Degani Café Business Analysis

This assignment presents a detailed analysis of the Degani café, a prominent Australian restaurant known for its food, beverages, and unique brand image. The report examines the company's strategies for revenue generation and profit maximization, highlighting its strengths and areas for development. It emphasizes the importance of effective marketing strategies to enhance sales and encourages the café to analyze competitor tactics using tools like Porter's Five Forces and SWOT analysis for sustained market success.

Running head: Strategy and innovation
Strategy and innovation

Strategy and innovation
Table of Contents
Introduction.................................................................................................................................................3
Current strategic approach of Degani Café..................................................................................................3
Porter five forces model..............................................................................................................................3
Fit between the company strategy and context............................................................................................5
Recommendations for the Degani................................................................................................................6
Conclusion...................................................................................................................................................6
References...................................................................................................................................................7
2

Strategy and innovation
Introduction
The report presents a brief overview of the current strategic approaches of the Degani
café. It explains the situational analysis of the company. It tells that how the company is
maintaining the good and effective image in food and beverage industry. It describes the goals
and objectives of the firm. Further, it explains the porter five forces model to identify the key
opportunities and threats in the market.
Current strategic approach of Degani Café
The current marketing strategy of the Degani café is unique and excellent. The company
provides a relaxing and quiet environment to the employees to do the work effectively and
efficiently. Mainly, café focuses on the social media to increase the sales and revenue of the café.
It uses the brand awareness strategy to gain the competitive advantages. It is introducing new
products in the market. It is planning to gain the various opportunities in South Australia,
Queensland, and New South Wales. It is focusing on the Queensland to take the huge
opportunities in the market to increase the sale of the food products. It uses the marketing
approach to understand and analyze the new products in the market. Through marketing
strategies, the Degani café implements tactics in order to improve the quality of the products and
services. Advertisement and promotion are the important and crucial part of the marketing plan
and budget. It uses the incentive approach to provide satisfaction to the customers (Abdullah &
Ahmad, 2011).
Porter five forces model
The Degani café success and growth is based on its effectiveness to reduce the adverse
impact of the five forces in its industry environment. This model is developed by the Michael
porters. The café should appropriate respond and analyze these five forces to maintain its market
position in the market. The porter five forces model analyze the current conditions of the
industry that impose emerging and current concerns relevant to the Degani café. The porter five
forces model has been discussed below (Kavishe, 2015).
3

Strategy and innovation
 Competitive rivalry or competition: The strong force of competition and competitive
rivalry are faced by the café. These forces affect the competitors in the market adversely.
The factors which contribute to the strong force of competitive rivalries such as low
switching cost, a variety of firms and a large number of firms. The porter five forces
model analyses and shows the competition that is existed in the market. The food
industry faces a variety of competitors in the market. Thus, the café must focus on the
competitors that are existed in the market (Grunert & Traill, 2012).
 Bargaining power of buyers and customers: The other strong force of the café is
bargaining power of suppliers /buyers. There are many external factors contribute to the
strong and effective bargaining power of suppliers. They are such as small and tiny size
of individual buyers, low and short switching cost and substitute presence. The
bargaining power of customers affects the business activities and operation of the Degani
Café. There are many substitutes in beverages and food restaurants that affect the
functions of such café. The bargaining power of suppliers is the major concern for the
Degani Café (Lang & Heasman, 2015).
 Bargaining power of suppliers: It is the weak force that is faced by the café. Suppliers
influence the food and beverages business. The external and macro factors such as
bargaining power of suppliers such as large overall supply, different variety of suppliers
and moderate fair size of individual’s suppliers contribute to the bargaining power of
suppliers. This model indicates that suppliers do not have more impact of the Degani
Café. The café has made a policy to diversify the products. This policy reduces the
impact of suppliers on the food and beverage business. Thus, the café must analyze the
suppliers in the market.
 Threats of substitutes: Threats of substitutes is the major concern in the restaurant
business. The threats of substitutes are such as low switching cost, availability of
alternatives and inappropriate cost of a substitute. These forces affect negatively the
business activities and operation of the café. The firm must control the threats of a
substitute. As a result, it gains the competitive advantages (Paul & Rana, 2012).
 Threats of new entrants: Threats of new entrants is another big concern in the food
industry. The threats of new entrants are such as high cost of brand expansion and
development, modest supply chain cost and moderate cost of business. New entrants
4

Strategy and innovation
create barriers for the food and beverage industry. Thus, the firm should focus on the
competitors to overcome in the market. Now it is assumed that porter five forces model is
a framework for analyzing and evaluating of the business activities and operations. It
shows the competitive integrity and reliability (Oraman, Azabagaoglu & Inan, 2011).
Fit between the company strategy and context
The Degani cafe is a leader in Melbourne café market. It uses unique and effective strong
strategy in order to meet the long-term goals and objectives. It is taking strong interest to expand
its business globally. There are approx 80 cafes, kiosks and restaurants of Degani Company
across the world (Haley & Haley, 2013). The company selects the best strategy to provide the
best quality of food and beverage products to the customers across the world. It has appointed
qualified, skilled and professional employee to serve the services to the customers in café and
restaurants. The firm focuses on the cost leadership strategy, focus strategy and differentiation
strategy to gain the long-term benefits in café industry (Tavitiyaman, Qu & Zhang, 2011).
Further, core competencies and core values are the strengths of the company. The core
competencies are the combination of processes, expertise, skills, and technologies. The social,
economic and environmental responsibility can be the core competency which the company uses
to maintain the good image in the market. The human resource management is the important and
foremost strength of the Degani Café which helps to the company to overcome on the
competitors in the market (Gold, Hahn & Seuring, 2013). It provides the effective and excellent
services to its customers. The Degani café can be a leader of Café and restaurants industry across
the world with different effective and excellent strategies which are growing in the Café market.
Another side, the company uses the various effective business strategies to gain the profit in café
market share. Besides this, the firm uses unique and effective advertising and promotion strategy
to encourage and increase the sales in the market and to beat the competitors. Although the
company is using effective strategy still it must create some campaign programs to reimburse
their loyal and faithful customers (McGrath, 2013). There is a close relationship between the
company strategy and its goals and objectives. The company cannot run the business in café and
restaurant industry without effective strategies. If the company makes effective plans and
strategies then it can easily meet the long-term mission and objectives. The company also uses
5

Strategy and innovation
the differentiation strategy to differentiate its products from the competitors’ products in the
market. So it can be said that there is a close relationship between company strategies and its
goals and objectives (Morris, Shirokova & Shatalov, 2013).
Recommendations for the Degani
The company needs to improve its services to provide satisfaction its customers in the
market. It should transform its capabilities and core competencies country to country to increase
the profit and sales. It has great opportunities in food and beverage products so it should build
and develop these products. It should also focus on the coffee and tea products. Further, the firm
makes a significant investment in marketing and advertising strategies to increase the revenue in
the market. It should maintain good communication and cooperation with customers. It should
provide home delivery services to its customers to attract the more customers in the market. The
firm must build a better relationship with customers to increase the efficiency and effectiveness
in the market. It should provide products and services at reasonable prices and it must offer good
quality of products and services. In this way, the company can build and develop a strong
position in the market with its effective strategies near future (Matzler, Bailom, Friedrich von
den Eichen & Kohler, 2013).
Conclusion
The report is based on the business activities and operation of the Degani café. It is one of
the biggest restaurants in Australia. It has made an exclusive and unique image in the market. It
deals in various food and beverage products. The company uses the various excellent and
effective strategies to increase the revenue and profit of the company. Further, Degani café
should follow the effective marketing strategies to increase the sales of the firm. It must analyze
and evaluate the plans and strategies of the competitors in the market. The Degani café is famous
for the meals, sweats, coffee, and beverages. Thus, the company should evaluate and analyze the
competitors’ strategies through porter five forces model and SWOT analysis. In this way, the
Degani café can maintain a good image in the market.
6

Strategy and innovation
References
Abdullah, L. A. Z. I. M., & Ahmad, N. (2011). Chocolate cakes preference using ranking fuzzy
numbers. Journal of Quality Measurement and Analysis, 7, 65-73.
Gold, S., Hahn, R., & Seuring, S. (2013). Sustainable supply chain management in “Base of the
Pyramid” food projects—A path to triple bottom line approaches for
multinationals?. International Business Review, 22(5), 784-799.
Grunert, K. G., & Traill, B. (2012). Products and process innovation in the food industry.
Springer Science & Business Media.
Haley, U. C., & Haley, G. T. (2013). Subsidies to Chinese industry: state capitalism, business
strategy, and trade policy. Oxford University Press.
Kavishe, T. E. (2015). Coping with Power Interruptions in Tanzania: An Industrial Perspective
A Case Study of One Small Scale Animal Food Processing Industry in Moshi
Municipality(Master's thesis).
Lang, T., & Heasman, M. (2015). Food wars: The global battle for mouths, minds and markets.
Routledge.
Matzler, K., Bailom, F., Friedrich von den Eichen, S., & Kohler, T. (2013). Business model
innovation: coffee triumphs for Nespresso. Journal of Business Strategy, 34(2), 30-37.
McGrath, R. G. (2013). The end of competitive advantage: How to keep your strategy moving as
fast as your business. Harvard Business Review Press.
Morris, M. H., Shirokova, G., & Shatalov, A. (2013). The business model and firm performance:
The case of Russian food service ventures. Journal of Small Business
Management, 51(1), 46-65.
7

Strategy and innovation
Oraman, Y., Azabagaoglu, M. O., & Inan, I. H. (2011). The firms’ survival and competition
through global expansion: A case study from food industry in FMCG sector. Procedia-
Social and Behavioral Sciences, 24, 188-197.
Paul, J., & Rana, J. (2012). Consumer behavior and purchase intention for organic food. Journal
of consumer Marketing, 29(6), 412-422.
Tavitiyaman, P., Qu, H., & Zhang, H. Q. (2011). The impact of industry force factors on
resource competitive strategies and hotel performance. International Journal of
Hospitality Management, 30(3), 648-657.
8