Question

Question 2

Porter’s generic strategies Allie Haroum is the owner of a small independent café in Sydney. Her café serves the local inner-city, which has an increasing number of female office workers. She sells high quality European and Middle Eastern food. A larger food court has just opened across the street from her store. It sells American and Australian fast food and offers lower prices on its food. It is a no-frills operation and its lower prices are attracting business away from Allie’s café. Assume you are part of a student team assigned to do a management accounting class project for Allie. Her question for the team is: “How can I apply Porter’s generic business strategies to better deal with my strategic planning challenges in this situation?” How will you reply?

Answer 1

As part of Porter's generic business strategies, the following strategic planning can be done to mitigate the challenge :

1. Undertake a market survey as to the specific fast food items the food court is offering.

2. Take a survey of the prices at which they are offering.

3. Take a survey of the footfall in the food court which will give an insight in to the volume of sales.

4. Assess whether the American and Australian fast food can be sold in the cafe which includes assessing the procurement of raw materials , the prices or the same, other direct costs(labor) and indirect costs (fuel, marketing, overheads).

5. Offer the American and Australian fast food along with the current European and Middle Eastern food (unique food items).

6. Assess whether the current food products pricing can be lowered using the economies of scale of the Austalian and American food items. The leasing/owing of a larger space for the aboev should also be considered.

The objective is to offer the unique existing food items along with the American and Australian food so that customers have a wide range to choose from.