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Food and Beverage Management Assignment: External Analysis for New Business in Australia

Question

Task: This food and beverage management assignmentrequires you to research a concept with potential to be successfully introduced into the F&B industry by conducting an external environmental analysis of your proposed concept to assist you make an informed judgement on its potential viability. The assignment requires you to:

  • Apply an external environmental analysis of the F&B industry in consideration of your proposed concept.
  • Identify key opportunities and threat.
  • Conduct a competitive analysis of the market. Ensure you describe the existing marketplace for the style of restaurant. Clearly establish your competitive advantage.
  • Discuss the advantages the concept will provide to industry and community at large and disruptions which may be caused.
  • Based on your analysis, assess whether it is viable to introduce your selected concept into the F&B industry.

Answer

Introduction
In the last few decades, Food and Beverage Industry had become one of the most economical industries in the world. It has come up with high hopes among the people who are planning to make a restaurant and to do business in this industry. In the following project, the topics or points going to be discussed are the external factors affecting the business of the company in the food and beverages industry, the opportunities and threats of the business and their impact on the business, the competitive advantages for any food and beverages company to do business in this industry and the analysis how this will this concept influence a large community and whether the concept is viable or not for any upcoming company in this industry.

Theoretical Analysis
External Analysis of the Food Industry

To open and run any business in a specific industry, it is very important to analyse the external factors that may influence the company to conduct business in that particular industry. The external factors can be categorized into many subgroups. To open and run a Food and Beverage Company in Australia, the following factors are categorized and analysed are discussed below.

Political: There are several political factors that may affect the opening and conduct of the business of any Food and Beverage Company. The food company has to follow every single aspect of the outlines of expansive regulations coded by the Government of a country like Australia. These outlines of the Government emphasizes the factors like the clean kitchens, the transportation of the production, the storing quality, and even the demands of the laborers in this industry, and the company have to abide by these factors (Agwa, Aziz &Khalifa, 2017).

Economic: The economic factors mainly drive the growth and flow of any business. In the passing decades, people are getting richer all over the world. The capital of the individual from every class is increasing gradually and every individual is spending this money on the luxuries, such as food from the restaurant, thus, increasing the total revenue in the food industry. This factor will have a progressive and affirmative effect on any upcoming restaurant or Food and Beverage Company. With the increased revenue in this industry, the cost of the laborers working in the restaurants and the food company is increasing with the passing time. With more and more restaurants are opening, the demands for more laborers also increasing, and hence there is an increase in the demands of the laborers for a minimum salary. Thus, the profit margin of the owner should have reduced for any upcoming restaurant (Bayona-Saez et al., 2017).

Social: Food always has a direct impact on the society of any region or country. Various social factors can affect the business of any impending restaurant in the Food and Beverage Industry. Over the past few years, people in every corner of the globe are growing conscious about their health and fitness. The individuals reduce going to any restaurant due to several health issues. Moreover, individuals are suffering from different dietary restrictions due to the impact of different diseases. This in turn also plays a key role in reducing the business of a Food Company. Anyone who is planning to open a restaurant has to face these social factors which may affect the business (Toaha et al., 2019).

Technology: The world is driving faster in the last few years based on technological advancement. Several variations of automation are being noticed in this industry nowadays. The advancement in technology is noticeable everywhere in modern restaurants. The social media platform plays a vital role in the promotion of a new restaurant. Thus these factors will be a major help and essential for the growth of any upcoming restaurant.

Legal: To open and run any business in a country the company has to abide by the legal rules and regulations of any country. Similarly, to run a food business in a country, the company has to look after and maintain the safety issues regulated by the government, such as the safety of the food, proper cleaning, maintenance of the temperature, proper sanitization. Violation of these issues may lead to a legal matter, and thus any upcoming restaurant has to follow these regulations to run the business in that country (Chand &Slath, 2018).

Environmental: One of the key factors which may influence the business of any restaurant coming to the market in near future is the environmental factors in that region. The consumption of meat results in massive deforestation and setting up farms. This causes a disturbance in the environmental balance of the region. Thus, it is one of the environmental factors that may have an impact on the business of an upcoming restaurant or food company.

Key Opportunities and Threats in the Food Industry
To open and run any restaurant or Food Company, it is very essential to identify and analyze the strengths, weaknesses, opportunities, and threats that may affect conducting the business and one should identify these factors before opening a Food Company in Australia and should analyze these factors discussed below.

The strength of the food industry lies in several factors like the strong network of distribution, relationship with its suppliers, costing, skilled labors, and many others. The company needs to distribute its branches in different parts of the city or country. The company should focus on their costing, as this will drive away more customers towards them; and should make a good relationship with the suppliers, as with good suppliers, there will be no shortage in product or delay in the service. Moreover, the company should hire skilled workers to produce quality food products in a shorter time (Kinyua& W Burugu, 2017).

The weakness of the company lies in different factors like the lower research development, inventory cost, inadequate flow of cash, and many more. A food company cannot succeed in the food industry without doing proper research on the market and have to update itself according to tastes and preferences. To maintain the inventory cost the company should focus on keeping a narrow margin between the supply, cooking, and consumption. Moreover, the company needs good cash to continue the business, without that the business thrives to survive in the market (Salim et al., 2018).

The opportunities for a food company are diverse, such as the company should emphasize the online stores and product delivery for busy people. An increase in population is a major opportunity as it causes a rise in the number of customers and as a result, the profit will increase (Mabandla, 2018).
The threats for a food company lies in the competition with its rival companies as it may cause in the reduction of the customer and less profit. Reduction in suppliers is another threat as it causes the shortage of raw products. Moreover, a change in the taste of the customers is another key threat for an upcoming company.

Competitive Analysis of the Market
Food and Beverages are one of the most essential industries in the market based on the consumption by the customer. But in this industry, more and more restaurants are coming up every day. This will create a chance of substituting one restaurant for another, as any restaurant can drive away many customers from its competitors if the costing, taste, quality factors are not maintained. Hence, the threat of substitutes is higher for an upcoming restaurant or Food Company (Mahafzah et al., 2020).

The buyers are the most powerful and have the power to influence the pricing. Higher prices of food allow the customers to switch to any competitor. As a result of this, the food pricing factor depends on the customers. Thus, the bargaining power of buyers is higher for an upcoming restaurant or Food Company.

The food companies depend very much on their suppliers for the raw materials. Without the suppliers, there will be a shortage in the production of the raw materials, causing lower production of food. However, as there are many suppliers in this industry, thus the bargaining power of the suppliers is moderate (Orga, Nnadi&Chioma, 2018). More and more restaurants and Food Companies are coming up every day. The new entrant focuses to get cost advantages by establishing proper operating costs and fixed costs. Hence, the threat of New Entrants is moderate for an upcoming restaurant.

Contribution to the Industry and Community
In an advanced country like Australia, Food and Beverages Industry plays a major role in the growth of their economy. The industry contributes about 0.8% of the total GDP of Australia. A total of about more than 180000 workers is connected with this industry in Australia. To do business in a country like Australia the company have to follow the Government rules in that country. It contributes a key role in the community as Australia is a cosmopolitan city with people from different countries, cultures, religions lives together in that country. It should be focussed that the food reaches to more and more customers from different cultures. To open a new restaurant in Australia it is important to look after the following factors like hospitable environment, hygienic and clean restaurant, low cost of food, good customer service, and variation in the menu for people belonging to different cultures (Salim et al., 2018).

However, by the violation of these factors, there might be some problems causing. For example, without the proper maintenance of hygiene, the customers may fall sick. Without a good environment, low costing and variation in the menu, the customers may switch to the competitors.

SFA Matrix

SFA Matrix

Option 1

Option 2

Option 3

Suitability

The new restaurant will be suitable because of the lower cost of the food

The new restaurant will be suitable because of hygiene and cleanliness maintained by the authority

The new restaurant will be suitable for the taste of the food preferred by the customers

Feasibility

Though the plan is good, but will not be as feasible as many customers do not prefer cheaper foods.

This plan is feasible among a good number of customers, as a large number of customers are always in search of hygienic restaurants.

This is the most feasible plan as low cost and cleanliness can bring a good number of customers, but those without good taste are nothing. But good taste can bring maximum customers regardless of the pricing factor and the hygiene.

Acceptability

It is acceptable to a good number of people as many customers are in search of cheap restaurants because of smaller budgets.

In the present world, the hygiene factor is one of the most important factors to be analyzed before setting a restaurant. Customers preferred to eat from a restaurant that maintains proper hygiene with their product.

Taste is the ultimate key factor in the food industry. Without good taste, no restaurant can run. The taste accepted by most of the customers runs the most in this industry.

Total Score

06/10

08/10

09/10

Table: SFA Matrix
(Source: created by the learner)

From the SFA matrix drawn above, it is shown that option 3 is the best in accordance with the suitability, feasibility, and acceptability of the factors, and hence, option 3 should be chosen for opening a new restaurant. The reason behind this choice concludes that taste is the ultimate thing in the food industry. Lower cost of food and maintenance of proper hygiene is good for a restaurant and can bring a good number of customers. However, without a good taste of food, cheaper price and cleanliness is nothing. That is the reason why the third option should be chosen for an upcoming restaurant.

Conclusion
On completion of the report, one will get an idea about the food business and factors influencing the market in Australia. From the above project, it is concluded that several political, economic, social, environmental factors can affect the opening of a new business in the market of Australia. However, the project will identify the strengths and weaknesses of an upcoming company in Australia and will give an overview of the opportunities or threats in the running of the project. The project gives a clear idea about the competition and the bargaining power of the customers, suppliers; and how it can affect the business. Moreover, the SFA matrix, in the end, shows the chosen factors are suitable, feasible, and acceptable by the customers to run the food business of the upcoming restaurant.

References
Agwa, Y., Aziz, W., &Khalifa, G. (2017). Evaluating Food and Beverage Courses in Higher Private Tourism and Hotels Institutes in Alexandria: Professionals’ Perception. International Journal of Heritage, Tourism and Hospitality, 11(2), 98-110.

Bayona-Saez, C., Cruz-Cázares, C., García-Marco, T., &García, M. S. (2017). Open innovation in the food and beverage industry. Management Decision. Chand, M., &Slath, A. (2018).Impact of food and beverage service practices on customer satisfaction in the food outlets, Chandigarh, India. International Journal of Hospitality and Tourism Systems, 11(2), 73.

Kinyua, C., & W Burugu, R. (2017). Pushed Or Pulled? Factors That Influence Students’ Choice to Study Food and Beverage Management Program. Mabandla, N. Z. (2018). The relationship between working capital management and the financial performance of listed food and beverage companies in South Africa (Doctoral dissertation).

Mahafzah, A. G., Aljawarneh, N. M., Alomari, K. A. K., Altahat, S., &Alomari, Z. S. (2020). Impact of customer relationship management on food and beverage service quality: The mediating role of employees satisfaction. Humanities & Social Sciences Reviews, 8(2), 222-230.

Orga, J. I., Nnadi, C. S., &Chioma, N. (2018).The role of knowledge management on the competitive advantage of food and beverage firms in South East Nigeria. Scholars Journal of Economics, Business and Management, 5(7), 612-622.

Salim, H. K., Padfield, R., Lee, C. T., Syayuti, K., Papargyropoulou, E., &Tham, M. H. (2018).An investigation of the drivers, barriers, and incentives for environmental management systems in the Malaysian food and beverage industry. Clean Technologies and Environmental Policy, 20(3), 529-538.

Salim, H. K., Padfield, R., Yuzir, A., Mohamad, S. E., Kaida, N., Papargyropoulou, E., & Nakamura, S. (2018). Evaluating the organizational intention to implement an Environmental Management System: evidence from the Indonesian food and beverage industry. Business Strategy and the Environment, 27(8), 1385-1398.

Toaha, M., Maupa, H., Brasit, N., Taba, I., & Aswan, A. (2019, August).Competitive Sustainability of Food and Beverage SMEs in South Sulawesi.In 3rd International Conference on Accounting, Management and Economics 2018 (ICAME 2018) (pp. 608-615).Atlantis Press.

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