclusion:................................................................................................................................8
References..................................................................................................................................9

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Introduction
Industry analysis can be defined as a marketing assessment tool which is designed in
order to provide an understanding of a company’s position in contrast with other companies
producing similar services and products. Understanding the overall workforces of an industry
is regarded as a major component for strategic planning in a more effective way. It involves
reviewing of the economic, market and political factors, which influence the development of
any industry (E. Dobbs 2014).
The report highlights the concept of industrial analysis taking “Time out Café” into
consideration. Industrial development can get highly influenced by the suppliers’ and buyers’
power, the competitors’ condition and the new entrants in the market (Rothaermel 2015).
The report throws light on the detailed analysis of industrial rivalry, barriers,
bargaining power of the consumers and suppliers and substitute products. It further includes
the strategies and processes to gain competitive advantages, including cost leadership,
differentiation strategy, e business, sustainability strategy and others, which influence the
industrial growth and progress.
Industry analysis
Industry analysis includes Porter’s five forces analysis which is an important tool for
the business strategists. It is basically based on certain observations of the varying profit
margins between the industries which influences the industrial structure. It determines an
industry’s attractiveness. It also gives a brief idea how a company operates and what are its
strategies. This section of the report describes the competitive forces of any industry (Dobbs
2012).

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Industry rivalry
It denotes the degree of the competition among industries and existing firms. The
intensity of the rivalry among various competitors of any company refers to an extent through
which the firms within a company pressurize one another; as a result, it limits there profit
potential. Competitors often try to steal market and profit share from each other. This, in turn,
reduces the potential of profit for all the firms within an industry. As far as Porter’s five
forces framework is concerned, the rivalry’s intensity shapes the industry’s competitive
structure, as it influences the existing firms’ ability to achieve profit (Lee, Kim and Park
2012). High rivalry intensity means the competitors are targeting the markets of each other
and pricing the products aggressively. The strengths of Time out Café is its packaging, food
quality, price, situated at a suitable place and its delivery service. It encourages diversity and
is equipped with high technology which is loved by people. It provides a friendly
environment to its customers and staffs. Moreover, it is expanding its strategies through
online delivery and building loyalty among the consumers. It is lowering the prices of its
products indirectly via more deals and combos which will lure them to buy more products
(Perdana, Roshetko and Kurniawan 2012).
Barriers to entry
It refers to some obstacles or high startup costs which prevent the new competitors to
enter the industry easily or the business area. It is beneficial for the firms that already exists
and operating as it protects the companies being affected from new entrants. The common
barriers are special benefits of tax, patents, customer loyalty, brand identity and high
switching costs of the customers. The Time out Café has strong customer base and well brand
recognition. The café has a strong presence in the social media, which helps it compete with
the new entrants in the market (Grandori 2012).

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Bargaining power of consumers
According to Porter’s Forces the power of the buyer can directly shape the structure
of competition of an industry. It refers to the consumers’ pressure on getting them high
quality products at lower prices. Strong buyers pressurize the sellers to lower the prices of the
products and offer them better and more services at a lower price. It hampers the
competitiveness of an industry and the profit making potential. The Time out Café has a
strategy of attracting the consumers while gaining profit at the same time. It created various
deals like combo packs and others which lure the consumers to purchase items from them. It
will also save the consumers’ money and lessen their bargaining power (Zhao et al. 2016).
Bargaining power of suppliers
The strong presence of the powerful suppliers lessens the profit of any industry. It
increases competition within the industries by indirectly threatening them to raise the prices
or reduce the products’ and services’ quality. It reduces the profitability where the companies
cannot recover the increase of costs. The Time out Café is controlled by the market and thus,
in order to mitigate the risks must reduce the suppliers’ power by making and designing their
own products. It can also take over its retail distribution power (Grandori 2012).
Substitute Products
The industrial threats of substitute product refer to the competitor’s product which the
consumers can buy instead of their own industrial product. It basically refers to the substitute
product which offers the same benefits to the customers. In many cases, the substitute
products’ prices are cheaper which increases the risk factor of the industrial product. The
competitor of Time out Café lowered their prices which ultimately dropped the café’s sale.
Their strategy was different, as they didn’t raise their products’ prices; rather they introduced
new deals and combos over their products to entice their customers. This increased their sales

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and customer base. Moreover, the café provides fast broadband internet for their staffs and
customers, which helps them compete with the substitute market products (Dobbs 2012).
Strategies and Process to Gain Competitive Advantage:
Focused Differentiation Strategy:
According to Porter, there are two of the basic management market competition theories
that can be directed to the new entry business. He has identified three nonspecific business
strategies. These are:
i) Cost Differentiation
ii) Leadership
iii) Focus Differentiation
According to Porter, focused differentiation strategy can be defined as the process of
targeting small group of customers who are differentiated in terms of behavior, demography
and other segments. This is closely associated to market segmentation. Focused
differentiation strategy comprises of the understandings of customers loyalty, high margins,
limited competition and customer awareness. As a matter of fact, this needs to be taken into
certain consideration pertaining to the effective understanding of the process that would focus
on the generic conceptualization of how business is performed in a new market through
profound understanding of the customers’ buying nature. In this context, it can be stated that
the café has created a product or service that is perceived by the customers as being unique in
the industry. In this case the basic advantage lies in this fact that in most of the cases there
has been a proper understanding of the case that would focus on the entire understanding with
its effective nature. As a matter of fact, the most interesting fact pertaining to the creation of
unique product has been dependent on the quality it was supposed to provide to the
customers. In terms of focused differentiation it can be stated that it has focused on the
limited part of the market. The café did not focus on broader understanding of the market in

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huge margin; rather it has only concentrated into the local market where it could become a
solid threat to the other competitors.
Focused cost Leadership Strategy:
As discussed by Porter, focused cost leadership strategy needs competition that is
based on the price of the product offered in the market. As a matter of fact, this has been
taken into certain consideration, pertaining to the effective cost management of the products
or services the café offers in the market. From the SWOT analysis, it has been identified that
in most of the cases there has been a thorough understanding of the process that was highly
effective in terms of creating the basic focus with the entire case such as the basic
understanding of the issues. In this case a narrow market is focused and the cost is delivered
and structured on the basis of that particular narrow market. The café has maintained
moderate price in the market thus attracting greater number of the local customers.
Cost Leadership Energy:
In this context an effective and succinct definition needs to be developed. Since this
has been taken into certain consideration pertaining to the effective understanding of the
process, it needs to be focused on the entire case. Cost leadership is a term that is defined
through the conception of the company that projects itself as the cheapest manufacturing
without compromising the quality of the product or service it provides in the market. The cost
leadership energy is derived from the procurement of resources that the café has developed
through maintaining strong contract with the local suppliers thus cutting the cost behind
production.
Total Quality Management:
According to the scholars, total quality management confirms the consistency of a
company in the product or services offered by the company. With its four components such

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as planning, quality assurance, quality control and quality improvement the companies
strategize their business performance for capturing the market. the café does not only focus
on the improvement in the quality of the service and product it provides to the customers, but
it also strives to maintain quality management through proper communication channel
between the company and the external stakeholders.
E-Business strategy:
Big-commerce has become an important stage in the maintaining process of the
business. In terms of new entry technological intervention plays an important role for the
success of the business. As a matter of fact, this has been taken into certain consideration
pertaining to the effective understanding that there is a clear chance for the entire
understanding of the process. E-business ensure competitive advantage through the ease of
the customer dealing and accounting quantification process.
Sustainability:
Business sustainability such as community build-up and environmental sustainability
is one of the key strengths for a business to excel in the future business. Corporate social
responsibility becomes obligations for the new entry business. As a matter of fact, this has
been taken into certain consideration pertaining to the effective understanding of the cases
pertaining to the entire case that was highly motivating in terms of maintain balance.
Conclusion:
From the aforementioned discussion it can be concluded that new business entry
needs a focus that is channelized through the conceptual understanding of the industry. With
the help of the industrial analysis it needs to be taken into certain consideration pertaining to
the effective understanding of the process that would create an effective mindset in the focus
leadership and quality management lessons.

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References
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Lee, H., Kim, M.S. and Park, Y., 2012. An analytic network process approach to
operationalization of five forces model. Applied Mathematical Modelling, 36(4), pp.1783-
1795.
Perdana, A., Roshetko, J.M. and Kurniawan, I., 2012. Forces of competition: smallholding
teak producers in Indonesia. International Forestry Review, 14(2), pp.238-248.
Grandori, A. ed., 2012. Interfirm networks: organization and industrial competitiveness.
Routledge.
Zhao, Z.Y., Zuo, J., Wu, P.H., Yan, H. and Zillante, G., 2016. Competitiveness assessment of
the biomass power generation industry in China: A five forces model study. Renewable
Energy, 89, pp.144-153.
Dobbs, M.E., 2012, January. Porter's five forces in practice: Templates for firm and case
analysis. In Competition Forum (Vol. 10, No. 1, p. 22). American Society for
Competitiveness.