Business Development of Tao Heung Seafood Hotpot Restaurant in the Past Fifteen Years
EXECUTIVE SUMMARY
The business strategy of an operating business, may it be local or international, is identified as one of the most important factors that define its tenure to the marketplace. This report documents the business strategy analysis of Tao Heung Seafood and Hotpot Restaurant.
Tao Heung Seafood and Hotpot Restaurant was established in 1990 and located in Hong Kong and various places in mainland China. It uses one of the most suitable examples of business strategy that exercises a simple yet practical business approach. This report presents the business strategy of Tao Heung which includes the ability of the management to identify challenges and come up with the most effective and immediate response to minimize its potential damage, innovations, marketing and management functions and other key strengths.
Further, this report presents the SWOT, PEST and Porter’s Five Forces Analyses of the restaurant. The main entries about the Tao Heung are accessed in its official corporate webpage. Also, information present in this report are collected from a quick survey questionnaire results among randomly selected customers and employees. Along the analysis done, a field visit also aided in integrating facts that are gathered through literature review. Suggestions are also presented. At the end of the paper, conclusion is drawn and a progress review report is taken at hand.
INTRODUCTION
Competition among the various industries in every given economy is rapid and stiff. It is as if ‘survival of the fittest, extinction of the weakest’ trend. Accordingly, the global market is considered to be in hyper competition mode (1995) and its rate is increasing as technology and industry concentration is intensified. With the international conditions of businesses, the aim for competitive advantage and market superiority remains to be one of the most important factors at hand. Aside from ensuring effectiveness in management, profit-oriented corporations are also considering a total evaluation of their organisational standards. This evaluation of organisational standards is a direct response to the result of changes occurring in the external environment of the organisation.
Today, as various industries are aiming for competitive advantage and sustainable development among its management and operations, there are numerous actions that are being implemented and are directed to the eventual success and growth of the company’s assets. In competition, there is motivation in every business to improve and develop their objectives. For an enterprise to succeed in global competition, hence, there is a continuous plan to develop marketing techniques such as innovation of new products with higher quality than its competitors. Aside from competition, there are countless factors that affect the overall conditions of business like customer satisfaction, loyalty, service (brand) quality, and others. Initially, it is determined that the ability of a business to stay in significant period of time in the industry where it belongs is on measure of its success. This means that being able to survive is a necessity and survival translates to the ability of a business to compete. Since the 1980s, marketing strategies have played key roles in planning to overcome challenges. It is believed that this line of thinking will continue to direct the activities of business into the 21st century (1999). Accordingly, every business is subject to factors that affect its function as a whole. These factors are the ones attributed for the success or even the failure of a business (1997). As a result, there are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the marketplace and address the needs of clients and changes in terms of marketing and management. In a profit-making business, the business organization obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit (1994).
However, there are several other factors that are relevant to consider when talking about the future of the business. Among these are the internal as well as external conditions affecting the overall operations and its management. Basing it from the existing knowledge of management, internal conditions such as management and marketing strategies, financial capability, human resources, business operations and strategies, etc. are supplemental factors to the overall business condition. On the other hand, external conditions like the overall conditions of the target market, competition, economic environment of the business, legal matters and legislations, emerging approaches, relevant occurrences (e.g. threat of terrorism, outbreak of diseases), etc. are sample determinants of business progression or downfall.
In any business like food and beverage industry, it is important to recognize the most appropriate strategy to be used in promoting the deliberate goals. With this, the management‘s decision in conceptualizing the strategy to be utilized in all the operations of the business is crucial. The position that the management will take in relation to this matter can make or break the overall stature of the firm. As a universal fact, it is natural for every goal-oriented business to plan or learn new things that will facilitate its problem-solution process, expansion and eventual progression. So, it is safe to claim that relevant marketing strategy, planning, and learning within the organization can improve its adaptability and overall competitive advantage.
This paper intends to discuss the overall business strategy of Tao Heung Seafood and Hotpot Restaurant. Specifically, the business strategy analysis is conducted by using the company’s history starting from their ability to overcome economic hardships particularly to their success era. Furthermore, this report will provide an effective strategy for companies operating in the domestic food industry setting. This will serve as a guide to develop their business successfully.
METHODOLOGY
This section presents the methods used by the researcher to find answers to the questions raised in the study. The main focus of this report is the business strategy of Tao Heung restaurant and how it was able to successfully move form the economic recession period.
The researcher finds it necessary to use the descriptive research method, which is primarily concerned with describing the nature or conditions and degree in detail of the present situation (1994). The emphasis is on describing rather than on judging.
The main sources of data for this study are survey questionnaires gathered after a field visit. These are considered as the most effective and direct method to obtain information for analysis. The primary data collection method is also directed to acquire factual and evident responses from respondents. The respondents of the survey questionnaires are randomly selected customers and employees. The questionnaires are open-ended and directly asked to the respondents. (See Appendix A)
On the other hand, the secondary data collection method used in this study is library and internet research which includes information form books, scholarly journals and magazines, publicly accessed websites, and other related documents. The information to be collected through the literatures will increased quantity of knowledge, a new generalization, an increased insight into factors which are operating, the discovery of new relationship, a more accurate formulation of the problem to be solved and many others. This study will extend from being descriptive to being analytical as descriptive research alone is not sufficient in the formulation of conclusions (2003). The significant number of research studies was personally chosen by the researcher as the additional source of data.
Data analysis was done step by step. Every piece of information was read carefully, and the text was sub-divided into meaningful units. Information was condensed to formulate answers to questions. The study emphasizes that a great deal of caution was exercised in drawing conclusions from the data By using the SWOT, PEST and Porter’s Analyses and supported by selected literatures, the business strategy of Tao Heung Seafood and Hotpot Restaurant is critically evaluated.
LITERATURE REVIEW
Today, companies within and outside the food and beverage industry particularly restaurants are striving to deliver not only their products and services but also high or even world class quality and satisfaction that will lead to increased customer loyalty and market share. The significance of customer satisfaction and its relationship with service quality, occupancy rate and profitability has long been exhorted by both management experts and researchers in the tourism field ( 1994;1996). Customer satisfaction and service quality in the restaurant business have been precipitated by the need to position organizations competitively in the marketplace. The positioning in the Hong Kong’s restaurant industry propelled marketing managers to build brand image for their brand names in order to create brand loyalty among its customers. However, in line with this propelled brand-building initiative, organizations must address on many issues in order to create brand loyalty among its customers and improve its position.
On the given issues, organizations like Tao Heung Seafood Hotpot Restaurant require a massive amount of skill in specialized marketing – like establishing sales quotas, relationships with clients like tourists and local agents and the corporate tour and even travel departments of major corporations, and more. Specialized management and accounting skills are also called for and in these kinds of issues as many organizations are searching for possible solutions in challenging these events.
This literature review includes information about Tao Heung Seafood and Hotpot Restaurant, Hong Kong and its restaurant industry, and business management as whole.
Tao Heung Seafood Hotpot Restaurant: a Corporate Background
According to the Company’s website, the first Tao Heung Seafood Hotpot Restaurant was established by Tao Heung in 1990 and located at Sai Wan. With its tradition in providing outstanding hotpot business and innovative promotional strategy, Tao Heung remains one lf the most stable Chinese restaurants in China and Hong Kong. Today, this restaurant is very much welcomed by the public because of its wide array of products such as fresh and economical seafood, delicious dishes and dim sum. Also, the original style of cooking and artistic interior design of the place helps in increasing the number of customers.
Because of the universal identity of the Chinese dining culture, there is a need to create one Chinese restaurant group that will uphold the time-honored and profound identity of Chinese cuisine. Tao Heung Seafood Hotpot Restaurant is committed to enhance the image of Chinese catering. In doing so, they invest in training employees and put focus in the development of the competencies of their staff as well as enhancing the abilities to come up with innovative ideas. The restaurant’s long term mission is to become the most esteemed Chinese restaurant group and a leader in the opening up of a new direction for Chinese dining. Tao Heung’s ultimate aim is to go into the crowd and served them while practicing the Delicious & Value business strategy. Meanwhile, they are also dedicated to share the value of money with the public at large.
The history of Tao Heung is not only a portrait of a successful business but an example of the evolution of business marketing management strategies and its implementations as well as effects. (See Appendix C for the complete history)
Hong Kong and the Restaurant Industry in 2001 on Statistical Facts
Hong Kong’s identity as one of the most promising and vibrant tourist destination in the world is uncontested. It projects an aura of opulence, efficiency, and high-tech competence. Also, Hong Kong is known for sustaining its competitive advantage especially in Asia’s hotel as well as tourism industry (2000; 1994). Because of its abundance in several attractions like its world-renowned cultural heritage, Chinese cuisine and dining, entertainment and leisure, tourists flock their way to experience Hong Kong’s magnificence and top offers. Among these offerings to the various visitors of the country are the rich assortment of food, entertainment, culture and lifestyle. Hong Kong locates in a favorable geographic location in the centre point of Asia Pacific region with a minimum five (5) hour fly reaching most of the areas worldwide, with the support of HK’s hardware, events tourism thrives on this piece of land. Different kinds of events that consist of both commercial, social, cultural, educational in nature are present in this venue (2004; 2003; 2005; 2006).
During the previous years, the Hong Kong Tourism Board (HKTB) works its way to promote HK as “Events Capital” in Asia. There are several ways and means being studied, designed and implemented to realize such vision. The primary responsibilities of HKTB are to market and promote HK as a destination worldwide, as well as to take initiatives to enhance the experiences of its visitors once they have arrived. Its mission, on the other hand, is to maximize the social and economic contribution that tourism makes to the community of Hong Kong, and to consolidate Hong Kong’s position as a unique, world class and most desired destination ( 2006).
The existence of the developmental action plans, policies, and programs to promote Hong Kong as a top tourist destination is evident. As an example, the promotion of the 2006 Discover Hong Kong with the full support of the state and its stakeholders is highly applicable. The HKTB together with the Hong Kong government established innovative campaign and promotion to develop and promote the country. Historically, Hong Kong is a British colony. With this known fact, there is a wide assortment of information that documented the efforts of developing its tourism planning and economy.
The historical brief of Hong Kong tourism development is limited. This is rooted on the history of the island being British colony for several years. There are other information and developmental facts that are not credited to the present situation. However, in reference to the previous national history, it could be said that Hong Kong tourism is just fresh and pioneering. With the influence of free trade, globalization and advent of modern technological means, the island becomes an instant role model in international tourism and economic progression.
Among the top offers of Hong Kong in terms of tourism is its authentic Chinese cuisine. It is identified that Hong Kong is among the world’s largest centres of great Chinese food. But for the past ten years, the economy faced several challenges brought about by some occurrences like the SARS outbreak and economic hardships. With these, many restaurants – both small and large (e.g. Golden harvest and Sun Light) are forced to stop its operations. An article published by on March 14, 2002 presented the statistical figures on Hong Kong food sales. In the same report, it highlighted the decrease of sales among restaurants as to compare with the previous terms. Here are the important facts reported by (2002):
Hong Kong restaurant receipts fell 2.5% to HK.4 or 8.78bn (euro) last year. The reason on this depreciation is attributed to the diners’ lost appetite for expensive meals and cut back on spending due to the worsening economy during the period.
Specifically, the report of the Census and Statistic department stated that receipts from bars were reduced to 8.4% in value while the Chinese restaurants went down to 3.4 % average.
Fast food outlets as well as non-Chinese restaurants both accounted 1.2% decrease in value.
The last quarter of 2001 recorded 4.9% year-on-year total restaurant receipts depreciation or amounting to HKbn.
A prediction from leaders of HK’s food and drinks industry also affirmed that another 1000 restaurants will close in 2002 as downturn resulted further into unrestricted expenditure.
A sharp recession in trade among HK’s mainstream dim sum restaurants and teahouses is also reported.
In a study conducted by (1995), they evaluated Hong Kong’s fast-food industry. They found out that despite rapid growth, fast-food chains face various challenges that directly and indirectly affect their operations such as intense competition to the point of saturation, high inflation, rent escalation, labor shortages, and political uncertainty. Furthermore, the presence of international fast-food chains and their diverse offering of core product like hamburger, chicken, or pizza-and their strategies are focused on image building through aggressive marketing. This adds as an additional operational burden. But by comparison, Lan and Khan concluded that Chinese-style fast-food chains are product-oriented and offer great variety. In terms of expansion, they identified that international fast-food chains are expanding through franchising while local fast-food companies like the ones in Hong Kong are expanding through private (such as family) ownership.
The SARS Outbreak and threat of terrorism and its effects in Hong Kong business and economy
It is also considered that one of the most difficult challenge that affected Hong Kong’s economy and various industries is the presence of SARS outbreak and the threat of terrorism. Much has been written and documented in the subject of SARS ranging from medical, economic, sociological, political, industrial, entrepreneurial, and business perspectives.
Generally, a comprehensive authoritative guide for managing crises and disasters in tourism risk management for the Asia Pacific region was provided by (2004). Also, provided lessons from SARS in his risk case studies. (2005) similarly conducted a research study on the SARS-related perceptions in Hong Kong while (2003) wrote an inclusive literature of the SARS epidemic. (2005) discussed pertinent factors about SARS and its effects in relation to public health. The author enumerated the peculiarities of the disease like its novelty, its ease of transmission in certain settings, and the swiftness of its spread through plane travel, joint with extensive media coverage; psychological impacts; international travel policies released by authorities; governments’ and press’ role in fair and balance communication and risk management; pre-departure screening in airports; screening and infection control capacities at points of entry into the healthcare system; and others. Incorporated in the research body are lessons learned during the outbreak and its effects on the overall scope of international travel.
Several empirical research studies conducted are bounded on the economic aspect. (2004) provided an assessment of the global economic impacts of SARS and a more comprehensive approach to estimating the global consequences of major disease outbreaks using the a global model called the G-Cubed (Asia Pacific) model. Specifically, (2004) conducted their research on the economic impact of SARS in Hong Kong. Included on their research output are the chronologies of SARS as the first deadly infectious disease of the 21st century – its spread in Hong Kong, number of cases, and affected regions. Also, demand and supply side is discussed.
In relation to tourism industry, numerous research articles are published. For instance, (2004) made a case study on the impact of SARS on Hong Kong’s tourism industry, with special attention given to the chronological arrangement of critical SARS-related events. Their findings affirmed that the epidemic had brought out negatively profound impact not only in Hong Kong but also to world tourism. Proven strong impacts are found on Southeast Asian countries. On the macro environment perspective, (2004) conducted his research on the effects of SARS on the Chinese tourism and hotel industry – from Mainland China and territories like Hong Kong and Macau. Findings avowed that the overall effect of SARS to the Chinese economy is relatively minimal yet Dombey reiterated that the main lessons are deemed to be social and political in applications. (2005) completed a related study on the effects of SARS on Hong Kong tourism industry. Their study is an empirical evaluation that provided an extensive body of knowledge on the pervasive effects of the disease to almost all industries related to hospitality, travel and tourism.
With the onset of such conditions, the entire tourism and hospitality industry had severe setbacks. In this case, Tao Heung restaurants operations are no exemption. The effects of the SARS outbreak affected the economy of the region, thus, it is parallel that every business operation like Tao Heung is also affected. Furthermore, (2004) dug deeper on the topic of overreaction to SARS and the eventual collapse of Asian tourism. They evaluated the sensationalism brought about by various channels of communication (e.g. media) and provided significant facts about the real nature of the condition. Other related studies on the effects of SARS in the tourism industry fall in the subject of structural change, consumers and their behaviors, and marketing management conditions. For instance, (2003) examined the possibility of a structural change in Hong Kong’s inbound tourism demand model as a consequence of the Asian financial crisis in 1997. Both authors underwent empirical research methodologies (such as Wald test) to identify the potential of structural change particularly to the Hong Kong’s inbound tourism. They investigated the differences manifested in the model parameters before and after the crisis using pooled time-series and cross-sectional data. Both tourist arrivals and tourism receipts were used as the indicators for tourism demand, and the major economic factors included in the model were income and price. The results supported the hypothesis that structural shift was prevalent in Hong Kong’s inbound tourism demand model. Lastly, important marketing implications for the tourism industry in Hong Kong were also discussed throughout the research body. Further, (2006) examined the impact that SARS on the marketing management functions using the case study method. The authors provided recommendations for how uncertainty may be managed in an increasingly globalized world. The aspects of strategic and risk-management, supply-chain management and corporate strategy, and planning are extensively discussed.
Records from (2004) stated that SARS outbreak in the 2002-2003 only resulted in 774 deaths. Together with weak domestic demand conditions, it resulted in low growth in parts of East and Southeast Asia (such as Hong Kong, Korea, Taiwan and Singapore) ( 2004). Generally, the outbreak of SARS directly and indirectly affected the tourism and hospitality industry of Hong Kong and the world. It is identified that the restaurant or the general food and beverage industry of Hong Kong is connected with the tourism and hospitality industry as well. Thus, Tao Heung restaurant chains are considered to be directly associated to the said industry. Thus, it is imperative to straightforwardly link the discussion to tourism.
On the subject of terrorism, there are varied references particularly on the economic impacts. For example, (2004) provide a good overview of empirical literature on the economic consequences of terrorism. While most researchers have concentrated on the impact of terrorism on investment and economic growth (1996;1998;2001; 2004; 2005), others connect it with tourism like the assessment of terrorism-related losses in the tourism sector (1992). Usually the aforementioned studies employ the number of incidents as an indicator of terrorist activity and, therefore, focus on a single country or a few countries, where terrorist events are of comparable frequency and magnitude. Meanwhile, the research endeavor of (1999) favored the inclusion of crisis management planning in tourism especially in tourist spots that are susceptible of terrorist attacks. This is directed to the purposes to provide sustainable development and marketing/management strategies that will protect and rebuild their image of safety/attractiveness, to reassure potential visitors of the safety of the area, to re-establish the area’s functionality or attractiveness, and to aid local travel and tourism industry members in their economic recovery. They determined the potency of risk of terrorism in various tourist destinations. As such, they recommended having a crisis management plan in place, establishing a tourism crisis management task force, developing a crisis management guidebook, and partnering with law enforcement officials (1999). Also, a general survey research study conducted by (2005) dealt with the perception of travel risk, anxiety, and intentions to travel internationally. In this research, terrorism and socio-cultural risk came out as the most significant predictors of travel anxiety.
The main effect of terrorism to tourism is that in increases fear of travel, decreasing the number of tourists visiting the country. (2005) stated that “heightened fears have reduced the level of travel to and from various countries resulting in a drop in air travel and tourism” (p.640). As a specific case, the September 11 attacks in the United States a few years ago are being pointed as the cause why tourist spots are now the best locations for terrorists to attack. The said terrorist attacks (henceforth, 9/11) distorted the way in which the global community perceives terror as a threat to national security. It has been realized that a terrorist incident can result in large-scale damage to both human and physical capital and can have permanent implications for economies across the globe. IN application, the fear of terror attacks in Hong Kong decreases the number of visitors that can be potential customers of Tao Heung. Practically speaking, it hinders the potential increase of its clientele. On the contrary, (2005) tackled the Counter Terrorist Solution or CTS and believed that the September 11 attacks strengthened the security concentration on embassies and military facilities making them ‘hard targets’, while leaving tourist locations as ‘soft spots’ for terrorist attacks. The logic is that extensive traffic in hotels such as human, material and vehicles, inside and outside the buildings is usually unprotected and unregulated ( 2005). Such weak points are especially true for larger hotel chains that incorporate bars, restaurants, clubs, shops and other public facilities – all turn security into a much more complicated matter. Basically, Nir believed that the logical assumptions of CTS pose new security challenges within the hospitality industry and whole tourism industry. Meanwhile, (2004) foresee the possibility that in response to augmented security measures in rich countries, terrorists shift their activities to low- and middle-income countries while continuing to attack people and property from “prime target” countries.
According to the document published online by (2005), terrorist actions can have both affect trade directly and indirectly. They added, “As an immediate consequence of the destruction of human and physical capital, trade disruptions can be important for certain economic agents… Terrorism may also involve a destruction of traded goods or a disruption of industrial supply chains”. Most studies that are conducted on the economic consequences of terror do not deal with the actual damage (in terms of human life, property, momentary disruptions through closure of airports, etc.). Instead, they focus on the impact of changed market conditions in the face of terror and the continued risk and uncertainty it entails and on the security measures taken in response to terror and the higher transaction costs this implies (2005).
In general, Gassebner and colleagues (2005) stated that the economic damage from terrorism or new diseases (e.g. SARS) far exceeds the number of actual deaths or damages. But the uncertainty that is created by terrorism and new diseases leads to sharp contraction in certain types of economic transactions, particularly those that involve close social interactions. This tends to centre on the services sector like the hospitality, tourism, food and beverage or restaurant industries particularly to Tao Heung. In addition, the more stringent health and security measures taken by governments are likely to increase the transaction costs of international trade.
This literature review connects the industry spill-over effects to the operations of Tao Heung restaurant chains. It is identified that the food and beverage or the restaurant industry as whole is under the tourism sector, thus, the trends (SARS or terrorism) in the identified area of operations particularly in the economic and managerial aspects affect the business in one way or the other. The business management is similarly incorporated on the ability of the identified organizations to cope up with the challenges or problems facing them.
DATA PRESENTATION (Analysis and Suggestion)
Analyzing the status, strategies and resources of businesses and their products or services is very essential as it allows operators to determine how they will progress in the years to come. This also enables them to identify their strengths and how they will optimize them. On the other hand, business analysis also makes operators realize their weak points, allowing them to address them immediately with effective strategic actions. Conducting a business analysis also helps organizations to prepare for their future development and growth. Considering that competition in the business field is continuously growing, implementing efficient strategies through business analysis is indeed significant for all operators in any industry.
As for Tao Heung, they successfully transitioned form the economic hardship periods because of consistent and outstanding business marketing and management strategies. The following discussion presents the strong points that make up Tao Heung’s staying power and competitive reputation among Chinese restaurant chain businesses and the overall catering industry.
INDUSTRY ANALYSIS
Organizations and companies in the industry sell to very large customers/buyers. Likewise, the industry also displays an apparent practicality for customers/buyers to switch from one choice to another. Moreover, the products offered by restaurants in the industry are essentially interchangeable and indistinguishable. The restaurant industry shows that the cost of the product and service represents a relatively large percentage of the buyer’s and customer’s total cost. Nonetheless, the customers could if desired backward-integrate specifically by acquiring a group in the industry to which Tao Heung is included.
The restaurant industry in Hong Kong is promising. With the current changes in the lifestyle of people and the contributions of technological advancements, the industry growth rate could be deemed in its progression stage. The major industry trend is the emerging culture of international demand for authentic foreign foods that will cater to the needs of the consumers. Also, the food industry is an integral part of the tourism business especially in Hong Kong. Consequently, consumers are more knowledgeable and demanding on what product to purchase. The critical success factors (CSFs) of the industry are its ability to serve the needs of the clients as based on the changing lifestyles, consumer behavior, and marketing strategy. Also, the idea of continuous innovations is considered as the most important CSF.
Along with the conducted analyses provided in the Appendices D-F (SWOT, PEST, and Porter’s Five Forces Model), Tao Heung is also regarded in a management style totally different from their competitors. They play an active in their business strategy as they put further emphasis on the following points:
As a business organization operating in various locations, Tao Heung’s marketing is consumer-focused. It is apparent by the fact that every major and minor decisions and plans created or implemented are based on the result of researches conducted and founded on the parts of clients. Furthermore, the services and products are something better, fresher and more valuable. Along with the changing business world, customers change as well, becoming more demanding and knowledgeable than before. In turn, company management had shifted their focus on their clients or customers so as to stay successful in business. This transition meant that organizations have to completely reformulate their conventional business aims and purposes from being process-focused to customer-centered. Moreover, employing proactive customer commitment involves the consideration on culture and infrastructure (1997). Organizations that capitalize on customers’ active participation in organizational activities can gain competitive advantage through greater sales volume, enhanced operating efficiencies, positive word-of-mouth publicity, reduced marketing expenses, and enhanced customer loyalty (1979;1990). Rather than going after every potential source of revenue, companies eliminate useless assets that do not add value for customers’ satisfaction. Business organizations implement bureaucratic policies and procedures for the benefit of the staff, customers and the company in general. According to (1990), if consumers somehow become better customers – that is, more knowledgeable, participative, or productive – the quality of the service experience will likely be enhanced for the customer and the organization.
Further, the restaurant bases its pricing strategies on several key trends that continuously shape the local marketplace particularly its economy. In its human resources, Tao Heung is able to develop talented people throughout the group. New ventures are often directed by people and seconded from other parts of the restaurant’s trademark management style, skills and experience. They frequently create teams with others to combine skills, knowledge, market presence, and so on. As the survey questionnaire stated, there is no bureaucracy within the limits of the organization. Thus, employee and management can air their concerns and views with regards to the overall functioning.
On the other strategy of Tao Heung, the reputation as a leading and respected industry in its specialized operations is uncontested. Furthermore, all the markets in which the restaurant operates tend to have similar characteristics – culturally and economically. These markets are also composed of customers that have been ripped off or under-served, where there is confusion and/or where the competition is complacent. In this case, Tao Heung is able to break into and shake it up. The role of the company is to be the consumer champion, and doing this requires delivering the brand values and company strategies to the clients. Tao Heung’s brand values and company strategy focuses on: Delicious and Value that simply means best quality, affordable, satisfactory customer service, innovations, and competitive advantage.
Tao Heung is a single-line business. This means that it is easier to manage or execute a strategy as to compare with diversified firm. In fact, (2003) had suggested that concentrating on a single line of business has numerous significant advantages. Undiversified firms can achieve enviable success over many decades like the cases of renowned companies such as Coca-Cola, Apple Computer, Xerox, Federal Express, McDonald’s, and Ford Motor Company.
However, with the constant technological innovations, changing needs and tastes, and new substitute products, it is not unusual for companies to transform their business operations in diversified way. Many had suggested that diversification depends partly on a company’s growth opportunities in its present industry and partly on the opportunities to utilize its resources, capabilities, and expertise in other market pitch. This applies to the case of Tao Heung restaurants when the management continuously aimed for the expansion of its operations in several locations.
Suggestions
Deriving from the analysis between the industry, operations management and capabilities of Tao Heung and its management, many strategic options would become imperative. It is therefore essential to evaluate these strategic options as to whether they are appropriate to the issues addressed, whether they are feasible enough to be implemented and their acceptability to key stakeholders.
In organizational planning and decision making, there is definitely a need to reconcile both the inside-out and outside-in capabilities. While Tao Heung’s operations management involves focusing on its core competencies with market position following its resource base, the Holdings will be put into a disadvantageous position if they choose to neglect both the macro as well as the micro industry environment. Therefore, they must be aware of the latest operations management changes, as well as changes in political, economic, legal and even demographic trends in order to develop the outside-in capabilities, such as market sensing, customer linking, channel bonding and technology monitoring.
The advantages enjoyed by Tao Heung may come in the form of increased revenues. Knowing what the market demands and the latest trends could help the company fully exploit its research and development (R&D) capabilities to come out with products which are not only cost-effective but also high in quality. The strategic option can even be used as marketing tool where the focus is on staying close to their customers and listening to their feedbacks. On the flip side of the coin, there will be huge mobilization of resources involved, and the associated risks bestowed on the restaurants’ authorities.
Nevertheless, the mentioned strategic option seems the most practical in the wake of globalization, since there is a sudden shift towards a more integrated and independent world economy. The key stakeholders too should not have any objections so long as Tao Heung’s core business is not threatened. By virtue of the restaurants’ centralized control of its business, it is being expected that major barriers should not exist in carrying out such an option except additional time may be required given the scope and span of operations.
Understanding the strategic importance of operations management is something that Tao Heung restaurant personnel have to be familiar with. Authorities normally practice a centralized and globally scaled configuration of operations and capabilities. This allows information dissemination to be retained.
There are many factors that contribute to the success and perhaps the minor setbacks that the Tao Heung faces. What brought them to success is the fact that they consider, not only the amount of profit they make, but also the satisfaction of the customers. On the other hand, the company must still also consider a more centralized structure. This is not to surpass their view of a non-hierarchical structure as effective. Through a more centralized structure, the management would be able to have more control of their resources, hence consider a better output.
Lastly, their continuous innovations and outstanding social responsibility must persist. The effectiveness of the restaurant authorities in coping up with changes can be related to the Model of Continuous Improvement (see Appendix B). The Model of Continuous Improvement may help organizations to have sufficient knowledge on the factors that are directly involved in the process. With this, continued patronage and expansion is not far at hand.
CONCLUSION
In general, Tao Heung is a man infestation of an organization that uses a practical business strategy. Such strategy is able to cope up with the changes in external environment which also affect the management of organization in several aspects. It is important for organizations to understand their internal and external environments because it can make or break the overall business management and operations. The main challenge for organizations like Tao Heung restaurant chains is that they must recognize the need for change and the necessary actions to address such needs. Changes should be aimed towards organizational development in terms of economic benefits, performance, task and knowledge management, as well as core competencies.
Tao Heung stays in the market because of its ability to cope up with the challenges at hand. The survey revealed that the customers are very much satisfied with the products and services that the restaurant chains serve. Further, its tradition in providing outstanding hotpot business and innovative promotional strategy makes Tao Heung remain as one lf the most stable Chinese restaurants in China and Hong Kong. Today, this restaurant is very much welcomed by the public because of its wide array of products such as fresh and economical seafood, delicious dishes and dim sum. Also, the original style of cooking and artistic interior design of the place helps in increasing the number of customers.
The ability of Tao Heung to survive economic recession is rooted on its practical and simple business strategy. The innovations, food safety concept, balance between quality and profit, consumer versus profit concerns and marketing research make it successful. Also, the outstanding relationship of the management and the human resources keeps the operations smooth flowing. And lastly, its commitment in providing its social responsibility is very much unmistakable.
Indeed, making a business successful in a particular setting demands crucial and detailed studies and examination of the factors that will generate the best results that will serve the aims and objectives of the company. In this light, owners of big business organizations 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 minimizing the risks and weaknesses of a business firm greatly helps in predicting the success in business enterprise. Furthermore, 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 organization but will likewise gain the trust and competence of the clients and customers. 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 organization.
Managers are proven to be effective in responding to emerging business occurrences. Apparently, the continuous development in the organization’s performance is a key indicator that managers are able to address contemporary management issues. Again, the ultimate challenge lies on the ability to stand amidst the rapid competition and the dynamic trends brought about by globalization and increasing consumer demands.
PROGRESS REVIEW REPORT
At first, it seems that the research is not possible or it cannot be done comprehensively due to some limitations. There are some fears that clouded the researcher’s mind, however, with constant personal motivation and the need to do it, the researcher decided to maximize available resources and start working.
In conducting this research study, the researcher is able to apply the theories and concepts gained from years of business marketing and management study. The management principle was evaluated in relation to its application to the case of Tao Heung. Thus, it can be said that learning is practiced. It can also be assessed that this endeavor developed essential virtues that will help the researcher in the future career and professional application. Furthermore, the invaluable gift of information gathered and experiences encountered through this research are very much treasured.
With this experience, the researcher is able to meet different people especially in conducting the survey and field visit. The development of interpersonal skills is seen on this work. Similarly, the appreciation that the researcher have for Tao Heung restaurant chains was reinforced and intensified. Now, the researcher sees any restaurant outlet in a very distinguished manner. The knowledge that Tao Heung restaurant chains stayed firm all throughout the years and the challenges both economically or socially made the researcher realized that nothing is impossible if the right decisions and strategies are made.
All in all, the research study is very rewarding as the researcher gained not just theoretical and conceptual know-how but also personal values that are seen to be useful in the future.
APPENDICES
Appendix A
Sample Survey Questionnaire/Questions Asked
What is your impression about Tao Heung Seafood and Hotpot Restaurant?
How does it differ from other restaurants?
What are the characteristics or qualities that you like about Tao Heung restaurant chains?
Describe the following:
Food
Price
Venue
Customer service
Overall experience
Any recommendation for the restaurant to improve its services and products?
Appendix B
The Model of Continuous Improvement
This model incorporates the necessary elements in managing change. As a given fact, change is directed to the eventual development and continuous improvement of the whole organization. It aids in foreseeing the competitive position in the highly competitive global business environment.
Appendix C
History of Tao Heung Seafood and Hotpot Restaurant: Business Management and Marketing Strategies and its Implementations and Effects
In 1992, the restaurant’s management launched the “One Dollar Cuisine” promotional campaign that became a hit and served as its key selling point in the restaurant industry. With its consistent and outstanding promotional campaign, the restaurant introduced the “One Dollar Chicken” in 1996 that led to a breakthrough in the Chinese restaurant market. The following year, they seize the services of professional and specialized management consultants to develop and maintain their expertise in relation to serving the consumers with the highest and finest quality of service and successfully gained the certification in 2002. Three years later (in 2000), they ventured into mainland China market by opening the country’s first hotpot restaurant in Shenzhen; established their second brand – Tao Heung Super 88; and opened up more restaurants in Guangzhou for the creation of a local dining culture for the following year as well as to enhance direct involvement to its clientele.
Aside from its very satisfactory services, the restaurant’s management also aided in providing million full sponsorship to establish the “Chinese Cuisine Culture Development Program”, Hong Kong’s first Chinese restaurant management course. In 2002, the continuing commitment to serve the highest number of consumers with the most outstanding services paved way to the attainment of the 5-S Certification in three (3) restaurants situated in mainland China. It became the first restaurant group to attain such Certification and used it as a new management concept directed to the enhancement of the quality of services as well as staff. Due to its blossoming productivity, the restaurant opened more outlets in Shenzhen. In the same year, Tao Heung continued its expansion and innovative business strategy by establishing a modern Hakka restaurant and called it the “Hak-ka Hut” and a “wedding” theme restaurant called the “Cheers Restaurant”.
The year 2003 is another major breakthrough in the restaurant’s management for they set up Tao Heung Logistics Center in Fotan for the purposes of ensuring consistent and stable food qualities. Similarly, to turn a new leaf of Chaozhou cuisine, they opened another modern Chaozhou restaurant called “Chao Inn”. The following years (2004-2005), many significant happenings that took place. Among these are:
- Opening of Tao Heung Museum (August 18).
- Allotment of 0,000 from the last financial year (September 2003 to August 2004) for the Tao Heung Staff’s Children Grant Award Scheme wherein 90 children were considered as recipients. This is also an important human resource management action that helps to back up the financial burdens of its staff especially in providing their children’s education. Furthermore, it aims to train talents who will contribute to the community and to implement the Holding’s objective as people-oriented.
- Launching of “Customer Service Hotline 29470818” in October 18, with its voice prompt instructions and the aim of facilitating effective communication with customers particularly for diversified customer needs.
- Joining in the 5th World Championship of Chinese Cuisine (November 18-21) where the Guangzhou shop won 7 different awards for team and individual categories. This competition was joined by professionals from 18 countries and districts.
- Supporting the relief operation in South Asia by conducting a 3-day (January 1-3) fund raising through selling “Tao Heung charity cash coupons for relief operation” in all its 26 shops in Hong Kong and collected a total of HK million. The donation was given directly to World Vision Hong Kong.
- Receiving the “Catering Industry Safety Award Scheme 2004/2005”, silver medal for Mong Kok outlet of Tao Heung Super88, and bronze medal for causeway Bay outlet of Chao Inn. Also, Chung’s Cuisine in Causeway Bay became a member of Quality Tourism Services Scheme organized by Hong Kong Tourism Board (HKTB) and at the same time awarded an Indoor Air Quality Certification Scheme for Offices and Public Places by the Good Class from Environmental Protection Department in February.
- Chao Inn and Cheers restaurant chains were certified Quality Tourism Services Scheme by the HKTB.
- CEO Mr. Chung Wai Ping was awarded as Innovative Entrepreneur of the Year 2005 by Junior Chamber International Hong Kong and Pearl River Delta Catering Business Top Ten Characters by China Hotel Management Association.
- SGS certified the Tao Heung Logistics Center as ISO9001-2000.
- Received the award “Superbrands” from a renowned global magazine with the same name.
- Using olive oil in all dim sum making among Chung’s Cuisine as a response to the growing importance of health among Hong Kong people.
- Opening Tao Heung’s Shanghai Inn and Chow Inn in Mangkok to cater the consumer’s demand for new taste as well as unusual and creative dishes. Shanghai Inn is a new brand that aims for the expansion of its predominance in thematic lines.
- Grand opening of the Tao Heung Foods of Mankind Museum in Fanling – a 7,900ft hall parted in two levels that exhibits the containers and cooking utensils, seasonings from various cultures, and variety of tea and coffee with tools, together with a display zone for traditional and western wedding banquets in contrast, a refreshments stall and a workshop (lower level) and a virtual zone of old style Chinese restaurant, showing the culture of traditional local restaurants, followed by history and development of the Holding (upper level).
- Supporting the Momentum Academy – an organization for the disable, by sponsoring all meals in the “Momentum Camp” held by the organization, and providing ingredients for stuffed dumplings, hence helped creating the world record of finishing 10,000 dumplings in 10 minutes.
- Offering a small favor to every senior citizen presenting his senior citizen’s card – a FREE birthday bun to show our gratitude on the Senior Citizen’s Day 2005 organized by the Hong Kong Council of Social Service.
Appendix D
SWOT Analysis of Tao Heung Seafood and Hotpot Restaurant
Strength
The company has significantly considered a long tenure in the Hong Kong restaurant industry and gained market status (especially in it Chinese clientele) making it a good image and brand name in the country.
It offers affordable, unique food products and maintains constant product innovation.
Tao Heung excels in focused customer service and ensured satisfaction, thus, acquiring a loyal customer base.
They are committed in quality and performance with regards to its product offerings.
It continued to respond to the changes in the lifestyles of people by also expanding its product range.
The management uses an efficient implementation technique on the chosen marketing strategy especially in relation to the marketing mix (Price, Product, Place, and Promotion – 4Ps).
It values human resources and its corporate social responsibility.
Weakness
The most popular weakness of Tao Heung is its strong dependence on economic conditions.
Opportunity
Tao Heung can increase business from mainland China travelers.
The company having a wide collection of products can use it to attract consumers who are looking for products that their competitors do not offer.
Since the restaurant has an easy to use website, it should try to encourage buyers to purchase their products that are not selling.
Also, there is a chance for the improvement of economic conditions and the policy of the Chinese government in relation to the identified operations of the business.
Threat
Tao Heung’s threat includes the changes that might occur within and outside the area of operations such as economic changes, varying customer preferences, changing lifestyles, and other relevant factors.
The threat of stiff competition within the food industry is always present.
Most likely, the increase in rental and oil prices is a potential hazard.
Appendix E
PEST Analysis
Political
- Tao Heung’s compliance to legal and regulatory policies is deliberate. The company’s management adheres to the requirements specified by Chinese authorities.
- There is a need to review the existing company policies in order to meet the demands of the competitive business environment.
Economic
- The possibility of the occurrence global recessions brought about by companies closing down and the loss of jobs may have a direct impact on Tao Heung’s business strategy.
- Also, the unprecedented fluctuations in the local economy will affect the financial conditions. Thus, there is a need for increase financial management strategies.
- Production levels are diversified taking particular attention to the competitive products and services.
Social
- Tao Heung does not only offer the products and services described in the food industry. They also actively participate in social-based activities that help other people and the community in which they belong.
- They also provide the other needs of the customers supported by their management system and store personnel and staff.
- The social responsibility of providing innovative products and services for consumers is always the main priority. The company made it a point to be consistent with its mission and aim in quality products and services offerings through economic considerations of that the customers adhere to who belong to the lower end of the consumer population.
- As industry leader, Tao Heung’s management trend moves toward more reliable delivery services across their customers for efficient product and service distribution.
- Using strategic retailing plans and packages, through seasonal promo, special offers like freebies and affordable price lists in its products and services, Tao Heung restaurants are able to competitively stay in business catering specifically to low-budgeted sector of the population.
- The selling systems of the company allow different people in the lower end market population to choose freely from the stores wide range of products without the need to spend too much of their resources.
Technological
- The company operates through different business outlets. However, there is an in-house plant for product development to serve its promise of high quality and increased value of its products and services.
- Tao Heung has a centralized logistics centre that is ISO certified.
- Efficient deliveries of supplies and effective demand forecasts of products and services are evident particularly on the needs which the restaurant accounts to make it possible for successful business operations in every locale it serves.
- Cost-effective and time-efficient routing and product placements, deliveries, stocking and warehousing have been the keys to the restaurant’s achievements.
- There is a need for Tao Heung’s business strategy to be aligned to any revolutionary technological changes impacting the restaurant industry.
- Tao Heung’s environmental commitment is clear through its sustainable development strategy.
Appendix F
Porter’s Five Forces Analysis
v Suppliers’ Power
While many suppliers provide raw materials to other industries, Tao Heung’s level in supplier power is relatively low. Moreover, companies in the industry are not likely to backward-integrate. On the other hand, it could also be posited that the organizations in the industry are the primary source of revenues for the suppliers. This makes the competition among suppliers more rigid. Likewise, if raw material costs get out of line, companies in the industry would be able to have a hard time using a different type of raw material to produce the product. The industry is also characterized with the quality and costs of raw materials having a significant impact on the quality and price of the products and services produced by the industry. Moreover, the raw materials provided by suppliers are essentially interchangeable and indistinguishable. The raw materials are essentially commodities. Likewise, in an industry where loyalty is also considered necessary, there is also the possibility for the suppliers to forward-integrate.
v Buyer Power
The buyer power of Tao Heung is relatively low. This is because it only constitutes a single segment. The buyer power has also been viewed as essentially benign and not an appropriate issue for competition authorities.
v Rivalry among Competitors
Companies are considered diverse in their history and culture and in how they do business. Moreover, the product/service sold by the industry has high storage costs or perishable. The industry is experiencing fast market growth. As stated the products offered by companies in the industry are essentially interchangeable and indistinguishable, thus, customers’ cost to switch brands are low. It has also been established that the product provided by the company is a commodity to a major part of its stakeholders. Moreover, it also shows that there are considerable numbers of large competitors that dominate the industry.
v Threats of New Entrants/Barriers to Entry
The economies of scale play a significant role in the cost of produce the product and service. Companies in the industry have low fixed costs and spend relatively little on plant and equipment. Competitors are not likely to cut their price to defend their market position. In an industry experiencing fast market growth, patents, proprietary knowledge, and brand reputation are also considered as barriers for companies entering the industry. Brand preferences and customer loyalty as well as regulatory policies are included.
v Threat of Substitute Products
The price of substitute products is available and designed attractively. This provides the industry a great following in competition. Moreover, the quality, features and benefits of substitute products are generally lower.
Credit:ivythesis.typepad.com
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