Entrepreneurial Strategy Analysis of Prezzo Restaurant (MKT3031)

This report provides a comprehensive analysis of Prezzo Restaurant's entrepreneurial strategies, focusing on its strategic situation, capabilities, and market position. It employs a range of analytical models, including Porter's Five Forces, BCG Matrix, McKinsey's 7S Model, PIMS Strategy, SWOT, TOWS, and PESTLE analyses to evaluate the restaurant's internal strengths and weaknesses, as well as external opportunities and threats. The report also outlines SMART objectives, proposes implementation strategies, and offers recommendations to enhance Prezzo's competitive advantage in the UK food sector. The analysis covers critical evaluation on Entrepreneurial Strategies, and concludes with a summary of findings and recommendations for Prezzo Restaurant.

Entrepreneurial Strategy 2018-19
Comprehensive situation analysis on Prezzo Restaurant.
Submitted in partial fulfilment of the requirements for the award of the degree of
Bachelor of Arts
In Business Entrepreneurship (Top-up)
Module: MKT3031

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................4
INTRODUCTION...........................................................................................................................4
Critical evaluation on Entrepreneurial Strategies.......................................................................4
C. Analyse of Prezzo Restaurant’s strategic situation capability and position...........................9
SMART OBJECTIVES: ..........................................................................................................13
Implementation of the Strategy.................................................................................................13
RECOMMANDATION............................................................................................................14
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

EXECUTIVE SUMMARY
Business strategy refers as a long term plan of action designed to accomplish a
specific goal or objectives. In this report different models were used such as Porter's
Five Forces Model, BCG Matrix, McKinsey's 7s Model, PIMS Strategy, SWOT
Analysis, TOWS Analysis and PESTLE Analysis. All these are consider useful
models which will help an organisation to gain competitive advantages within given
time period.
INTRODUCTION
This report will focus on service sector in the UK.
In order to complete this report the company, which has been chosen, is dealing in the
food sector, Prezzo Restaurant.
This report will cover entrepreneurial strategies for example: BCG Matrix,
McKinnesy 7S and Porter’s Five Forces. For situation analysis, this report will present
several modules for example: SWOT, TOWS and PESTLE. For current situation
analysis this report will present SWOT and TOWS whilst PESTLE analysis will apply
for current market situation. Besides this report will explain five key objectives using
SMART concept.
This research will provide several implementing strategy for the above mention
strategies and modules. Moreover, the report will provide some recommendations to
Prezzo Restaurant. These recommendations will help the company to understand and
major situation in the market.
Critical evaluation on Entrepreneurial Strategies
Porter's Five Forces Model:
Michael E. Porter proposed the following Model. This Model states that in order to
know about the competitive environment of any business, the following five forces
will be used which are explained as under:

Threat of New Entrants
This power takes into consideration about the threat of entering new companies in the
market whether the barriers to enter in the industry are high or low. In this way the
impact of following power is determined. Example: Prezzo Restaurant provides
cheerful service and a light and bright atmosphere which will help a restaurant
to achive better results. In case of companies producing medicines, the barriers
are high because it needs licensing and confirmation from the government and
many legal formalities, which are time consuming and are also costly to the
entrepreneur.
Threat of Substitutes
In today's world, every product does have some or the other substitutes available.
This power also impacts upon the working of an organisation. It is so because if there
are numbers of substitutes are more than it will be a threat to the company's products
because people will quickly shift to other products (Covin and Wales, 2012). For
example: In case there are no close substitutes available than it will not easy for
people to choose any other product satisfying their need and requirement.
Industry Rivalry
The considerations in this power are the number of competitors in an industry of the
firm. The intensity of rivalry in the industry also impacts upon the working of another
organisation. If the competition is intense, then it will not easy for the companies to
survive. For example: If the competition among companies is low than it will be easy
for the company to survive and earn profit.
Bargaining Power of Buyers

In this power, the focus is on the buyers of the products of an organisation.
Depending upon the number of buyers of the product of a company the power is
decided. For example: In case the number of buyers are more that the bargaining
power of the buyers will be low and in case of low number of buyers, the bargaining
power of the buyers will be more.
Bargaining Power of Suppliers
In this case also the power of suppliers will be decided on the basis of their number.
In case the number of suppliers are more than their power of bargain with the
company will be low because in case of bargaining more, it will not be difficult for
the companies to shift to other suppliers in order to get their demand of raw materials
completed. For example: In case of less number of suppliers, their bargaining power
will become more and they will be able to bargain more due to less number of choices
with the company (Johnson and et. al., 2011).
The following analysis is helpful for the companies, as it will help in knowing about
the intensity of the competition in the market among different countries. The company
could also make improvement in their strategies with intensity of competition in the
market. It is also disadvantageous to the company because it provides the estimation
not the accuracy about the five forces prevailing in the market.
BCG Matrix (Boston Consulting Group):
This matrix is based on the observation that an organisation's business units can be
classified into four categories based on the combination of their relative market share
and market growth to the largest competitor. The four categories of this matrix are
discussed as under:

The following model describes dogs as the one having low market share and low
market growth and due to this reason, the following also do not generate much cash
and do not consume much cash. For example: As an outputs, organisation are
interested to invest in processing these units further to increase a bigger market share
and accomplish a stronger position in the market. These products have the potential of
being positioned as cash cows in the future owing to the industry growth prospects.
These can be defined as those ones that are growing rapidly and due to this reason
consume much amount of cash. Due to their low market share they do not generate
much cash for the company. For example: These products are the money churners
for the organisation and require very low investments in order to sustain their
leadership as well as profitability in the market.
Due to increased market share, these companies generate large amount of cash, but
they also consume large amount of cash because of their growth rate.

These are those ones who are the business leaders in the market and are developed
business, so they get more return on their asset and generate more cash than they
consume.
The main advantage of this analysis is that this analysis is very easy to understand and
help the company in identifying the opportunities available with them (Advantages
and Disadvantages of BCG Matrix. 2019). But on the other hand, it is also
disadvantageous to the company because it does not take into consideration those
factors, which are important for the success of the organisation.
McKinsey's 7s Model
The following model is a set of soft and hard elements that aims at influencing the
matters of an organisation directly. The soft elements consist of factors such as Style,
Values, Skills and Staff and in the hard elements the including are Strategy, Structure
and Systems. The discussion of these elements are provided as under:
Hard Elements The following is the description of the Hard Elements
Strategy
The objectives of an organisation are made clear with the help of their vision and
mission. So the strategy can be defined as the plan implemented in order to achieve
the goals and objectives of the company (Johnson and Van de Ven, 2017).
Structure

The structure of an organisation is made up of corporate hierarchy, divisional
structure that informs about the operations and functions carried out in the
organisation.
System
The following can be defined as the rules and regulations that are necessary to be
followed in order to make the successful running of the business and their operations.
The Soft Elements of this model are discussed as under:
Shared Values
These are the commonly accepted norms and values by the employees of an
organisation that are followed in order to influence and control the behaviour of the
staff in the organisation.
Style
It can be defined as the characterisation of the ways by which the managers set
priorities and behave in order to achieve the organisational goals.
Skills
These can be defined as the abilities and capabilities needed in order to complete the
provided job in an effective and timely manner.
Staff
It refers to those individuals and person who are hired in the companies in order to
complete the day-to-day activities of the organisation effectively. It also takes into
account the size of the workforce and also the training and preparation they are
provided to complete the tasks they are provided with.
This analysis helps in guide the thinking about the organisational effectiveness in the
broadest sense. The following tool turned out to be an excellent tool for judging an
organisation's ability to implement the strategy. But on the other hand it also do have
some disadvantages as three factors which are style, skills, and shared values are
delayed factors that can only be affected in the long term.(Karami, 2016).
PIMS Strategy
It stands for Profit Impact of Marketing Strategies.

The following strategy is used in order to know about the performance of strategic
business units in thousands of companies in all major industries. It is done with the
help of studying the performance of the companies, which helps in getting knowledge
about their performance. In accordance with the Strategic Planning Institute, PIMS
can be defined as the collection of statistically documented experience drawn from of
businesses, designed to know about the effectiveness of various strategies out of many
more in the current market environment in which the company is dealing. The
following analysis also helps in knowing about the relationship in between the key
strategic decisions of any business and their results. If the analysis has been done in
the right way it will help a lot to the managers of the company in gaining a better
understanding of the environment in which the company is dealing.
For example: As the analysis does have some benefits, so on the other hand it also
does have some negative points. The first is it is a time consuming process. A little
mistake will spoil the whole analysis and will waste the time completely. Further, the
results will also be not relevant to the actual results.
Analyse of Prezzo Restaurant’s strategic situation capability and position.
SWOT Analysis
The following analysis is used in order to analyse the internal strength and
weaknesses and externally the opportunities and threats of the organisation. The
application of this analysis on Prezzo has been discussed as under:

Strengths
 This restaurant is providing a wide variety of dishes to their customers and has
become the strength of the company (Lechner and Gudmundsson, 2014).
 The delivery system is good and fast which is also its strength because the
other companies no not have good delivery system in comparison to Prezzo.
 Hotel mainly specialise in providing cheerful service and a light and
bright atmosphere. It is biggest strength for company.
Weaknesses
 Insufficient market budget has led to hinder the growth and development of
the company.
 Incompetent staff is another weakness for the company, which can be a reason
for the decrease in the market share of the company.
Opportunities
 Expansion of business is an opportunity for the company, which can
contribute towards its growth and development.
 Expansion will also provide an opportunity for the business to have new
talents as a part of their staff that will help the company in providing better
services to their customers.
Threats
 The high competition level in this sector is a threat to the company because the
company have to face competition from both the international and local
companies.

 Due to increased number of businesses, Prezzo could face price discrimination
as to capture more market share other companies could lower down their
prices and due to this the profit level of the company will also lowered down.
TOWS Analysis
The following analysis is used in order to examine the opportunities and threats and
compare them with the strengths and weaknesses of the company. The following
analysis has been applied to the Prezzo Restaurant and the explanation is provided as
under:
Strengths-Opportunities
Efficient delivery system of the company will be helpful for it in increasing the
customer base of the company so that the expansion of the company could be made
possible. Further, the wide variety of dishes provided by the company are also helpful
for its expansion as Prezzo will have something new in order to provide to their new
customers (Lee, Lim and Pathak, 2011).
Strengths-Threats
Due to the increased competition in the market, Prezzo needs to develop those
strategies, which could be helpful for the company in capturing the market share such
as the wide variety of dishes provided by the company. It will be helpful for the
company to increase their prices also in case of intense competition because the
company is providing more facilities to their customers as compared to their
competitors such as home delivery.

Weakness-Opportunities
By enabling expansion of the business the company will be able to cover up its
budget and will also be able to increase their customer’s base as the sources of income
of the company will increase. By expanding the business, the company will be able to
get new talent, which could help, in the growth and development of Prezzo.
Weakness-Threats
Prezzo could reduce the impact of threat by focusing on its weakness such as by
making improvement in its marketing budget so that good advertisement could lead to
increase in their market share.
PESTLE Analysis
The following analysis is used in order to know about the impact of external factors
on the working of an organisation. The application of this analysis on Prezzo is
discussed as under:
Political Factors
The political stability of the country is its greatest strength so it will become easy for
the company to form their policies and implement them in the organisation for a long
period of time.
Economic Factors

During the periods of deflation, the prices of the products decreases to much extent,
because of low income in the country so the following situation is negative for the
company because the purchasing power of the people tends to decline.
Social Factors
Related to the change in the taste and preferences of the people, the demand for the
products of the company will be affected (Morrish, 2011). For example: As the
change in tastes and preferences of the people goes positive that it will impact
positively on the company and vice versa.
Technological Factors
The technology may bring many up gradations in the way of working of the
companies so it depends of the favour, the change in technology is in favour of Prezzo
that it will be beneficial for the company otherwise will impact negatively.
Legal Factors
In UK, the government has put strict restrictions on presenting false advertisements
to the people. It is done in order to prevent people from exploitation due to the false
and misleading advertisements. The following rule has impacted upon Prezzo, as now
it cannot create any advertisement that presents something supernatural.
Environmental Factors
The working of the company does not harm the environment much but the adoption
and participation of the companies in environmental sustainability programmes will
help in increasing the brand awareness of the company
Implementation of the Strategy
BCG MATRIX
From the above discussed all the strategies of this matrix, the most suitable one will
be the Cash Cows because of it will help the company in earning good profits during
the periods of low market growth also. For this the company is required to make their
focus more on advertisement and the quality of their products which will help in
creating good image of the company in the market (Perry, Chandler and Markova,
2012). By creating good brand image, it will become easy for the company to
establish good relation and trust with their customers. This will help the company in
providing products at low prices at the time of low market growth also because the
company has already earned much profit earlier.

Implementation of TOWS Analysis
The company should focus on the strengths and threats of the business. It is so
because focusing and making improvement in these will help in the growth and
development of the company. Focusing on strengths will provide something new to
the company, which their competitors do not have and will provide them competitive
advantage. In addition to this, Prezzo do have threat from their competitors so it is
important for the company to implement those strategies, which will help it in
overcoming the threats. In addition to this, the company could also make innovations
in their working which will help Prezzo in increasing the customer’s base and
lowering down the prices of their products and services. As the company's cost of
production will lower down so the company will become able to provide goods at
lower prices to their customers and hence the market share will increase. The
following strategy will also help the company in achieving the objectives of the
company (Rosenbusch, Rauch and Bausch, 2013)
SMART OBJECTIVES:
 To increase sales by 25% in the next 10 months.
 To reduce employee turnover to 10% in the next one year.
 To increase the market share by 32% in the next 15 months.
 To make increment in the income of the company by 26% in the next 14
months.
 To decrease cost of production to 6% in the next 15 months.
 To increase sales by 25% in the next 10 months: In order to achieve this
objective, the company will focus on making improvement in the STAR
Products such as Pizzas by adding some more varieties in them.
 To increase the market share by 32% in the next 15 smonths: To achieve the
following objective Prezzo will make focus on the COWS Products such as
Pastas and Meat Dishes which will help the restaurant in capturing more
market share.

RECOMMANDATION
From the above assignment it has been recommended to the company that
contribution to continuous innovation will help the company in creating new and
maintaining the current customers of the company. In addition to this, it is also
recommended to the company to provide their employees with training and should
make fresh recruitment in order to increase the market share of the company. The
reason behind this recommendation is to increase the rate of growth and development
of the company. The recommendation is also made related to the expansion and
increase in the variety of food products made by the company so that the business
could gain market share and increase its customer base.
CONCLUSION
From the above assignment it has been concluded that situation analysis plays
an important role in making the organisations aware about the impact of internal as
well as the external environment surrounding the company. In addition to this, it is
also concluded that SWOT and TOWS Analysis are also helpful for the company as
they make aware the company about their capabilities and strengths which are
important to know before making any decision and also impacts upon the decision
making process of the company. Further it is also concluded that McKinsey's 7s
Model and Porter's Five Forces Model helps the company in order to know about the
intensity of competition in the market so that they could adopt suitable strategies in
order to deal with the prevailing situation.

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