Strategic Cost Management and Business Analysis of Cafe de Coral Group

This report provides a comprehensive analysis of the accounting practices and strategic management techniques employed by the Cafe de Coral Group, a large restaurant and catering group in Hong Kong. It delves into key areas such as customer profitability analysis, examining how the company assesses the financial contribution of its customers and its impact on overall profit. The report also explores the application of the balance scorecard, a strategic planning and performance management tool, to evaluate the company's performance across various perspectives, including financial, internal processes, customer, and learning and growth. Furthermore, it investigates the strategic marketing and budgeting strategies used by the group to enhance brand awareness and achieve its business objectives. Finally, a SWOT analysis is conducted to assess the company's strengths, weaknesses, opportunities, and threats, providing insights into its competitive position and future prospects. The report highlights the importance of these tools and techniques in enhancing the company's corporate value and maintaining market leadership.

Managing Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of Café de Coral Group..........................................................................................1
Customer profitability analysis...............................................................................................1
Balance scorecard...................................................................................................................3
Strategic marketing and budgeting.........................................................................................5
SWOT analysis.......................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
FIGURES & TABLES...................................................................................................................10

INTRODUCTION
In every business organisation, it is important to have perfect accounting approaches that
can help management to record and analyse theirevery day financial transactions. The tools and
techniques in strategic cost management and business analysis are widely used in companies and
are vitally important to provide useful information for management to make valuable decisions
and; more importantly, to enhance its corporate value. The Café de Coral Group is one of these
companies using these tools and techniques to perform business analysis, financial review and
identify keys to success.
Overview of Café de Coral Group
Café de Coral (HK Stock Code: 341) Group (“The Group”) is incorporated in October
1968 and is one of the largest public listed restaurants and catering groups in Hong Kong. The
Group comprise three business pillars, namely Hong Kong quick-service restaurants (QSR),
Mainland operations and Hong Kong casual dining (Fig.1). with99 outlets in Mainland china and
359 total operating units with 18,771 staff in Hong Kong and the mainland China (Fig.2) (Café
de Coral annual report, 2017). The success of the Group over the years is underpinned by a
coordinated strategy of investment in brand, staff, processes and network. The Group’s main
target is to maintain market leadership by offering safe and delicious dishes at affordable prices;
however, rising cost of food materials and labour, labour shortage and long working hours are
the key factors that the Group shall overcome. ., In this report, the following tools and techniques
of strategic cost management and strategic business analysis will be discussed that the Group
uses to build on their reservoir of goodwill and enhance corporate value:
(1) Customer profitability analysis
(2) Balance Scorecard
(3) Strategic marketing and budgeting
(4) SWOT analysis
Customer profitability analysis
It is known as the Company that makes from serving a customer or group over a
particular period of time. Generally, they are different among total revenue attained from and
total cost obtain with customer relationship in a specific time period. It is the ability to make its
goods and service in more unique manner. Cost leadership is developed when an organisation is
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competent enough to control costs that are relative to the competitors. It can be more helpful in
increasing productivity and performance to increase efficiency. Profitability is the primary
element of enterprises (Morales and Lambert, 2013). With proper resource planning that allows
administrators to forecast the profitability of an existing project those are formulating in the
Group. Customer profitability is the total profit a firm makes from serving a customer or group
over a period of time. Generally, the difference amount which is collected from total revenue
earned and total cost incurred in order to develop healthy relationship with customers. According
to the incomes statement presented during the year by group provide necessary information
about total profit incur by the group.
Particular 2017
HKD
2016
HKD
Changes
HKD
Gross profit 1,056,820 1,044,672 12,148
Net profit for the year 503,850 517,860 (14,010)
From the above table, it has been clearly seen that gross profit for Café de Coral is
increase from last year. While, net profit incur during that time get decrease by 14,010 in present
year as compare to previous year.
Customer profitability analysis
Class of people Restaurants Spending
Low Cade De coral, Super Super Less spending done by the people
Medium The Spaghetti house, Shanghai
loulou, super sandwiches
They are willing to spend money
High Café de Coral mainland Ready to pay any amount
Comparison of revenue distribution
Particular 2017 HK $000 2016 HK $ 000 Increase/ Decrease
Revenue 7895262 7567176 328086 (+)
From the above distribution which is collected from annual report of the company. It has
been seen that theiris a increase in last year of total sales generated by Café de Coral restaurant.
With improvement in growth under sales of the company from last is positive sign in order to
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make certain investment plan. It means that customer growths are also increasing in every year
because of which total revenues is enhanced.
Traditional cost accounting can be determine that product and services cause costs to
occur. However, direct labour, direct material and other costs are traced directly to delivering
product to its customers. Customer profitability analysis can become more essential aspect for
new management accounting techniques that is based on recognition that every customer is
entirely different. Each dollar of revenue does not contribute equally to the firms profitability. It
has been seen that customers utilised resources of the company in different manner. Hence,
customer costs are varies from one customers to another.
Balance scorecard
It refers as a strategic planning performance management technique. BSC is a
management framework that is use to transform an organisation strategic planning into various
set of performances those are measures and applicable to customers, products, process and many
more other purposes. It is helpful in observation and evaluating performance against an
important issues those are arises in an organisation.
Application
These kind of management accounting is an effective technique use to analyse any
financial issues those are arises in an organisation. It will be effective in improving performance
by measuring correct matters those are related with the profitability of a company. It will be
helpful in order to improve communication system of an employees and customer (Keller,
Parameswaran and Jacob, 2011). theirare various financial issues that are related with
productivity, cost effectiveness and inventory management all of these are rectify by the use of
this techniques. It consists of various perspectives such as:
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Illustration 1: BSC Terminology: Perspectives
(Source: Balance scorecard, 2017)
 Financial aspects that are helpful in creating sustainable economic interest for the
company are useful part in balance scorecard analysis
 Internal business procedures is used to fulfil level of productivity, efficiency and quality
that are delivered to the customer at the time they are using product and services of
restaurant .
 Learning and growth are some other ways employee performance can be determine.
Through using this particular system quality and efficiency related to our product can be
analyse.
 Customer value creation is primary part which is identified by using balance scorecard
techniques (Fullerton, Kennedy and Widener, 2013). Other stakeholders that are the part
of organisation is designed to serve their customers as per their requirements.
Theirare certain aspects those are need to be kept as primary sources. with the use of BSC
application these can easily measure and monitor their progress towards set targets and planning
(P. Tucker and D. Lowe, 2014). By the help of this techniques they can communicate with other
about what exactly they are trying to attain in future. One of the most effective component in
BSC method is strategies mapping to communicate stakeholder value by the organisation. It is
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simple and logical, cause and effect connection among planning process. The Café de Coral can
enhanced their performance, if they can plan to work according to their vision and set targets.
The group needs to use SMART tools to remove all those obstetrical those are coming in the
ways of growth and sustainability. With the help of proper planning Café de Coral upcoming
project can easily be attained. The strategies for expanding their business in other parts of the
nation can only be possible, if they are using right kind of ability and better productive
performance measures.
Strategic marketing and budgeting
A marketing plan is essential for the company to aware theirproducts to numerous
customer. It outline various tactics, costs and project outcomes over a specific period of time.
Marketing strategies can help company to analyse needs and wants of customer and expectation
they are expected from the Coral Company. The main purpose of strategic marketing is to
increase productivity and efficiency of business with their valuable contribution. It will also
provide right guidance to a plan to attain theiraims in more accurate manner without making any
extra cost. It is termed as a time consuming exercise, but it forces to analyse company's strategies
and relative tactics.
Application
It takes time to formulate a better marketing plan and budget, while it is necessary as it
helps company to ties all activities to tangible objectives.
Set annual goals: It is mainly related with attaining the aims that consists of quantitative
aims such as total sales, profit, number of customer and breakdowns by a product. Strategic aims
are required to be implemented in more effective manner in order to expand into a new segment
with its current distribution channel.
Positioning in the marketplace: The strategies need to be develop by making
differentiation from other competitors those are dealing in same business operations. The brand
planning can be effective enough to draw maximum customers.
Targeting: Coral group is needed to target those segment which is sufficient enough to
avail the services those are offer by cafe de coral restaurant. The facilities and services must be
offered according to the demand of customers.
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Market budget: It can be more hard process. Because every decision is made on the
basis of estimation or last year budget information (Reason, 2016). Manager’s uses return on
investment to prepare more effective budget for marketing of their products and services.
From the past year, it has been seen an eventful and productue one for all of us in the
restaurant. In order to attain satisfactory performance in most of part of the businesses. The team
has been driving and investing in several challenges that are come in front of them. It is
encouraging to observe statisfactory performance of out QSR business and team ability to
maintain proper leadership during deliver of services to customers.
SWOT analysis
This is known as internal analysis that provides a framework for determining and
analysing company positive and negative aspects of the company. It can be helpful for them to
provide necessary information about culture and input to participation in large group experience.
Strengths:
 Wide range of industry knowledge: The biggest strength of this company is that they
are large enough to serve maximum customers in a year (SWOT Analysis, 2013). They
are one of the best product severing group. It famous dish include baked pork chop with
rice. In order to enahance customer experiences in particularly through our customer
journey program during the time.
 Experience: They are having more than 30 years of experience in food and catering
business as compared to other companies.
 More than 300 operating units in Hong Kong: Its primary location are categorise as
new territories, Kowloon, Hong kong, Tseung Kwan o and Tuen Mun. few of them are
sitauted in mainland chine market.
 One of the top 200 constituents of Hang Seng Composite Index Series

Weaknesses:
 Lack of promotion of new and interesting cuisine: The negative aspect of coral group
company is that they are not promoting their business at higher level. Because of which
few customer are not recognised theirbusiness.
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 High operational cost: It is analysed that company's large amount of expense are incur
over operation management. Staff cost are highley paid by restaurant for the purpose of
making more reliable outcomes at the time of delivering better services to customers.
 Reputation: In past few year, it has been observed that there are certain issues arises
with the restaurant. Recruitment, development and retaintion strategies and employee
compensation. These are affecting performace as well as reputation of the company.
Reporting of poor management can made huge impacts in 2015.
Opportunities:
 Expansion of target market: With the help of necessary information about financial
position and current year performance, they can plan to expand their business in other
parts of the nation (Morgan, Pritchard and Pride, 2011).
 In the china market, our team;s is ongoing efforts to formulate their brand that have
begun to get better results. The main land chine is widely competitive and customer
consumption are changing continuously. In 20117, they continue to develop and
strengthen sustainability platforms across all of their opeation .
Threats:
 Economic restructuring: It is the phenomenon by which it is helpful in shifting from a
production sector to a service base. Cash flow generated during the year need to be
control or manage in effective manner.
 Volatile market condition: It is a statistical tool of tendency of a market to increase or
decrease sharply within a short period of time. It is measured by the standard deviation of
ROI. Tax charges are major threat for the group because it can affect directly on
productivity.
An emergency fix for solving hygienic problems those are related with foods and
services. The expenses are highly incurred to control its food safety, quality and productivity.
Their are tax chargese are reduce in order to increase sales for the restauarant.
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CONCLUSION
Based on the above-mentioned in strategic management accounting and business
analysis, specifically it has been concluded that managing accounting information is necessary
for the company. They provide meaningful information for decision making process. It can be
help to get more valuable outcomes from the use of necessary tools and techniques which are
affecting profitability of the business. The strategic cost management and business analysis is
crucial aspects for the company in order to maintain and control their everyday transactions.
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REFERENCES
Books and Journals
Maskell, B. H., Baggaley, B. and Grasso, L., 2011. Practical lean accounting: a proven system
for measuring and managing the lean enterprise. CRC Press.
Renz, D.O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Cardinaels, E. and Soderstrom, N., 2013. Managing in a complex world: Accounting and
governance choices in hospitals. European Accounting Review. 22(4). pp.647-684.
Keller, K. L., Parameswaran, M. G. and Jacob, I., 2011. Strategic brand management: Building,
measuring, and managing brand equity. Pearson Education India.
Bai, X., Nunez, M. and Kalagnanam, J.R., 2012. Managing data quality risk in accounting
information systems. Information Systems Research. 23(2). pp.453-473.
Kothari, S.P., Mizik, N. and Roychowdhury, S., 2015. Managing for the moment: The role of
earnings management via real activities versus accruals in SEO valuation. The
Accounting Review. 91(2). pp.559-586.
Reason, J., 2016. Managing the risks of organizational accidents. Routledge.
Morgan, N., Pritchard, A. and Pride, R., 2011. Destination brands: Managing place reputation.
Routledge.
Fullerton, R.R., Kennedy, F.A and Widener, S.K., 2013. Management accounting and control
practices in a lean manufacturing environment. Accounting, Organizations and Society.
38(1). pp.50-71.
Morales, J and Lambert, C., 2013. Dirty work and the construction of identity. An ethnographic
study of management accounting practices. Accounting, Organizations and Society.
38(3). pp.228-244.
P. Tucker, B and D. Lowe, A., 2014. Practitioners are from Mars; academics are from Venus?
An investigation of the research-practice gap in management accounting. Accounting,
Auditing & Accountability Journal. 27(3). pp.394-425.
Online
SWOT Analysis. 2013.[Online] Available through:
<http://thesis.blogkorner.com/2014/04/strategic-analysis-of-cafe-de-coral.html>.
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FIGURES & TABLES
Fig. 1. Cafe de Coral Group Key Strategic Businesses
Fig. 2. Total Operating Units of Cafe de Coral Group
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