Strategic Analysis of TsuiWah Restaurant: Business Strategy Report

This report provides a comprehensive business strategy analysis of TsuiWah restaurant, a well-known Hong Kong eatery. It begins with an introduction to business strategy and its importance, followed by an application of Porter's Five Forces to assess the competitive landscape, including bargaining power of customers and suppliers, competitive rivalry, and the threats of substitutes and new entrants. The report then maps the strategic groups within the Hong Kong restaurant industry, comparing TsuiWah with its competitors based on factors like price, quality, and geographic coverage. A value chain analysis is conducted to examine the primary and support activities that contribute to TsuiWah's operations, from inbound logistics to services and infrastructure. The report concludes with recommendations for TsuiWah, focusing on market segmentation, branding, quality, and marketing efforts, aiming to enhance its competitive position and profitability. The analysis includes figures and diagrams to illustrate key concepts, offering a detailed overview of TsuiWah's strategic challenges and opportunities.

Business Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Porter five forces..........................................................................................................................1
Mapping strategic group in HK restaurant..................................................................................2
Value chain analyse.....................................................................................................................5
RECCOMENDATION....................................................................................................................7
Market segment...........................................................................................................................7
Extent branding............................................................................................................................8
Quality.........................................................................................................................................8
Marketing efforts.........................................................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy is an ideal for those who are approaching strategies for the first time in
their business. This strategy provides many tools and techniques to analyse both internal and
external factors so that organisation can identify appropriate strategies for the obstacles. In this
assignment TsuiWah restaurant is taken (Aldehayyat, 2011). This restaurant is mainly famous for
tea and they are having more than 25 branches in China, it was established in 1960. Some of
these tea houses are providing 24 hours’ service and they are focused to improve their business
by making strategy for each and every small thing like; sitting arrangement and locations. In this
report porter five forces have been explained in regard to restaurant. Along with this mapping
strategic group in regards to HK eatery. Further, recommendation has been provided in regards
to extent branding, marketing efforts, segments and many more.
TASK
Porter five forces
Porter’s five forces analyses is a framework in analysing the characteristics which is
affecting competition within same industry. This analysis is best suited for company to evaluate
industry competition. It will also help to restaurant in establishing an appropriate strategy. If
there is a less competition in same industry, then there will be a high chance to earn high profit.
These forces model is having three components which help to organisation in measuring
competition (Azar, 2011). External forces include threat of new entry, substitutes, rivalry among
existing firms. Whereas internal force includes bargaining power of supplier and customers. The
combination of these both forces determines the level of competition which will affect to
company goals and objectives. Tsuiwah restaurant have to analyse these forces which will help
them to analyse their position in competitive market.
Bargaining power of customer – The more pressure from customer choice in regards to
taste and preferences which also exert on restaurant. Bargaining power of customer gives benefit
to organisation in increasing their profitability. For example, if queue is too long on one outlet,
then buyer can probably go to another restaurant which is suited across the road or in new
location. If there is high bargaining power of buyer, then it will disadvantage to restaurant to
operate their functions at new location.
1

Bargaining power of supplier – The main dealer in fast food industry are dairy
products, meat vendors and many more. Their bargaining power is low if there are less number
of customers. If there is less number of supplier, then it will show lack of differentiation among
products. The manager Tsuiwah have to deal with number of suppliers in order to operate their
restaurants in other country also. It will also help them in attracting new celebrities in other
market.
Competitive rivalry among competitors – There are many competitors of this company
is Café de Coral who is also serving different varieties of food (Ban, 2012). If there is high
competition, then there will be high of eateries who are also selling quality of products. This can
be disadvantage for Tsuiwah restaurant to retain in market for a long period of time. It is also
gauges level of competition between revivals and existing company which directly impact on the
price and quality of food. For example, low cost of storage and low exit barriers.
Threats of substitutes – The availability of substitute product may increase the chance
of loss of customers from own restaurant. So, cited restaurant has to properly analyse the taste of
customers to retain them for a long period of time. The competitors of this company is also
selling different type of foods to target other customers (Moreno-Izquierdo, Ramón-Rodríguez
and Perles-Ribes, 2016). So, it is responsibility of Tsuiwah manager to provide those dishes
which can retain the customers for a long period of time.
Threat of new competitors – New competitors are giving opportunity to existing frim to
earn more profits. In current scenario, it become difficult for new company to beat existing
organisation in terms of providing high quality of services. It can also become barrier for them in
retain in market (Cheng, 2013). If there is an increase in competition in same industry, then there
will be a lower chance of earning more profit. If there will be new entry company who is beating
Tsuiwah restaurant, then they have to maintain their quality of food and price to keep the
customers happy.
Mapping strategic group in HK restaurant
Strategic groups are set out by firms which are following similar strategies. The analysis
of strategic group can offer a significant insight to executives to run their operations smoothly.
For example, restaurant industry can be divided into several strategic groups which including fast
food, coffee and teas, fine-dining. These variable are based on pricing, presentation and
preparation time. TsuiWah restaurant comes under retailer sector and their competitors are
2

serving high quality of food and services to customers (Chou, Chen and Wang, 2012). However,
the measure of price and quality can be done on the basis of geographic coverage which includes
following things:
 Extension of product in diversified area
 Coverage of geographic area
 Number of market segments
 Distribution channel which are used by organisation
 Quality of product and services
 Pricing policy
Strategic group analysis can be done in several ways; it helps in identifying most direct
competitors, supports in finding out the strategic problems, also aid in ascertaining some
opportunities to retain in market for a long period of time.
3

Price/Quality
High
Low
Few localities Many localities
Geographic Coverage
TsuiWah restaurant is located in few localities and their price of tea is generally which
cannot be affordable by every. But quantity of tea is good if it is compare with other
organisations (Cook, 2011). There are many competitors of this who is also serving same food
and tea but the taste of food which is provided by TsuiWah restaurant is different from others. To
retain in market, it is responsibility of marketing manager to find out those strategies in which
they can beat their competitors and keep their customers happy. With the help of strategic
mapping company can extend their products and services in new markets. It will support them in
generating more profits also. this tool can be used by organisation to identify their position in
4
TsuiWah
Restaurant
Clos
Maggiore
Café de
Coral
TRATTO
RIA DA
LUIGI

competitive market. As there are many competitors who is operating their business in different
countries and adopting new strategies to achieve competitive advantage (Maumbe, 2012). The
high quality of service ambiance is provided by TsuiWah restaurant so that they can also cover
those restricted areas where people are addicted about tea. Along with this, they are also using
high technologies in which they can secure confidential document that what indigents are using
by employers to serve high quality of tea.
Higher authority of this company is having more responsibilities to open their more
outlets in other countries so that they can beat their competitors. For this they have to make
proper communication with employees and communicate those policies which will also enhance
the efficiency and effectiveness of product and services. Further, they also have to maintain their
quality and quantity of tea to retain customers for a long period of time.
Value chain analyse
Value chain analyse is that process where a firm or entity identifies their primary and
support activities to add the value in final products (Dey, 2016). After that, they will analyse
these activities to reduce the cost or increase product differentiation. In primary activities it
includes inbound logistics, operations, outbound logistics, marketing and sales, services.
Whereas in support activity it includes firm infrastructure, human resource management,
procurement and technology. These terms have been defined in context of Tsuiwah restaurant
which is famous in serving tea and to attract large number celebrities.
Figure 1: Value Chain Analysis
(Source: Value Chain Analysis, 2017)
Primary activities
5

Inbound logistics – The inbound logistic for restaurant refers in selecting the finest
quality of tea leaves by the manager. The raw materials are directly produced by farms to their
buyers. These are transported into storage sites. TsuiWah does not outsource any procurements
to ensure about their high quality standards.
Operations – This restaurant is having 26 branches in Hong Kong, Macau and Mainland
China in the form of direct stores (Jean Paolo G Lacap RMP, 2014). According to financial
report more than 70 percent of TsuiWah revenue is earn from Hong Kong operations, which is
nearly 30 percent from its Chinese mainland and 0.8 percent from Macao.
Outbound logistic – In this restaurant, there is a little or no presence of intermediaries in
selling of their product. As a new in market in other country, they are launching new rang of teas
which can be sold through some leading retailers of domestic country. The products which are
using by organisation from outsourcing should be utilised in appropriate manner. Through this
resources can also retain for future use without scarifying the needs of present customers.
Marketing and sales – This eatery is investing large amount of funds in marketing and
selling department in providing quality food and satisfy the customers services. However, they
are carried out marketing activities when they want to launch new food in the form of sampling
around their outlets. Appropriate strategies should be adopted by them such as price skimming,
penetration to retain in market for a long period of time.
Services – The services which are providing by TsuiWah restaurant is good. Their aim is
to provide better ambiance to customers which also builds customer loyalty (Kumar, Dass and
Kumar, 2015). Through this they can attract more customers and provide unique service so that
they can get best experience. To maintain quality of services proper training should also be
provided to employees so that they can easily interact with their customers.
Support activities
Infrastructure – The infrastructure facility in all departments of Tsuiwah restaurants is
good. These include all departments such as financial, sales, legal are required to operate their all
functional activities in smooth way. The manager of this eatery is designed and pleasing outlets
to provide high quality of services to customers.
Human resources management – The company is committed towards their key attributes
which is helping to organisation in attaining growth and success over the years. The workers of
TsuiWah restaurant is get motivated by providing them bonus and incentives to them. The
6

compare of this tea outlet is with other is good in terms of quality and taste. However, an
employee of this company is taking care of their workforce and which also reducing the labour
turnover during the year. Further, HR manager is conducting various training programmes in
setting out work culture good and keep their staff motivated and efficient.
Technology department – This restaurant is using high technology for providing quality
of services (Kumar and Rajan, 2012). They are adopting new technologies to provide quality of
tea to customers. They are also providing free Wi-Fi facilities to customers. They are also taking
feedback from customers through online and receiving suggestion from them in improving their
quality of services. The company has implemented some of the suggestions which has been
received by customers. Along with this they are using different kinds of software’s to keep data
confidential.
Procurement – This involves that converting raw material into final products. The agents
of TsuiWah restaurant who are working in Hong Kong, Macau and Mainland are using high
quality of tea leaves to bring finest in tea for their customers (Lee, Singal and Kang, 2013).
These agents have established a strategic relationship with partners and suppliers to build a
strong communication with company standards.
This value chain will help to organisation in segregate their aims and objectives and
wasteful activities which us accompanying during the product development process.
RECCOMENDATION
Market segment
Market segmentation of this restaurant should be according to geographic, distribution,
price and media. This restaurant is famous in three places i.e. Hong Kong, Macau, Mainland. For
making more strong position in market, they should open their more outlet in other places so that
they can increase the brand awareness. Geographic segmentation of market is done within
restrict boundaries only. For example, manager have to choose those market where they can
attract new customers. A brand could sell their product in one market, state, region. In
distribution, managers should be reached in different market through different channels of
communications. In restaurant so many people are coming even old age people so that prefer to
taste such kind of tea, so it is responsibility of those person to make high quality of tea to keep
them happy. Through this they can also increase the brand awareness in new area.
7

Extent branding
This gives an opportunity to organisation in extending their brand position in other
markets also. The company should open their more outlets in other countries so that they can
beta their customers. Well it depends upon the financial capacity of organisation. It a kind of
strategy in which firm is extending new product in developed nations. An extendibility of brand
depends upon customer association which value to TsuiWah restaurant. There are different types
of extension of brands which can be used by company such as “brand alliance”, co-branding and
extension of franchise brand. For eatery, extension of franchise brand should be better because
they can open more stores in different places with the help of franchising their own product and
services.
Quality
The quality of food and tea which is providing by Tsuiwah restaurant is already good
because there are many customers who are already attracted towards it even it includes
celebrities. But they should more concentrate on their quality of product to maintain their strong
position in market. It is responsibility of marketing department to conduct proper research that at
point of time how much quantity will be consume by customer. Through this they can set their
quality of food and attract customers towards it. Along with this, they have to also analyse their
competitor’s strategies in what quantity they are selling products and services to customers.
Marketing efforts
This company has recently launched the new branding campaign to take a stroll down
memory lane. They also providing “Cha Chaan Teng” (Local dinner) which has now become the
listed restaurant in Hong Kong. This all thing has been done because of marketing department of
this organisation are lots of efforts to identify customer’s needs and satisfy them by providing
different kind of food. They are generating large amount of revenue from social media. As they
are making innovative site to attract customers. It is responsibility of marketing department to
properly conduct the market research in order to identify the identify the needs of customers.
CONCLUSION
After summing up report it has been concluded that, there are many strategies which can
be adopted by organisation. It is essential for company to retain in market, then they have to
adopt those strategies which will help them to identify those issues which are facing by
8

employees as well as customers. As there are many competitors of this company to use those
approaches which is described above. Along with this, they can also extend their business in new
countries who are fascinated about the tea.
9

REFERENCES
Books and journals
Aldehayyat, J. S., 2011. Organisational characteristics and the practice of strategic planning in
Jordanian hotels. International Journal of Hospitality Management. 30(1). pp.192-199.
Azar, O. H., 2011. Business strategy and the social norm of tipping. Journal of Economic
psychology. 32(3). pp.515-525.
Ban, V., 2012. Analysis of the upscale/Fine dining sector in the restaurant industry.
Cheng, D. S., 2013. Analyze the hotel industry in porter five competitive forces. Journal of
Global Business Management. 9(3). p.52.
Chou, C. J., Chen, K. S. and Wang, Y. Y., 2012. Green practices in the restaurant industry from
an innovation adoption perspective: Evidence from Taiwan. International Journal of
Hospitality Management. 31(3). pp.703-711.
Cook, R. L., 2011. Fundamental forces affecting US fresh produce growers and marketers.
Dey, K., 2016. The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN
and Porter's Five Forces.
Jean Paolo G Lacap RMP, A. F. B. E., 2014. Competitiveness and Sustainability of the Hotel
Industry: The Case of Hotels in Pampanga. Business Management and Strategy. 5(1).
p.115.
Kumar, P., Dass, M. and Kumar, S., 2015. From competitive advantage to nodal advantage:
Ecosystem structure and the new five forces that affect prosperity. Business
Horizons. 58(4). pp.469-481.
Kumar, V. and Rajan, B., 2012. Social coupons as a marketing strategy: a multifaceted
perspective. Journal of the Academy of Marketing Science. 40(1). pp.120-136.
Lee, S., Singal, M. and Kang, K. H., 2013. The corporate social responsibility–financial
performance link in the US restaurant industry: Do economic conditions
matter?. International Journal of Hospitality Management. 32. pp.2-10.
Maumbe, B., 2012. The rise of South Africa's quick service restaurant industry. Journal of
Agribusiness in Developing and Emerging Economies. 2(2). pp.147-166.
Moreno-Izquierdo, L., Ramón-Rodríguez, A. B. and Perles-Ribes, J. F., 2016. Pricing Strategies
of the European Low-Cost Carriers Explained Using Porter's Five Forces Model. Tourism
Economics. 22(2). pp.293-310.
MURIUKI, B.K., 2013. Micro and Small Restaurants in Nairobi's Strategic Response to their
Competitive Environment. Studies. 5(1).
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2012. Business cases for sustainability: the
role of business model innovation for corporate sustainability. International Journal of
Innovation and Sustainable Development. 6(2). pp.95-119.
Online
Tsui Wah campaign celebrates Cha Chaan Teng legacy. 2017. [Online]. Available through:
<http://www.marketing-interactive.com/tsui-wah-looks-back-on-50-years-of-cha-chaan-
teng/>. [Accessed on 4th August 2017].
Value Chain Analysis. 2017. [Online]. Available through: <http://www.marketing-
interactive.com/tsui-wah-looks-back-on-50-years-of-cha-chaan-teng/>. [Accessed on 4th
August 2017].
10