Chapter 1
Introduction
In today’s business arena, the value and importance of customers is not something that should be set aside by companies especially in restaurant businesses. Marketing plans and strategies would be incomplete without paying much consideration to the customers. Customers will and should always be a part of the agenda in any marketing plan of any company. With this regard, this chapter presents the objectives, overview of the company (i.e. Tao Heung Holdings Limited), statements of the problem, the significance of the research and scope and limitations.
Company Overview[1]
Tao Heung Holdings Limited is one of the leading Chinese Restaurant Group in Hong Kong. The group operated 42 Chinese restaurants in Hong Kong under different brands serving a selection of Chinese cuisine developed for various consumers as of 8 June 2007. As for their brands, Tao Heung Holdings Limited includes Tao Heung, Tao Heung Seafood Hotpot Restaurant, Cheers Restaurant, Hak Ka Hut, Tao Heung Super 88, Chao Inn, Shanghai Inn, Harbour Seafood Restaurant and Chung’s Cuisine.
The group is actually one of the long-lived restaurant business group operating in Hong Kong. Thus their directors believed that they are a pioneer in the Chinese restaurant industry in implementing the “5-S” management system throughout the entire operational process, starting from sourcing and processing of food ingredients, maintaining hygiene standards, staff training and daily management of each of their restaurants. From the history of their operation, the group also received numerous awards and accreditations.
Objectives
While the overview gives information regarding the company, the research also needs to have its own objectives that must be followed for the completion of the study as well as the integration of the information that will be gathered based on the research questions. At the end of the study, there is the need to ensure that each of the objectives is met in order to guarantee that the study has managed to gain the information that can garner for the formulation of the conclusion.
As such, the objective of the study will be thus:
By integrating these information and coming up with a conclusions that will help with the information-exchange and thus may be the basis of other studies. Moreover, it may also be the bases of information that may be beneficial for other restaurants in Hong Kong, especially with regards to the factors that the organisation may be find useful for its success. While this may not be the regular procedures that other organisations may take, it nevertheless may give other organisations a chance to build the foundation from which they may be able to push their organisation into a jumpstart, thus another objective of this study is to be able to provide true and useful information that may be used for other practical reasons and can be used for other reason as well as the improvement of the organisation or Hong Kong economy in the study itself.
Research Questions
The previously given discussion shows the general direction and aim of the study, as well as the purpose, however there is also the need for the researcher to elaborate some questions that will be enable to study to go into a certain direction, especially with regards to the nature of the problem being researched. The research questions will then serve as the guide for the researcher for the information that should be gathered from the sources as well as the methods in which they will be extracted from the sources.
As such, the following will be the research questions:
Significance of the Study
This work will be a significant to restaurant and other businesses in Hong Kong. The researcher believes that the CSFs will curb business problems and will benefit the restaurant industry and Hong Kong businesses as well. Also, this study may provide insightful recommendations on the subject of environmental issues that may become useful contribution in the field of Hong Kong economic progress. Finally, this study may provide authentications on existing theories on consumer spending or at least provide generalizations that may also contribute in the academe field (e.g., students and researchers).
Scope and Limitations
This research will only discuss issues involving the impact of CSFs to the business performance and profitability of Tao Heung Holdings Limited. However, related literature and studies cited for this study came from sources of information so as to draw details about CSFs, customers’ satisfaction and business development. The outcome of this study will be limited only to the data gathered information from books, journals and to the survey results gathered by the researcher. As this study is specific to Hong Kong, a similar study on other underdeveloped countries is further suggested. Projected time period for the implementation of this study will be at least three to five months, or if possible, even shorter than three months, as long as all the objectives of the study have been met.
Chapter 2
Review of Related Literature
This chapter will be discussing the findings of related research to this study. It will provide a discussion on the significance of this study to the existing literature. Moreover, this chapter will discuss several issues regarding customer satisfaction programs, critical success factors (CSFs) and business competitive advantage based on the existing literatures.
Customer Satisfaction Program in Restaurant Businesses
To be able to start a Customer Satisfaction Program, particularly in restaurant business, it is necessary for the restaurant to identify the type or types of customer they cater to based on the relationship it has with its customers. Aside from this, Critical Success Factors (CSFs) as considered by customers should be carefully assessed. The customers’ Customer-company relationship is based on a continuum wherein both “always-a-share” and “lost-for-good” relationships occupy the two extremes of the continuum. In an “always-a-share” relationship, transactions are arms-length and discreet. Customers are valuable and at the same time, replaceable. On the other hand, in a “lost-for-good” relationship, the probability that the customer will purchase again from the same company is extremely low when the customer decides to terminate the use of a product due to product defects or problems (Jacobs, Latham, & Lee, 1998).
The disconfirmation paradigm has been the dominant model used in explaining the customer’s satisfaction or dissatisfaction. There are actually 3 possible reactions that may come from the customer. Two of them are positive reactions while the other one is a negative one. A customer shows a positive reaction either when the product is able to perform as what he/she has expected (zero positive index) or the product is able to exceed its expected performance (positive disconfirmation index). On the other hand, a negative reaction (negative disconfirmation index) is expected when the product performs below the expectation of the customer (Jacobs et al., 1998).
Customer satisfaction refers to the consumer’s positive subjective evaluation of the outcomes and experiences associated with using or consuming the product or service. Satisfaction occurs when the product has been able to meet or exceed the conceived expectations that the customer has (Padilla, 1996). Furthermore, customer satisfaction may also be considered as the measure of the high degree of quality of the product (Jacobs et al., 1998). Consumer satisfaction may be considered as the measure of quality of a particular product (Jacobs et al., 1998). However, it should not be limited to the traditional concept of quality. In its traditional concept, manufacturers view quality as inherent in the product or service. Once a product or service has been delivered or sold, its quality is believed to have been established (Crosby, Devito, and Pearson, 2003). However, Crosby, Devito, and Pearson (2003) argued that a product’s quality still has some other dimensions that are under the manufacturer’s control. These dimensions may still be modified and enhanced even after delivery.
Customer Satisfaction Program is important for any businesses to have in order to have an assessment of its customers’ satisfaction or dissatisfaction and classify which Critical Success Factors (CSFs) are crucial for business success. However, in designing a Customer Satisfaction Program, it is important that the restaurant business designs its program based on its own needs, and more importantly based on the needs of their customers. Hence, it is important that a customized program that suits both the needs of the restaurant business and the customers is designed. Moreover, CSP should “focus on measuring customer perceptions of how well the restaurant business delivers on the critical success factors and dimensions of the business as defined by the customer. The findings of restaurant business performance should be analyzed both with all customers and by key segments of the customer population” (Guidestar Communications, 1999).
Like what has been mentioned, the main concern of a restaurant business is to be able to maintain its long-term sustainability, enhance profit earnings or, simply, its survival. But aside from survival, being able to satisfy the customers has other beneficial implications that come with it. It is possible that the customer is not only able to keep its customers; it is also able to get more customers.
In order to be able to understand quality’s different dimensions, Legault and Sparks (1993) gave a flow chart that identifies the stages in the pre and postproduction process of a product and its important elements. These stages are as follows: design, production, sale, delivery, after the sale, safety, and perceived quality.
Critical Success Factors (CSFs)
Actually, customer satisfaction program reflects to the Critical Success Factors (CSFs) of a certain business (Chung, KH 1987). Since the early times, anthropologists and theorists had already identified and recognized the significant role of CSFs in managing business organizations (Chung, KH 1987). According to Thierauf, RJ (2001), the interest for this business concept had been documented in a number of related literature and studies (e.g. Chung, KH 1987 and Lester, DH 1998). Eventually, theories, hypotheses and correlations have been developed in support of the principle behind the organizational CSFs. The interests of organizations on CSFs have been roused due to the constant evolution of their priorities, which currently emphasize on customer satisfaction and development of the employees (Lester, DH 1998). Up until now, organizational CSFs is being established to a number of restaurants and other business groups so as to achieve various advantages, including increased profitability, quality management and workforce development.
Under theoretical perspective, theorists had illustrated the significant role of the leaders and employees on the development of successful CSFs. Thus, the leadership skills of the management and the insights of the employees have equal weight in terms of CSFs dynamics (Thierauf, RJ 2001). While various benefits of the organizational CSFs have been evident in the business field, there were also studies who have concluded that the application of irrelevant CSFs can also lead to failure (Chung, KH 1987). This finding then emphasizes on the importance of the process for implementing change within an organization. This process does not stop from the evaluation of CSFs; thus, CSFs management is necessary so as to conduct regular business assessment for constant development.
As essential CSFs become deeply established in the organization, change becomes a challenge that it will require a major investment of time and resources (Lester, DH 1998). Many challenges are to be faced in order for the organizational transition to successfully take place. This then calls for open-mindedness among the members, clear description of what is being attained by the organization coupled with effective and skilled leaders.
Business Competitive Advantage
In regards to the management of change in every business industry, the company’s competitive advantage should be considered. The competitive business environment within particularistic industries intensifies the need of business organisations to diversify the operation systems of the company recognising the importance of the conglomeration of assets, skills, and capabilities of the available resources that the company has in order to be successful. All these will be realised through the intervention of the corporate parent organisation to increase the value of its subsidiary businesses in the international market environment (Jayne & Dipboye, 2004). In this light, owners of big business organisations operating in a competitive business environment should be in constant look out with its competitors and the overall status and events in the industry. Taking advantage of the opportunities and intensifying the strengths while minimising the risks and weaknesses of a business firm greatly helps in predicting the success in business enterprise (Goshal, 1997).
Most companies find it impossible to create any kind of sustainable competitive advantage based on product alone. It is common knowledge that every one of the successful companies sought and found a precise understanding of how it could create a customer-centred competitive advantage. Hessan and Whitely (1996) emphasised the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. It requires that companies create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
Firms respond to conditions in their marketplaces by modifying their competencies such as internal capabilities and linkages with suppliers and associates and the ways in which they position themselves in relation to their competitors specifically their strategic direction (Beyers & Lindahl, 1999). Each of these components is intricately related and ultimately contributes to firm competitive advantage. The goal is to deliver maximum value for the least possible total cost. Examination on the business strategies and plans in order to answer to the demands of clients and customers through efficient delivery of such needs will not only increase the profit of an organisation but will likewise gain the trust and competence of the clients and customers. Moreover, efficient management of delivery options in a particular company and looking into the problems encountered in operating the business may enhance the likelihood of a business corporation to attain its goals as enterprising organisation (Porter, 1990).
Similarly, one of the core characteristics of a successful organisation is focus. Since the business environments are fast becoming more and more complex added to the fact that it changes rapidly and dynamically, businesses need to concentrate on a few key elements that are most important to their organisations survival. Thus, it is not surprising the critical success factors keep the organisations from straying too far with external issues not relevant to their company’s success. As stated by Thierauf, (2001), critical success factors (CSFs) in business, are the limited number of areas in which results, if they are satisfactory can ensure that successful competitive advantage for the company. Basically, determining these factors is an old concept in business because there were great leaders throughout history who have identified and addressed key factors to achieve their successes. Actually, there is no one definition of CSF but it is considered that these are the areas which the company needs to concentrate on to flourish. Therefore, the activities should be carefully monitored and guided by the management.
With regards to this development, Chung (1987) stated that critical success factors are managerial factors that create a competitive edge for a company in its respective industry. There is no specific process in identifying and executing critical success factors in strategic management planning. This is the reason why Thierauf (2001) asserts that different companies which have similar structure can conduct its market entry forming different strategies which lead to the development of various critical factors. As the primary means for an organisation to achieve its strategy, critical success factors must take into account the differences in the environment and organisation that exists.
Apparently, Porter’s Five Forces Model highlights the interplay between the suppliers, buyers, new entrants, substitutes, and industry competitors in order for a business entity to gain competitive advantage. When it comes to suppliers, an organisation that offers products as well as services also depends on suppliers that deliver the company’s raw materials. This condition leads to the buyer-supplier relationships within different industries. Such relationship is directly influence by the changes in the supply and demand variables based on the existing needs of the consumer population. The influence of the supplier is defined by its ability to dictate price and influence availability of materials and their ability to (a) increase prices without suffering from a decrease in volume, (b) reduce the quantity supplied, (c) organise in a formal or informal manner, (d) compete in an environment with relatively few substitutes, (e) provide a product/material that is a critical part of the end product or service, (f) impose switching costs on their customers when they depart, and (g) integrate downstream by purchasing or controlling the distribution channels (Porter, 1998).
The power of buyers describes the impact customers have on an industry. When buyer power is strong, the relationship to the producing industry becomes closer to market conditions wherein the buyer has the most influence in determining the price. As such the bargaining power of buyers increases when they have the ability to (a) make agreements with other companies providing similar products and services, (b) purchase a product that represents a significant fraction of the expenses incurred by the company, (c) purchase of a product that is undifferentiated, (d) incur low changes in costs when they change vendors, (e) be price sensitive by bearing in mind the options available, and (f) integration to purchase the goods of the suppliers (Porter, 1998).
Meanwhile, the possibility of new companies entering the industry influences the pace of the competition. Thus, the key is to evaluate the methods of entry and exit for a new player to the industry. Although any company should be able to enter and exit the sector, each industry presents different levels of difficulty influenced by economics. These unique characteristics of the each industry are referred to as barriers to entry which may come from different aspects of the business ranging from supplies to technology. They seek to reduce the rate of entry of new entrants which leads to maintenance of a level of profits for the existing players (Porter, 1998).
“Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The treat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product (Porter, 1998).
Lastly, companies particularly in restaurant business strive to secure a competitive advantage over their rivals. The intensity of rivalry varies within each industry and these differences can be important in the development of strategy. Industries that are “concentrated,” versus “fragmented,” often display the highest level of rivalry. In pursuing an advantage over its rivals, a firm can choose from several competitive moves: (a) changing prices, (b) improving product differentiation, (c) creatively using channels of distribution, and (d) exploiting relationships with suppliers (Porter, 1998).
Figure 1. Porter’s Five Forces Model
Understanding the dynamics of the competitors in the industry helps assess the potential opportunities of every business venture by differentiating the similar products or services offered by the company against other business organisations. As such, it is necessary to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry so as to determine the long-term profitability of a market or market segment.
Chapter 3
Methodology
This chapter will be dedicated to the description of the methods and procedures done in order to obtain the data, how they will be analyzed, interpreted, and how the conclusion will be met. This section is to justify the means in which the study was obtained and will help in giving it purpose and strength as it will then be truthful and analytical. All these will help in the processing of the data and the formulation of conclusions.
Specifically, this research will cover the following: the research design and method, the respondents or subjects to be studied (which will include the sampling method), the data collection instrument, and the data analysis. These will be presented below.
Research Design
The research design chosen both qualitative and quantitative research, which uses explanatory methods in describing the variables wherein the data, situations, or other facts collected will be explained or correlated with other data. It is especially useful when conducting a study wherein the data are immeasurable, such as feelings, beliefs, thoughts, and others (Mays & Pope, 2000). Furthermore, the study will be descriptive as it will focus on the conditions set and the nature that surrounds the data and does not focus on the correlation with other collected facts.
The Respondents
The researcher, in choosing subjects or respondents for the topic at hand, is usually thought of to have the power over who the respondents of the study will be. Such a task would have been easier, except a researcher cannot simply choose out of whim; the subjects must be selected carefully with the intention of having subjects who each posses characteristics that, when put together, will represent a community. It is not only themselves whom these subjects will represent, but the bigger whole or the whole population. The characteristics which the researcher has chosen them for will determine which part of the community they belong and what part of the community they are representing. Thus, the choosing of the subjects must be based on their characteristics.
In this study, it is necessary to collect information from Tao Heung Restaurants and Maxims Group clients.
Data Collection Instrument
In order to obtain the desired data, the researcher has chosen to use the primary research data, which is to collect firsthand the data to be used for the outcome of the research. In able to do this, the researcher must have a data collection instrument to be presented to the respondents. Thus, the researchers have chosen obtaining data through the questionnaire. The questionnaire is administered by writing questions on a page and distributing it to the respondents, expecting them to return the paper with their answers on it. This is easier than other methods of data-collection (e.g., interview, observation, etc.) as particular details may be hard to talk about during interviews and cannot be drawn out from observation.
The advantage of using the questionnaires method is that the respondents have time to think of their answers, thus allowing smaller rate of errors. Also, concerning delicate matters, the respondents may feel more at ease when answering questionnaires as they are not required to speak with someone else in order to give information. The disadvantage of the questionnaire method is when the respondents are unable to read or write; then the questionnaire will be rendered useless by the respondents as they may need interpreters for the questionnaires. Thus, in case such that unlikely event may happen, then the researcher will have no choice but to quickly switch to the interview method, wherein the researcher will be allowed to interact with the respondent and ask the questions based on the prepared questionnaire.
3.4 Instruments to be Used
To determine the perception of the respondents about the status of Critical Success Factors (CSFs) to both Tao Heung and Maxims, the researcher prepared a survey-questionnaire. The respondents graded each statement in the survey-questionnaire using a Likert scale with a five-response scale wherein respondents were given five response choices (Creswell, JW 1994). The equivalent weights for the answers were:
Range Interpretation
4.50 – 5.00 Strongly Agree
3.50 – 4.49 Agree
2.50 – 3.49 Neutral
1.50 – 2.49 Disagree
0.00 – 1.49 Strongly Disagree
The decision was made to use a questionnaire for the data collection for this project due to the sensitivity of the information being obtained. It is important for the respondents to be open and honest in their responses. The use of the questionnaire provides the project owner with the ability to test the views and attitudes of the respondents. The questionnaire was designed to allow the collection of specific information about the participants to conduct statistical analysis, e.g. age, gender, occupation and monthly income.
Data Analysis
In order to correctly interpret the data in such a way that its result will reflect what the study originally intends to show then the researcher must employ the correct and accurate way of data analysis.
Moreover, simple statistics can be done and applied, and it will be easier to determine the status of the perception of the respondents regarding Critical Success Factors of Tao Heung and Maxims.
Summary of Action
As stated in this chapter, the researcher undergoes stages. In the research design, the researcher collected secondary data and formulated and developed the questionnaire. In this stage, these instruments were subjected to approval and validation. During the data collection, the researcher collated and summarized the data obtained from the journals, questionnaire and survey. The researcher analyzed these data and from these, findings and recommendations were presented.
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[1] The information are from http://www.taoheung.com.hk/eng/main/index.jsp
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