Entrepreneurship and SMEs: A Case Study of SpiceSky Restaurant

This report presents a comprehensive analysis of SpiceSky Restaurant, a London-based Indian restaurant experiencing a decline in sales. The investigation identifies several key business problems, including financial management issues, a failure to analyze and adapt to competitor strategies, inadequate branding and promotion, a lack of customer follow-up, poor customer relationship management, and a failure to embrace technological advancements. The report also highlights issues with distribution and supply chain management. Based on these findings, the report recommends several solutions, including mergers and partnerships to address financial constraints, the development of a robust competitive strategy, and improvements in customer relationship management. The report emphasizes the need for SpiceSky to adapt to the changing market and prioritize customer satisfaction to regain its competitive edge and increase sales.

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ENTREPRENEURSHIP AND SME'S
Student name
1-29-2019

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Contents
Introduction......................................................................................................................................2
Major business problems identified.................................................................................................2
Recommendation to the business problems.....................................................................................7
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

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Introduction
Conducting business is crucial in today’s competitive world, where the customers have various
options to go for. In this report, the hotel industry is taken as a case to analyze various business
problems and major reasons that were responsible for the decrease in sales. According to the
scenario, appropriate suggestions and recommendation will be made in the report further (Anute
& Deshmukh, 2015)
The organization is SpiceSky restaurant, located at the heart of London’s city center, established
in 1988. The major USP of the organization is the range of Indian food and its quality. However,
there was a significant decrease in the sales of the restaurant since the last twelve months, even
when the market is growing. The investigating team reach the restaurant and found that there are
various downtown restaurants which could be responsible for the decline of sale. The
investigating team analysis the situation, and understanding the internal situation of the
restaurant. The purpose of the investigation is to find out the major business problems and
providing recommendations that have to be implemented to help organization to increase the
sales of the restaurant. This investigation while being structured and systematic and in-depth
study of internal business analysis of SpiceSky and external environmental factors will be
considered. Moreover, the future is uncertain, and not essential that everything will be in favor,
for this the contingency plan of an organization must be prepared to counter the uncertain
problems (Ayers, 2017)
Major business problems identified
After the interview conducted with Ali Mahal, the owner of the SpiceSky, and analyzing all the
major factors. The major business problems identified were as follows:

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1. Financial management
Cash is the major aspect that is required while conducting any business. It was observed
that the company has appointed the cost manager, for reducing the cost, but due to this,
there were many customers felt dissatisfied due to reducing in a variety of food and
beverage, especially Hadia that is the rice beer. Through this can be said that the
company was in lack of finance, and were not able to manage the resources well. This is
one of the major business problem faced by the company that is lack of finance or
investment in the company to follow their unique selling proposition of the organization
of a range of foods items. Moreover, it was observed that the suggestion made by the cost
manager of the company were not very relevant, as they were leading to reduce in sale of
goods, although through this the operating profit of the company was not reduced, the
revenue was not reduced, but this could work for short run and would be harmful to the
company in the long run. As this could be the reason that the company would not be able
to retain its existing customers and attract new customers (forbes, 2019)
2. Ignoring competitors
It is important to analyze the external environment, especially the forces of the industry
that will affect your business, and then the relevant changes in the business are to take
with time. The increase in the competition in the area for restaurant chains providing
similar Indian food were the major competitors for SpiceSky. This was another major
business problem identified, where the organization lack, that is analysis the competitors
and bringing change to the business. The competitors were using various promotional
tools while providing a high variety of food and beverages to the customers. Therefore,
the customers were more attracted to the competitive restaurants instead of SpiceSky, this

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was the reason that there were only old faces seen in the restaurant and no new customers
were attracting or visiting the restaurant. It was observed that the bargaining power is in
hands of the buyers due to the high option to opt for, and most importantly there is no
switching cost involved in this industry. Therefore, in such an industry, it is important to
keep a check of the competition and what strategy they are adopting that could lead to
reducing in the business sales (Bowers, et al., 2017)
3. Competitive strategy –
Considering the strategy to keep the company updated according to the strategy of the
competitors, this was another issue observed in the business of SpiceSky, which was not
developed the competitive strategy, the unique selling proposition while initiation the
business was the range of products and quality, which is not enough to gain competitive
advantage. In order to gain a competitive advantage, the company must have something
unique and innovative, so as to compete with the major competitors and gain upcoming
opportunity in the industry. This problem has to be fixed in order to increase the sale of
the company again. This is the long term plan for the organization, which the cost
manager is influencing negatively through inappropriate suggestion to save the revenue
but losing the sale in long term (Choi, 2015)
4. Branding and promotion
Brand recognition and awareness are very important for attracting new customers. Since
the company is lacking in the finance, the company was unable to advertise largely, that
is the major business problem observed, due to which the brand recognition, and creating
brand loyalty had become difficult. Promotion is a key tool to attract customers and most
importantly to retain the existing one in the competitive environment. However, it was

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observed that their competitors were largely into advertising and promotion, and Spice
Sky had advertising through television, and hoardings very long time ago, and the same
advertising was running till now. As the scenario has been changed to a larger extent, the
advertising use has also been changed, and it has become important to reach to the
customers through larger pace, which the company lacked the most and was the major
reason to decline in the sale. There are various promotional tools that have been added in
today’s world, which most of the companies are using, and since it is not used by the
SpiceSky, the company was lagging behind its competitors (Chung, 2015)
5. No follow up
In the service industry, it is very important to take care of the customer’s needs and
requirement, and considered customer feedback. This was another business problem
identified, that is the company was ignoring the feedback from the customers. For
instance, many customers were complaining regarding the reduction of the variety of
food especially Hadia beer. This was ignored by the organization, this could be a major
reason for the reduction in sales, as people were feeling more dissatisfied with the
experience at the restaurant. From the interview from the owner, it was observed that the
customers are complaining about reducing the ranges, which the owner ignored as it was
suggested by the cost reduction manager, which seems to be one of the wrong decision of
the organization. Through this, it can be said that for the success of the service industry, it
is important to consider customer satisfaction as the major factors while taking any
business decisions (Chan & Khodakarami, 2014)
6. Customer relationship and Customer experience

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Building a relationship is one of the major element while providing food and service and
a place for customers to hang out with family and friends. Customer relationship is
largely relevant to create brand loyalty, and this was another problem identified, due to
which the customers were switching to another organization or hotel, which was
eventually decreasing the sales of the organization (Chung, 2015)
Since it is the hotel industry, and service is a major role in the industry. The customer
experience has to be enhanced in order to attract more customers, this was lacking in case
of SpiceSky, the employees were not found to be very friendly and polite with the
customers, the service was not very quick and they were not answerable to the customer
regarding reduction in menu list, especially some of the most unique product. This leads
to a lack of a good experience for the customer who visited the place. The experience is
the major thing that a customer can feel, and for this, it is important to provide a friendly
and positive environment. The company was more of product oriented instead of service-
oriented which was an issue while providing customer experience (Finne, 2017)
7. Technological up gradation
Since, the external environment is the major aspect to consider while conducting the
business, and through PESTLE analysis the company can be updated with the external
major factors that can influence the business. This was another problem observed, that
the company was not doing, and due to which the company did not have any update in
the business process. For instance, with time the technology has also been changed to a
large extent, through this it can be said that the organization was using old technology
and did not introduce to the latest technology, that could have increased the sale and
reduce the cost ion long run. For instance, technology for the mode of payment has been

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changed, the online site which provides an option for the customers to see the
information, customer ratings, and the online booking of table options. Through a change
in technology the company could have reached out to more customer and could have
provided sales promotion, which associating with payment companies, and provide
relevant discounts to the customer to increase the sale of the organization (Dobbs, 2014)
8. Distribution
The distribution of goods that is the supply changing management is a very important
function to opt in the hotel industry. The organization lack in this management and led to
an increase in the cost of the supply chain, and dissatisfaction among the customers by
reducing the cost with the wrong technique. Some of the other problem identified was the
higher cost of the raw material, and not having timely logistics of supply of raw material
to serve to the customer at the end. The company was very much depended on its old and
one supplier, which was unable to reach on time at times due to uncertainty, or
unavailability of raw material, which eventually affect the business of the SpiceSky. This
was also the ignorance by the cost manager while adopting cost reduction strategies to
consider the supply chain as one of the modes to reduce the cost for the business instead
of reducing the item from the menu (Christopher, 2016)
Recommendation to the business problems
The issue identified in the previous section can be rectified through proper strategy development
and planning. The major recommendations that can be helpful for the company to increase the
sale of the goods are:
1. Mergers and partnership

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One of the major issue identified was the problem of finance that the cash was a deficit in
the company, due to which the company had to follow some cost reduction techniques.
For this, one of the recommended strategies for the business would be finding another
partner who will be interested in adding capital to the company and will be liable for the
profit and loss of the company. Through this, the company can have an investment which
can be used to apply major changes that are required in the business top upgrade instead
of reducing the range of the products (Gabriel, 2016)
The major benefits from the partnership would be an increase in the capital of the
organization and to share the risk with another person. This would provide business a
new stage to the product life cycle of the organization. Moreover, since there would be
more than one person who would be liable for the decision making, the chances of
mistake are reduced to the large extent, because the decision would be mutual and with
the understanding of both individuals.
Another such recommendation would be merging the restaurant with some of the popular
food chains, but run the business separately, although Ali has to share the profits, the
investment amount could have been increased with this strategy of margin. These could
be decreased in revenue for Ali but it will be a beneficial strategy for the organization in
long run (Gong & Yi, 2018)
2. Competitive advantage
Another issue identified was there was a lack in the competitive strategy of the
organization, the porters have provided four competitive advantage, and that the company
can be used to analyze their strategy. From the figure below in order to gain competitive
advantage, either a company can focus over the cost of the product and lead with cost

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leadership strategy, where the price is kept lower than that of competitors. Another
strategy is product differentiation, which according to the grid is to add differentiation an
innovation in the product while considering the broad market, and focusing is the strategy
where either use of lowering the cost or differentiation while focusing over the narrow
group of customers (Griffiths & McLean, 2014)
Figure 1:(Source: (Dobbs, 2014)
For SpiceSky, the most approachable strategy would be differentiation that is targeting
the broad segment of customers while focusing on the product differentiation. The
recommended product differentiation is the best way out to increase the sale in the
competitive industry. For gaining a competitive advantage, the company must introduce
new products, and bring innovation, for which the people would be ready to pay a more
and higher price. This could be introducing new products, better food presentation, more
range of food and beverages. Moreover, the taste of the products must be improved and
since the quality was USP of the organization from the very beginning, it has to maintain
and the quality provided to the customers must be best so that the customer feel

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worthwhile paying for the food and service in the restaurant (Harrigan & Choudhury,
2014)
3. Use of promotional tools
Another issue was lack of advertising, branding, and promotion. For which the
recommendation to the company includes the use of extensive promotional tools to make
people aware and remember about the brand. Moreover, since the technology and social
trends have been changed in society, it is recommended to the company to use the latest
promotional tools, other than the old school techniques (Kumar, et al., 2018). The
recommended tools are as follows
 Advertising – one of the traditional method, which seems to be important while
understanding the competitor’s strategy is advertising through an audio video that
is through television, and through another mode is through printed form through
pamphlets, newspaper, and hoardings. This has to be updated according to the
planned brand positioning, that is providing the best quality food and most
innovation is provided to the customer and creating similar customer perception
through the advertising (Hayran, 2016)
 Social media marketing – one of the issue observed that the company was not into
analyzing the changing trends of the external environment. For this, the use of
social media marketing is very essential as the change of social trend, that most of
the people spend maximum time on social media, and through this, the
opportunity for the organization is to reach maximum customers at the same time

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through social media platforms like Instagram, Facebook, and Twitter pages (Hu,
et al., 2016)
 Event organizing – since the food and beverages are the major product serving to
the customer, some of the major food preparation events can be organized by the
company in order to promote. They can include various competitions related to
cooking, to promote their brand and create brand recognition to attract more
customers. this is the latest way to promote the brand and taste of the company to
reach out to the customers (Pandey, 2016)
 Sales promotion – this is another traditional way of promoting the product. The
offers like first time visit to the restaurant can be applied by the company to
attract new customers. As the issue identified was that only old faces were seen in
the restaurant. For this the best way to attract new customers and retain the
existing one. The booklet can be created for this technique of promotion, which
would include different promoting coupons that can be used by the customers
within a tear. The schemes could be like one starter free with another, or discount
related coupons on beverages especially on the most popular drinks that were
Hadia (Kaul, 2017)
4. Customer orientation and customer experience
Another issue observed was the company do not follow up or ignore the customer
perception, and did not provide good customer experience. The industry of SpiceSky is
the service industry, although the food that is the product is important the service and
experience at the restaurant are equally important. For this, it is recommended to the
company to provide excellent customer experience through the various tool. Moreover,

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another recommendation is to create the business strategy as customer focused and
customer oriented that is understanding the customer need and preference and then
provide the product and services accordingly. This include change in the menu according
to the customer need, for this the company must have customer follow up that is the
feedback regarding the taste, the service, and their experience with the visits to the
restaurant. This will help the management to understand the customer more, and adopt
the things that were complained or needed by the company (Safari, et al., 2016)
For improvising the customer experience, the company can introduce live performance in
the restaurant like some of the popular musicians to play on specific days of the week.
This will also attract major tourist, to enjoy the dining with best quality food and a source
of entertainment. Moreover, some of the basic things must be included in the like
facilities, restroom, excellent environment and interior, friendly employees. For this, it is
recommended to the organization to provide the training and development program by
the company to the employees as they would be majorly responsible to create the best
place for the customers to hang out and spend time. Through the training program, the
innovation can also be included in the plan, for which the taste is one of the major
aspects, and another this is to provide quick and helpful service to the customers
(Reinartz, et al., 2017)
5. Technological up gradation – technology was another issue identified, for which the best
way out is to upgrade the technology according to the change in the environment of the
industry. For instance, it is recommended to introduce various technology while creating
the food or beverage to fix the taste and quality of ingredients to be used. Moreover,
another way that is recommended to use the technology is in the payment system, in

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today’s world people prefer not to carry cash and pay through card or wallets that are
very popular. Therefore, it is recommended to the organization to provide an option for
the customer to pay through the debit or credit card, and the electronic wallets like
Google Pay, or Paytm.
Another way recommended to upgrade the technology is through taking feedback, the
feedback from the customers could be taken online, to record major issue or appreciation
by the customer, and this review and stars can be seen by other people or are shown
publically in order to influence more customers to visit the place, and the problems
mentioned by the customer must be taken as the area to improve for the company
(Hayran, 2016)
Another way to use technology is reminders to the customer through Email, this could
also be the promoting of the brand, or another thing to provide to the customers through
the use of technology is to book table online for free, so that they do not have to wait in
the queue, in case of more number of customers are pre-booked. This is to enhance the
experience of the customer with the restaurant. Therefore, technological up gradation
could be a useful strategy for the company to increase the sales (Hayran, 2016)
6. Supply chain management
Another business problem identified, was a problem with distribution and the supplier.
That is the supply of the raw material was not on time at the time, due to which the chef
was unable to serve the customer at that point in time. This hampers the brand image and
dissatisfaction among the customers. The major recommended strategy for this issue to
solve is to increase the number of suppliers (Gencer, 2017)

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Figure 2: (Source: (Gencer, 2017)
From the supply chain management process, it can be said that the company must be
reaching out the customer in a more structured and planned way, in order to keep the cost
of the distribution minimum. The focus for this recommendation would be over the
second stage that is the source, through this stage the focus is to decide on the source of
the raw material, that is the supplier or vendor, and rational decision could help the
organization to reduce the cost of distribution, and any further disruption within the
supply chain management process (Hugos, 2018)
Through an increase in a number of suppliers, the risk of uncertainty can be mitigated
while approaching another supplier in case of any delay or issue with logistics. Moreover,
since one of the major strategies would be product differentiation, which is providing best
quality Indian food, the supplier could be from India as well, and through appropriate
supply chain management, the company can manage their major supplier and need of
inventory and raw material on time. Moreover, the accurate calculation of the order cycle,
which will lead to the availability of raw material and stock on time. Since the ingredients
would be from India, especially the spices, for which the taste is excelled and popular, the

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product taste would be unique and something that the competitor would not easily adapt
(Munson, 2013)
7. Using porter’s analysis tools, and PESTLE analysis tool
It is important for the company to be aware of the external factors, so as to analyze the
need for change in the business strategy with time. For this, the external environmental
factors to be analyzed is the political, economic, social, legal, and technological factors of
the nation. Moreover, to analyze the industry forces that affect the business decision must
be studied with time, this includes bargaining power of buyers and sellers, major
competitors, the threat of new entrants, and the threat of the substitute. These two threats
are large that is company entering into the industry with more innovative ideas, and a
substitute could be the fast food chains like Mc. Donald’s, or coffee shops like Starbucks
can be a large threat. All the forces must be analyzed with time, in order to have a better
strategy for the organization, to sustain in the market. This will help the organization to
solve the problem of ignoring competitors. (Khoja, 2016)

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Conclusion
To conclude, it can be said that the report included major business problems identified for
SpiceSky, a restaurant at London city center, providing Indian food and beverages to the
customers. After the interview conducted with Ali Mahal, the owner of the SpiceSky, and
analyzing all the major factors.
The major business problems identified were financial management, that is the lack of
investment or cash to invest in the organization, ignoring competitors that is lack in analysis of
the external forces within the industry, competitive strategy that is lack of strategy to gain
competitive advantage, branding and promotion that is no promotional tools used to attract
customers , no follow up that is the feedback of the customers are not taken seriously while
making decisions, customer relationship and customer experience, technological up gradation,
and distribution.
The major recommendation made to the organization to increase the sale, and resolve the
problems identified are mergers and partnership in order to increase the investment amount ,
competitive advantage so as to sustain in the market and compete, for which product
differentiation strategy was recommended, use of promotional tools that were advertising, social
media marketing, sales promotion, and event organization, customer orientation and customer
experience that is innovation like live music concert within restaurant. Moreover, technological
up gradation, supply chain management that included an increase in suppliers to resolve the issue
of distribution, using porter’s analysis tools, and PESTLE analysis tool in order to resolve the
problem of ignoring competitors for the organization.

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