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Analysis of Internal and External Environment of The Business of "The Colombo Roti Cafe"

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What is Leadership

Leadership is simply motivating a group of people for achieving towards for a common goal. Leadership let the group towards one direction by giving more inspiration and guidance for the task which need to be fulfilled.

“Leaders establish the vision or the future and set the strategy for getting there.”

Importance of Leadership for Roti Café

Leadership inspires the management in order to achieve overall business success by motivating the entire group with maximum satisfaction. Basically when compared to a manager a good leader possessed.

  • Vision led to long term horizon
  • Facilitates in decision making and build the creativity
  • Accept challenges
  • Appeals to the hearts
  • Taking proactive actions
  • Motivating the staff

The top management has the idea of expanding “The Colombo Roti Café” to many areas in Colombo and beyond. In order to obtain this they should need a long term vision to lead their business in to a major competitor in the industry. Proper decision making is highly important for Mr. Fernando and Mr. Fonseka. With the right leadership and guidance they could easily facilitate their decisions. As well as creativity is a must for “The Colombo Roti Café” to attract more customers and to retain them for a longer period.

When compared to today’s business environment, it is rapidly changing with new technology and new innovations. Therefore they should need a direct leadership to understand and accept the challenges that comes across the business environment. Mr. Fernando and Mr. Fonseka are committing to ensure the quality, value and the customer satisfaction. Leadership helps to understand what actually customers expect from the business and how they can create a value of the business in customers’ mindset.

When they have a good leadership, they always seeking for the success of the business in each and every corner. They seek threats and weaknesses they have and take proactive actions for the challenges they come across in the day to day business routines. Now The Colombo Roti Cafe accommodates up to 75 customers. Therefore they should have a friendly staff to exhibit hospitality to the customer base they dealing. In order to get the maximum output from the staff, good working environment and motivating top management is essential.

PEST Analysis and Other Related Environment Factors

PEST analysis is helpful tool for analyzing the macro-environment (external) that impacts all the organization. PEST analysis focuses on the Political, Economic, Social, and Technological factors of the macro-environment. These external factors normally are exceeding the control of organizations and sometimes appear as a threat. Additionally, macro-environment factors such as law and the environment can have an impact on the organization. With these two factors we can call it PESTLE analysis too.

Political

Tax

The tax policy of the government has a direct effect on this business. High taxes on flour, other necessary food items and equipment can interfere with the business.

Health Regulations

In recent years investigation has been taken by the public health inspectors against the food related business which is not suitable for consumption and also equipment related to prepare the food and have taken legal action against them. This management should use the standardize equipment and raw material when preparing their food for avoid these complications.

Economics

Consumer Income and Spending

If the economy is stable, people will have more money to consume more. The rising cost of living is a reason to reduce the roti demand because roti is not an essential commodity.

Exchange Rate

Increase in exchange rate will impact the prices of flour, spices and consumer equipment imported from abroad.

Social

Consumer Taste and Fashion

Social background of consumers is a very important factor when it comes to food and beverage industry. When more people intend to use cafes for celebrate their personal and group events such as birthdays, get-together and the Anniversary celebrating, the demand for café will go up.

Technology

  1. E-Marketing.
  2. Hotline.
  3. New production process.

Technology plays a critical role in present business world. The management can get a better advantage by using upgraded technology for their ventures. It is important to promote products through the online media such as the internet, digital media and social media such as Facebook, Instagram. Communicating to the customers about special offers via SMS and e-mail has become very popular. Another way they can technology is to use a new roti making machine with a high volume.

Other Related Environment Factors

Law

  1. Employment Law.
  2. Consumer Law.

Any change in the labor law has direct impact on this business. If the government introduces minimum wage, it may be reasons to raise the administrative cost of the business. Refuse to display the price list of items of the business place and avoid issuing a bill or receipting when making a request, violates the consumer rights. Then the Consumer Affairs Authority act strictly against the business. (Caa.gov.lk, 2018)

Environment

  1. Tourism.
  2. Waste Management.

As the cafe situated in the city of Colombo, attraction of tourists will enhance the demand for café. Further in order to in line with the environmental regulation, the café has to establish waste management system. Instead of polythene, it should focus on using environment friendly material.

SWOT Analysis

What is SWOT

SWOT analysis is an acronym for Strengths, Weaknesses, Opportunities and Threats.

  • Strengths (internal, positive) – Characteristics of the business or project that give it an advantage over others.
  • Weaknesses (internal, negative) – Characteristics of the business that place the business or project at a disadvantage relative to others.
  • Opportunities (external, positive) – Elements in the environment that the business or project could exploit to its advantage.
  • Threats (external, negative) – Elements in the environment that could cause trouble for the business.

Identification of SWOT

Identification of SWOT is important to café being they can use the findings in developing strategies to achieve objective. Accordingly it has to consider whether the objective is attainable in the context of the findings of SWOT.

Strengths for Colombo Roti Cafe

This element addresses the things that Colombo Roti Cafe does especially well. It includes intangible, such as Company’s brand attributes, or something more easily defined such as the unique selling pros position of a particular product line. It could also be the human resource and strong leadership.

  • Excellent, well-trafficked location.
  • Good reputation among local community.
  • Seasonal locally sourced menu.
  • Secret recipes.
  • Wide product range including five types of roti.
  • Attractive and clean place & facilities.
  • Quality of the products.
  • Internal resources such as skilled, knowledgeable staff.

Weaknesses for Colombo Roti Café

Weaknesses means the things the company perform poorly and things that company keep away from its success. Every organization has its weaknesses which is equally applicable to Colombo Roti Café as well. The weaknesses relating to the Colombo Roti Café are as follows.

  • Not currently using food delivery apps/technology
  • Single location means limited reach
  • Higher costs than comparable chain restaurants
  • Modest advertising budget

Opportunities for Colombo Roti Cafe

This means elements in the environment that the business could exploit to its advantage. Opportunities are a combination of different circumstances at a given time that offer a Positive outcome, if taken advantage of. The opportunities of Café are as follows.

  • Emerging need for the food products.
  • Press/media coverage of the shop.
  • Changes in government policy related to the field.
  • Changes in social patterns, population profiles, lifestyle changes, and so on.
  • Local events.
  • Growing interest in/support for locally sourced ingredients
  • Seasonal menu keeps things fresh and interesting
  • Potential for growth via food delivery apps/technology

Threats for Colombo Roti Cafe

Elements in the environment that could cause trouble for the business are considered to be threats and those are related to Café are as follows.

Intensifying competition from established chain restaurants

  • Uncertain economic environment
  • Rising costs of ingredients
  • Changing technology
  • Have bad debt and cash –flow problems

Porter’s Five Forces

Rivalry amongst existing competition (Inter firm rivalry)

In this context “The Colombo Roti Café” it can be identified higher competition because the current market is already dominated by the main competitors like McDonalds, KFC, Burger King. This can create major impact on the profitability of the business. In order to face these situations “The Colombo Roti Café” management needs to consider on developing strong brand which can compete with the established competition. To improve the brand name, it is required to focus on providing good quality and healthy variety of food products which in turn helps to increased customer satisfaction.

Threat of New Entrance

This is the start of new competition. Companies mostly face these types of situations when the business shows higher potential of earnings. In this scenario “The Colombo Roti Café” has faced with moderate threat in relation to that due to the following factors

  • Varity of food served.
  • Availability of outlets.
  • Method of delivery (Costs on supply chain)
  • Consumer tastes and habits.
  • Prices of the products compared to the other food outlets.
  • Quality of the foods and the customer service provided.

They needs focus more on provide new verity of food products that serves than other food outlets, based on the consumer tastes and habits which gives different experience other than food outlets like McDonald’s, KFC and other restaurants at affordable prices, rather stuck on producing same quality “roti. Also they need to expend more in development of their business outlets where more people living and busy cities. It would be more ideal to forces on expanding their outlets at the same locations of McDonald’s and KFC’s situated, so that they can switch the customers towards their outlets.

Threat of Substitutes or Substitution

Substitutes are the products that can be used to replace the use of the existing product. This is a threat to the business because of the fact it can challenge the profitability of the business and it mainly effect the growth of the business. In this “The Colombo Roti Café” case following factors effect highly to the growth of the business.

  • Number of substitute availability at the same industry.
  • Product quality improvement and the consumer satisfaction.

In this “The Colombo Roti Café” scenario the products same as “roties” available at the super markets as substitutes which were pre-cooked so consumption of those is very high, to challenge this they needs to focus on serve more quality and healthy food products which increases customer satisfaction and demotivates the use of substitutes.

Bargaining Power of the Customers

Customers will always demand for high quality products at lower prices. Prices would be determined by both parties after series of negotiations. If the buyers have a higher bargaining power, the supplying company might have to experience low profits. In this “The Colombo Roti Café” case the following factors create strong impact on the Bargaining power of the customers.

  • Number of food outlets.
  • Availability of substitutes.
  • Prices of the products.

In this “The Colombo Roti Café” context availability of other providers in the same industry is high so that there is a high tendency on people move towards other providers like McDonald’s and KFC and other restaurants. Other factor is that availability of substitutes also is high in the industry which gives the same outcome. so that the management needs to focus on to provide high quality healthy foods at affordable prices which in turn helps to increase the customer satisfaction other than the McDonald’s, KFC or other restaurants.

Bargaining Power of the Suppliers

Suppliers too can affect the profitability of the business by charging higher prices or providing lower quality products. In this context “The Colombo Roti Café” case the top management’s main concern is to expansion of the business island wide this means that they also needs to focus on increasing the suppler network in order to find more quality raw materials at a affordable rate which impact the determination of pricing. Most important fact is they have to maintain inter connected supplier force so that it will be easier to fulfill their raw material needs when it required.

Conclusion

The Colombo Roti Café is established in the heart of Colombo and has been able to ensure the success within a shorter period of time. Yet, it can be noted that the café has faced with several delinquents including lack of trained and skilled staff, severe competition and lack of capital infusion. Accordingly it has not been able to fulfill its pre determined objective of expanding the business in other key hubs in Colombo. Yet after analyzing the internal and external environment of the business it was noted that though the café has faced with several challenges, it could be easily faced with them along with the strengths possessed by the café and with better management.

Thus, as management consultants, we find that the proposed business expansion is viable with the financial assistance from a bank, new technology & innovation. The business should recruit an experienced & specialized staff to address immediate issues and to proceed with the business expansion operation. With that the café will be able to ensure its growth and success in the long run.

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Analysis of Internal and External Environment of the Business of “The Colombo Roti Cafe”. (2018, December 03). GradesFixer. Retrieved September 22, 2021, from https://gradesfixer.com/free-essay-examples/analyzing-competition-of-a-business/
“Analysis of Internal and External Environment of the Business of “The Colombo Roti Cafe”.” GradesFixer, 03 Dec. 2018, gradesfixer.com/free-essay-examples/analyzing-competition-of-a-business/
Analysis of Internal and External Environment of the Business of “The Colombo Roti Cafe”. [online]. Available at: <https://gradesfixer.com/free-essay-examples/analyzing-competition-of-a-business/> [Accessed 22 Sept. 2021].
Analysis of Internal and External Environment of the Business of “The Colombo Roti Cafe” [Internet]. GradesFixer. 2018 Dec 03 [cited 2021 Sept 22]. Available from: https://gradesfixer.com/free-essay-examples/analyzing-competition-of-a-business/
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